Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 05, 2023 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2023 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 | |
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 | 901 | |
Local Phone Number | 302-9587 | |
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 Common Stock, Shares Outstanding | 14,223,202 | |
Common Stock [Member] | ||
Title of 12(b) Security | Common Stock | |
Trading Symbol | SURG | |
Security Exchange Name | NASDAQ | |
Common Stock Purchase Warrants | ||
Title of 12(b) Security | Common Stock Purchase Warrants | |
Trading Symbol | SURGW | |
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Current Assets | ||
Cash | $ 5,188,098 | $ 7,035,654 |
Accounts receivable - net | 10,289,379 | 9,230,365 |
Inventory | 18,086,916 | 11,186,242 |
Prepaids | 167,655 | 111,524 |
Total Current Assets | 33,732,048 | 27,563,785 |
Property and equipment - net | 502,607 | 643,373 |
Other Assets | ||
Note receivable | 176,851 | 176,851 |
Intangibles - net | 2,453,224 | 2,779,977 |
Internal use software development costs - net | 603,954 | 387,180 |
Goodwill | 1,666,782 | 1,666,782 |
Investment in CenterCom | 397,948 | 354,206 |
Operating lease - right of use asset - net | 409,858 | 431,352 |
Total Other Assets | 5,708,617 | 5,796,348 |
Total Assets | 39,943,272 | 34,003,506 |
Current Liabilities | ||
Accounts payable and accrued expenses | 5,423,313 | 5,784,374 |
Accounts payable and accrued expenses - related party | 467,899 | 1,728,721 |
Installment sale liability | 11,349,440 | 13,018,184 |
Deferred revenue | 43,200 | 243,110 |
Operating lease liability | 41,290 | 39,490 |
Total Current Liabilities | 18,475,535 | 23,464,062 |
Long Term Liabilities | ||
Operating lease liability | 378,284 | 399,413 |
Total Long Term Liabilities | 4,902,300 | 5,421,191 |
Total Liabilities | 23,377,835 | 28,885,253 |
Commitments and Contingencies (Note 8) | ||
Stockholders’ Equity | ||
Common stock, $0.001 par value, 500,000,000 shares authorized 14,234,655 and 14,116,832 shares issued and outstanding, respectively | 14,286 | 14,117 |
Additional paid-in capital | 41,625,010 | 40,780,707 |
Accumulated deficit | (25,291,773) | (35,804,106) |
Stockholders’ equity | 16,347,523 | 4,990,718 |
Non-controlling interest | 217,914 | 127,535 |
Total Stockholders’ Equity | 16,565,437 | 5,118,253 |
Total Liabilities and Stockholders’ Equity | 39,943,272 | 34,003,506 |
Related Party [Member] | ||
Current Liabilities | ||
Notes payable | 1,108,150 | 1,108,150 |
Long Term Liabilities | ||
Notes payable | 4,026,413 | 4,493,798 |
Nonrelated Party [Member] | ||
Current Liabilities | ||
Notes payable | 42,243 | 1,542,033 |
Long Term Liabilities | ||
Notes payable | 31,970 | 53,134 |
SBA Government [Member] | ||
Long Term Liabilities | ||
Notes payable | $ 465,633 | $ 474,846 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 14,234,655 | 14,116,832 |
Common stock, shares outstanding | 14,234,655 | 14,116,832 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenues | $ 35,886,433 | $ 28,005,144 | $ 70,662,876 | $ 49,146,515 |
Costs and expenses | ||||
Cost of revenue | 25,860,705 | 25,814,153 | 52,942,665 | 44,321,894 |
General and administrative expenses | 3,823,227 | 3,038,529 | 6,812,648 | 6,722,310 |
Total costs and expenses | 29,683,932 | 28,852,682 | 59,755,313 | 51,044,204 |
Income (loss) from operations | 6,202,501 | (847,538) | 10,907,563 | (1,897,689) |
Other income (expense) | ||||
Interest expense | (156,267) | (566,999) | (348,593) | (736,644) |
Gain (loss) on investment in CenterCom | 10,713 | 35,519 | 43,742 | 10,336 |
Amortization of debt discount | (37,068) | (37,068) | ||
Gain on forgiveness of PPP loan - government | 524,143 | 524,143 | ||
Total other income (expense) - net | (145,554) | (44,405) | (304,851) | (239,233) |
Net income (loss) including non-controlling interest | 6,056,947 | (891,943) | 10,602,712 | (2,136,922) |
Non-controlling interest | 90,955 | 81,094 | 90,379 | 48,449 |
Net income (loss) available to common stockholders | $ 5,965,992 | $ (973,037) | $ 10,512,333 | $ (2,185,371) |
Earnings (loss) per share - attributable to common stockholders | ||||
Basic | $ 0.42 | $ (0.08) | $ 0.74 | $ (0.18) |
Diluted | $ 0.40 | $ (0.08) | $ 0.71 | $ (0.18) |
Weighted average number of shares outstanding - attributable to common stockholders | ||||
Basic | 14,191,083 | 12,268,669 | 14,154,163 | 12,166,817 |
Diluted | 15,076,466 | 12,268,669 | 14,811,785 | 12,166,817 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Preferred Stock [Member] Series A Preferred Stock [Member] | Preferred Stock [Member] Series C Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2021 | $ 260 | $ 12,064 | $ 38,662,340 | $ (35,123,343) | $ 3,551,321 | ||
Balance, shares at Dec. 31, 2021 | 260,000 | 12,063,834 | |||||
Recognition of stock based compensation | 9,294 | 9,294 | |||||
Non-controlling interest | (32,645) | (32,645) | |||||
Net income (loss) | (1,212,334) | (1,212,334) | |||||
Non-controlling interest | 32,645 | 32,645 | |||||
Warrants issued as debt issue costs | 38,953 | 38,953 | |||||
Balance at Mar. 31, 2022 | $ 260 | $ 12,064 | 38,710,587 | (36,335,677) | (32,645) | 2,354,589 | |
Balance, shares at Mar. 31, 2022 | 260,000 | 12,063,834 | |||||
Balance at Dec. 31, 2021 | $ 260 | $ 12,064 | 38,662,340 | (35,123,343) | 3,551,321 | ||
Balance, shares at Dec. 31, 2021 | 260,000 | 12,063,834 | |||||
Net income (loss) | (2,185,371) | ||||||
Balance at Jun. 30, 2022 | $ 260 | $ 12,349 | 39,420,055 | (37,308,714) | 48,449 | 2,172,399 | |
Balance, shares at Jun. 30, 2022 | 260,000 | 12,348,834 | |||||
Balance at Dec. 31, 2021 | $ 260 | $ 12,064 | 38,662,340 | (35,123,343) | $ 3,551,321 | ||
Balance, shares at Dec. 31, 2021 | 260,000 | 12,063,834 | |||||
Balance, shares | 200,000 | ||||||
Balance at Dec. 31, 2022 | $ 14,117 | 40,780,707 | (35,804,106) | 127,535 | $ 5,118,253 | ||
Balance, shares at Dec. 31, 2022 | 14,116,832 | ||||||
Balance at Mar. 31, 2022 | $ 260 | $ 12,064 | 38,710,587 | (36,335,677) | (32,645) | 2,354,589 | |
Balance, shares at Mar. 31, 2022 | 260,000 | 12,063,834 | |||||
Recognition of stock based compensation | 9,294 | 9,294 | |||||
Non-controlling interest | (81,094) | (81,094) | |||||
Net income (loss) | (973,037) | (973,037) | |||||
Non-controlling interest | 81,094 | 81,094 | |||||
Warrants issued as debt issue costs | 76,451 | 76,451 | |||||
Stock issued as direct offering costs | $ 200 | (200) | |||||
Stock issued as direct offering costs, shares | 200,000 | ||||||
Stock issued to purchase software | $ 85 | 411,315 | 411,400 | ||||
Stock issued to purchase software, shares | 85,000 | ||||||
Warrants issued as interest expense | 212,608 | 212,608 | |||||
Balance at Jun. 30, 2022 | $ 260 | $ 12,349 | 39,420,055 | (37,308,714) | 48,449 | 2,172,399 | |
Balance, shares at Jun. 30, 2022 | 260,000 | 12,348,834 | |||||
Balance at Dec. 31, 2022 | $ 14,117 | 40,780,707 | (35,804,106) | 127,535 | 5,118,253 | ||
Balance, shares at Dec. 31, 2022 | 14,116,832 | ||||||
Stock issued for services | $ 60 | 307,398 | 307,458 | ||||
Balance, shares | 60,082 | ||||||
Recognition of stock based compensation | 9,294 | 9,294 | |||||
Non-controlling interest | (576) | (576) | |||||
Net income (loss) | 4,546,341 | 4,546,341 | |||||
Non-controlling interest | 576 | 576 | |||||
Balance at Mar. 31, 2023 | $ 14,177 | 41,097,399 | (31,257,765) | 126,959 | 9,980,770 | ||
Balance, shares at Mar. 31, 2023 | 14,176,914 | ||||||
Balance at Dec. 31, 2022 | $ 14,117 | 40,780,707 | (35,804,106) | 127,535 | 5,118,253 | ||
Balance, shares at Dec. 31, 2022 | 14,116,832 | ||||||
Stock issued for services | $ 618,644 | ||||||
Balance, shares | 125,009 | ||||||
Net income (loss) | $ 10,512,333 | ||||||
Balance at Jun. 30, 2023 | $ 14,286 | 41,625,010 | (25,291,773) | 217,914 | 16,565,437 | ||
Balance, shares at Jun. 30, 2023 | 14,285,655 | ||||||
Balance at Mar. 31, 2023 | $ 14,177 | 41,097,399 | (31,257,765) | 126,959 | 9,980,770 | ||
Balance, shares at Mar. 31, 2023 | 14,176,914 | ||||||
Stock issued for services | $ 65 | 311,121 | 311,186 | ||||
Balance, shares | 64,927 | ||||||
Recognition of stock based compensation | 9,294 | 9,294 | |||||
Non-controlling interest | (90,955) | (90,955) | |||||
Net income (loss) | 5,965,992 | 5,965,992 | |||||
Exercise of warrants for cash | 44 | 207,196 | 207,240 | ||||
Balance, shares | 43,814 | ||||||
Non-controlling interest | 90,955 | 90,955 | |||||
Balance at Jun. 30, 2023 | $ 14,286 | $ 41,625,010 | $ (25,291,773) | $ 217,914 | $ 16,565,437 | ||
Balance, shares at Jun. 30, 2023 | 14,285,655 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Operating activities | |||||
Net income (loss) - including non-controlling interest | $ 6,056,947 | $ (891,943) | $ 10,602,712 | $ (2,136,922) | |
Adjustments to reconcile net income (loss) to net cash used in operations | |||||
Depreciation and amortization | 467,519 | 362,629 | |||
Amortization of right-of-use assets | 21,494 | 34,294 | |||
Amortization of debt discount/debt issue costs | 37,068 | ||||
Amortization of internal use software development costs | 32,265 | 64,530 | |||
Stock issued for services | 618,644 | ||||
Recognition of share based compensation - related party | 18,588 | 18,588 | |||
Warrants issued for interest expense | 212,608 | ||||
(Gain) loss on equity method investment - CenterCom | (43,742) | (10,336) | |||
Gain on forgiveness of PPP loan | (524,143) | ||||
(Increase) decrease in | |||||
Accounts receivable | (1,059,014) | (5,072,918) | |||
Inventory | (6,900,674) | (1,316,445) | |||
Prepaids | (56,131) | (44,054) | |||
Increase (decrease) in | |||||
Accounts payable and accrued expenses | (1,351,218) | 4,696,158 | |||
Accounts payable and accrued expenses - related party | (270,665) | 795,098 | |||
Installment sale liability - net | (1,668,744) | ||||
Deferred revenue | (199,910) | (168,750) | |||
Operating lease liability | (19,329) | (30,948) | |||
Net cash provided by (used in) operating activities | 224,060 | (3,148,073) | |||
Investing activities | |||||
Purchase of property and equipment | (11,401) | ||||
Capitalized internal use software development costs | (281,304) | ||||
Purchase of software | (300,000) | $ (300,000) | |||
Acquisition of Torch, Inc. | (800,000) | ||||
Net cash used in investing activities | (281,304) | (1,111,401) | |||
Financing activities | |||||
Proceeds from exercise of common stock warrants | 207,240 | ||||
Repayments of notes payable - related party | (467,385) | ||||
Proceeds from notes payable | 6,700,000 | ||||
Repayments on notes payable | (1,520,954) | ||||
Repayments on notes payable - SBA government | (9,213) | (19,496) | |||
Net cash provided by financing activities | (1,790,312) | 6,680,504 | |||
Net increase (decrease) in cash | (1,847,556) | 2,421,030 | |||
Cash - beginning of period | 7,035,654 | 6,283,496 | 6,283,496 | ||
Cash - end of period | $ 5,188,098 | $ 8,704,526 | 5,188,098 | 8,704,526 | $ 7,035,654 |
Supplemental disclosure of cash flow information | |||||
Cash paid for interest | 209,840 | 195,950 | |||
Cash paid for income tax | |||||
Supplemental disclosure of non-cash investing and financing activities | |||||
Debt issue costs recorded in connection with notes payable | 115,404 | ||||
Stock issued to acquire software | $ 411,400 |
Organization and Nature of Oper
Organization and Nature of Operations | 6 Months Ended |
Jun. 30, 2023 | |
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 Nevada 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 LogicsIQ, 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 ECS Prepaid, LLC June 9, 2009 Missouri Central States Legal Services, Inc. August 1, 2003 Missouri Electronic Check Services, Inc. May 19, 1999 Missouri Torch Wireless January 29, 2019 Wyoming SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all of the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2023 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2023 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 30, 2023. Management acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the consolidated results of its operations for the periods presented. Liquidity and Management’s Plans As reflected in the accompanying consolidated financial statements, for the six months June 30, 2023, the Company had: ● Net income available to common stockholders of $ 10,512,333 ● Net cash provided by operations was $ 224,060 Additionally, at June 30, 2023, the Company had: ● Accumulated deficit of $ 25,291,773 ● Stockholders’ equity of $ 16,565,437 ● Working capital of $ 15,256,513 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) We manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company has cash on hand of $ 5,188,098 The Company has historically incurred significant losses and has not, prior to 2023, previously 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 continue to be, 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 June 30, 2024, and our current capital structure including equity-based instruments and our obligations and debts. The Company believes it has sufficient cash resources on hand along with access to additional debt and/or equity-based capital from third parties and related parties as needed to meet its current obligations for a period that is one year from the issuance date of these financial statements. 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, ● 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 | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Principles of Consolidation and Non-Controlling Interest 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. For entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity is allocated to owners other than the Company. The aggregate of the income or loss and corresponding equity that is not owned by us is included in Non-controlling Interests in the consolidated financial statements. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) 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 the 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. Effective January 1, 2022, the Company executed a management agreement with Torch Wireless (“Torch”). Generally, the Company was engaged to handle the following services: ● Oversee management of the business being conducted by Torch, ● Involved in the performance of Torch’s obligations under contracts regarding its business operations and maintenance of Torch’s customer relationships, ● Assist Torch with regulatory compliance, ● Manage all billing and collection functions, including the right to collect revenues related to Torch’s business operations, as part of the agreement, Torch may not participate in this function; and ● Manage all payment functions related to the business, including the right to disburse funds, as part of the agreement, Torch may not participate in this function Torch is a provider of subsidized mobile broadband services to consumers qualifying under the federal guidelines of the U.S. Federal Communication Commission’s Affordable Connectivity Program (“ACP”). The ACP provides the Company with up to a $ 100 30 With the purchase of Torch, the Company offers subsidized mobile broadband in all fifty (50) states. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) It was determined that the Company had acquired 100 At the time of acquisition, Torch had no significant assets or liabilities. The Company paid $ 800,000 800,000 At the time of acquisition, Torch had nominal revenues and losses. As a result, and given the immaterial nature of this acquisition, the Company elected not to present any pro-forma financial information during the year ended December 31, 2022. In addition, the Company was required to pay the Sellers monthly residual payments for customers enrolled by the Company through December 31, 2022 of either $ 2 3 For the six months ended June 30, 2023 and 2022, the Company incurred expenses of $ 0 321,243 This transaction did not involve the purchase of a “significant amount of assets” as defined in the Instructions to Item 2.01 of Form 8-K. Additionally, the acquisition of Torch was not deemed to be significant at any level under SEC Regulation S-X 3.05 and did not require the presentation of any additional historical audits. For financial reporting purposes, Torch has been consolidated into the Company’s consolidated statements of financial position, results of operations, and cash flows. At June 30, 2023 and December 31, 2022 goodwill was $ 1,666,782 , respectively. There were no SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Note Receivable (Sale of Former Subsidiary) On May 7, 2021, the Company disposed of its subsidiary True Wireless, Inc. In connection with the sale, the Company received an unsecured note receivable for $ 176,851 0.6 10 7,461 Payments are scheduled as follows: Schedule of Receivables For the Year Ended December 31, 2023 (6 months) $ 52,227 2024 89,532 2025 44,766 186,525 Less: amount representing interest (9,674 ) Total $ 176,851 As of June 30, 2023, the Company believes the note is collectible. On July 12, 2023, Notice of Default was provided by SurgePays, Inc. to Blue Skies Connections, LLC for failure to pay amounts due under that certain Promissory Note dated June 14, 2021 by Blue Skies Connections, LLC in favor of SurgePays, Inc. in the original principal amount of $ 176,851 See Note 8 regarding contingencies – legal matters. 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. See Note 10 regarding segment disclosure. The SurgePhone and Torch Wireless business segment made up approximately 83 69 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Revenues related to this business segment are 100 Accounts receivable related to these programs made up 98 96 Customers in the United States accounted for 100 Use of Estimates Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material. Significant estimates during the six months ended June 30, 2023 and 2022, respectively, include, allowance for doubtful accounts and other receivables, inventory reserves and classifications, valuation of loss contingencies, valuation of derivative liabilities, valuation of stock-based compensation, estimated useful lives related to intangible assets, capitalized internal-use software development costs, 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 changes 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 may 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Fair Value of Financial Instruments The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: ● Level 1 – Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; ● Level 2 – Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and ● Level 3 – Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate. Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values. The Company’s financial instruments, including cash, accounts receivable, accounts payable and accrued expenses, and accounts payable and accrued expenses – related party, are carried at historical cost. At June 30, 2023 and December 31, 2022, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) ASC 825-10 “Financial Instruments” Cash and Cash Equivalents and Concentration of Credit Risk For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At June 30, 2023 and December 31, 2022, 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 At June 30, 2023 and December 31, 2022, respectively, the Company did not experience any losses on cash balances in excess of FDIC insured limits. 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 $ 17,525 There was bad debt expense of $ 0 Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Inventory Inventory primarily consists of tablets, cell phones and sim cards. Inventories are stated at the lower of cost or net realizable value using the average cost valuation method. There were no At June 30, 2023 and December 31, 2022, the Company had inventory of $ 18,086,916 11,186,242 Of the total inventory balance at June 30, 2023, $ 677,118 Impairment of Long-lived Assets including Internal Use Capitalized Software Costs 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 impairment losses for the three and six months ended June 30, 2023 and 2022, respectively. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Internal Use Software Development Costs We capitalize certain internal use software development costs associated with creating and enhancing internally developed software related to our technology infrastructure. These costs include personnel and related employee benefits expenses for employees who are directly associated with and who devote time to software projects, and external direct costs of materials and services consumed in developing or obtaining the software. Software development costs that do not meet the qualification for capitalization, as further discussed below, are expensed as incurred and recorded in general and administrative expenses in the consolidated results of operations. Software development activities generally consist of three stages: (i) planning stage, (ii) application and infrastructure development stage, and (iii) post implementation stage. Costs incurred in the planning and post implementation stages of software development, including costs associated with the post-configuration training and repairs and maintenance of the developed technologies, are expensed as incurred. We capitalize costs associated with software developed for internal use when the planning stage is completed, management has authorized further funding for the completion of the project, and it is probable that the project will be completed and perform as intended. Costs incurred in the application and infrastructure development stages, including significant enhancements and upgrades, are capitalized. Capitalization ends once a project is substantially complete, and the software and technologies are ready for their intended purpose. There is judgment involved in estimating the stage of development as well as estimating time allocated to a particular project. A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods. We amortize internal use software development costs using a straight-line method over a three-year estimated useful life, commencing when the software is ready for its intended use. The straight-line recognition method approximates the manner in which the expected benefit will be derived. We determined the life of internal use software based on historical software upgrades and replacement. On an ongoing basis, we assess if the estimated remaining useful lives of capitalized projects continue to be reasonable based on the remaining expected benefit and usage. If the remaining useful life of a capitalized project is revised, it is accounted for as a change in estimate and the remaining unamortized cost of the underlying asset is amortized prospectively over the updated remaining useful life. We also evaluate internal use software for abandonment and use that as a significant indicator for impairment on a quarterly basis. 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 JUNE 30, 2023 (UNAUDITED) 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. The Company’s operating leases contained renewal options 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 regarding operating leases. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation. Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts contain 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) 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 Torch, TW and LogicsIQ are satisfied when services are performed. Performance obligations for ECS and SB are satisfied at point of sale. For each of our revenue streams we only have a single performance obligation. Surge Phone Wireless (SPW) and Torch Wireless SPW and Torch Wireless are licensed to provide subsidized mobile broadband services through the ACP to qualifying low-income customers to all fifty 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. Surge Blockchain Revenues are generated through the sale of various products such as energy drinks, CBD products, and other top selling products in convenience store and bodega nationwide. At the time in which our products are sold at the store our performance obligation is considered complete. At point of sale, our web portal platform initiates an automated clearing house transaction (ACH) resulting in the recording revenue. LogicsIQ LogicsIQ, Inc. is a lead generation and case management solutions company primarily serving law firms in the mass tort industry. Revenues are earned from our lead generation retained services offerings and call center activities through CenterCom. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) 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. Effective February 1, 2023, LogicsIQ started offering call center services to existing clients. These services are similar in nature to the services CenterCom offers LogicsIQ. The total revenue from these services for the three and six months ended June 30, 2023 was $ 443,244 871,030 , respectively. 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. Surge Fintech and ECS Revenues are generated through the 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. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) At June 30, 2023 and December 31, 2022, the Company had deferred revenue of $ 43,200 243,110 The following represents the Company’s disaggregation of revenues for the six months ended June 30, 2023 and 2022: Schedule of Disaggregation of Revenue from Contracts With Customers For the Six Months Ended 2023 2022 Revenue Revenue % of Revenues Revenue % of Revenues Surge Phone and Torch Wireless $ 58,874,214 83.32 % $ 34,116,686 69.42 % Surge Blockchain, LLC 21,301 0.03 % 47,671 0.10 % LogicsIQ, Inc. 5,962,430 8.44 % 5,925,016 12.06 % Surge Fintech & ECS 5,804,931 8.21 % 9,057,142 18.43 % Total Revenues $ 70,662,876 100 % $ 49,146,515 100 % Cost of Revenues Cost of revenues consists of purchased telecom services including data usage and access to wireless networks. Additionally, prepaid phone cards, commissions, and advertising costs. 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 June 30, 2023 and December 31, 2022, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related to uncertain income tax positions were recorded for the three months ended June 30, 2023 and 2022, respectively. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) For the three and six months ended June 30, 2023, the Company generated net income. The Company currently has an unapplied net operating loss carryforward (deferred tax asset), which is currently being evaluated for applicability in offsetting the current taxable net income. The Company believes the current net operating loss carryforward is in excess of any amounts of income tax that may be due. At June 30, 2023, the Company has an estimated income tax liability of $ 0 Investment – Former Related Party On January 17, 2019, we announced the completion of an agreement to acquire a 40 Anthony N. Nuzzo, a former director and officer and the holder of approximately 10% of our voting equity, had a controlling interest in CenterCom Global. During 2022, Mr. Nuzzo passed away. See Form 8-K filed on March 24, 2022. The strategic partnership with CenterCom as a bilingual operations hub has powered our growth and revenue. CenterCom has been built to support the infrastructure required to rapidly scale in synergy and efficiency to support our sales growth, customer service and development. We account for this investment under the equity method. Investments accounted for under the equity method are recorded based upon the amount of our investment and adjusted each period for our share of the investee’s income or loss. All investments are reviewed for changes in circumstance or the occurrence of events that suggest an other than temporary event where our investmen |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2023 | |
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 June 30, 2023 December 31, 2022 Lives (Years) Computer equipment and software $ 1,006,286 $ 1,006,286 3 5 Furniture and fixtures 82,752 82,752 5 7 1,089,038 1,089,038 Less: accumulated depreciation/amortization 586,431 445,665 Property and equipment - net $ 502,607 $ 643,373 In June 2022, the Company acquired software having a fair value of $ 711,400 300,000 85,000 411,400 4.84 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Depreciation and amortization expense for the three months ended June 30, 2023 and 2022 was $ 70,383 28,184 Depreciation and amortization expense for the six months ended June 30, 2023 and 2022 was $ 140,766 35,875 These amounts are included as a component of general and administrative expenses in the accompanying consolidated statements of operations. |
Intangibles
Intangibles | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles | Note 4 – Intangibles Intangibles consisted of the following: Schedule of Intangible Assets Estimated Useful Type June 30, 2023 December 31, 2022 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 (3,300,296 ) (2,973,543 ) Intangibles - net $ 2,453,224 $ 2,779,977 Amortization expense for the three months ended June 30, 2023 and 2022 was $ 163,377 163,377 Amortization expense for the six months ended June 30, 2023 and 2022 was $ 326,753 326,753 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Estimated amortization expense for each of the five (5) succeeding years is as follows: Schedule of Estimated Amortization Expenses For the Year Ended December 31: 2023 (6 Months) 326,753 2024 653,507 2025 653,507 2026 653,507 2027 165,950 Total $ 2,453,224 |
Internal Use Software Developme
Internal Use Software Development Costs | 6 Months Ended |
Jun. 30, 2023 | |
Internal Use Software Development Costs | |
Internal Use Software Development Costs | Note 5 – Internal Use Software Development Costs Internal Use Software Development Costs consisted of the following: Schedule of Intangible Assets Estimated Useful Type June 30, 2023 December 31, 2022 Life (Years) Internal Use Software Development Costs $ 668,484 $ 387,180 3 Less: accumulated amortization 64,530 - Internal Use Software Development Costs - net $ 603,954 $ 387,180 Costs incurred for Internal Use Software Development Costs Additional costs of $ 281,304 3 Amortization of Software Development Costs Management determined that all costs incurred in 2022 related to internal use software development costs related to the application and infrastructure development stage which were completed at December 31, 2022. Amortization of these costs began in 2023. Management has determined that all costs incurred in 2023 related to internal use software development costs related to the application and infrastructure development stage will be completed as of December 31, 2023. Amortization of these costs will begin in 2024. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) For the three months ended June 30, 2023 and 2022, amortization of internal use software development costs was $ 32,265 0 For the six months ended June 30, 2023 and 2022, amortization of internal use software development costs was $ 64,530 0 Estimated amortization expense is as follows for the years ended December 31: Schedule of Estimated Amortization Expenses 2023 (6 Months) 64,530 2024 222,828 2025 222,828 2026 93,768 Total $ 603,954 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Note 6 – Debt The following represents a summary of the Company’s notes payable – SBA government, notes payable – related parties, and notes payable, key terms, and outstanding balances at June 30, 2023 and December 31, 2022, 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. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) (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 Schedule of Notes Payable PPP EIDL EIDL PPP Terms SBA SBA SBA SBA Total Issuance dates of SBA loans April 2020 May 2020 July 2020 March 2021 Term 18 months 30 30 5 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 Balance - December 31, 2021 $ 126,418 $ 150,000 $ 336,600 $ 518,167 $ 1,131,185 Forgiveness of loan - - - (518,167 ) (518,167 ) 1 Repayments - (4,078 ) (7,676 ) - (11,754 ) Reclassification to note payable (126,418 ) - - - (126,418 ) 2 Balance - December 31, 2022 - 145,922 328,924 - 474,846 Repayments - (2,223 ) (6,990 ) - (9,213 ) Balance - June 30, 2023 $ - $ 143,699 $ 321,934 $ - $ 465,633 1 – During 2022, the Company received a forgiveness on a PPP loan totaling $ 524,143 518,167 5,976 2 – 377,743 371,664 6,079 Monthly payments are $3,566/month SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Notes Payable – Related Parties Schedule of Notes Payable 1 2 Note Payable Note Payable Terms Related Party Related Party Total Issuance dates of notes Various August 2021 Maturity date December 31, 2023 and December 31, 2024 August 2031 Interest rate 10% 10% Collateral Unsecured Unsecured Conversion price N/A N/A Balance - December 31, 2021 $ 5,593,431 $ 467,385 6,060,816 Conversion of debt into common stock (1,086,413 ) - (1,086,413 ) Reclass of accrued interest to note payable 627,545 - 627,545 Balance - December 31, 2022 5,134,563 467,385 5,601,948 Less: short term 1,108,150 - 1,108,150 Long term $ 4,026,413 $ 467,385 $ 4,493,798 Balance - December 31, 2022 $ 5,134,563 $ 467,385 $ 5,601,948 Repayments - (467,385 ) (467,385 ) Balance - June 30, 2023 5,134,563 - 5,134,563 Less: short term 1,108,150 - 1,108,150 Long term $ 4,026,413 $ - $ 4,026,413 1 Activity is with the Company’s Chief Executive Officer and Board Member (Kevin Brian Cox). Of the total, $ 1,108,150 4,026,413 In 2022, the Company included $ 627,545 270,745 4.01 1,086,413 1,086,413 2 Activity is with David May, who is a Board Member. The note of $ 467,385 63,641 531,026 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Notes Payable Schedule of Notes Payable 1 2 3 4 Terms Notes Payable Notes Payable Notes Payable Note Payable Total Issuance dates of notes April/May 2022 April/June 2022 March 2022 2022 Maturity date October/November 2022 January/February 2023 March 2023 2025 Interest rate 19 % 24 % 19 % 1 % Default interest rate 26 % N/A 26 % 0 % Collateral Unsecured All assets Unsecured Unsecured Warrants issued as debt discount/issue costs 36,000 N/A 15,000 N/A Balance - December 31, 2021 $ - $ - $ - $ - $ - Gross proceeds 1,200,000 5,000,000 500,000 - 6,700,000 Reclassification from SBA - PPP note payable - - - 126,418 126,418 Repayments (100,000 ) (5,000,000 ) (100,000 ) (31,251 ) (5,231,251 ) Debt issue costs (76,451 ) - (38,953 ) - (115,404 ) Amortization of debt issue costs 76,451 - 38, 953 - 115,404 Balance - December 31, 2022 1,100,000 - 400,000 95,167 1,595,167 Repayments (1,100,000 ) - (400,000 ) (20,954 ) (1,520,954 ) Balance - June 30, 2023 $ - $ - $ - $ 74,213 $ 74,213 1 - These notes were issued with 36,000 3 2 - The Company executed a $ 5,000,000 80 3 - These notes were issued with 15,000 3 12,000 3 400,000 400,000 36,204 436,204 100,000 400,000 4 – See Notes Payable – SBA Government Note Summary 1. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Secured Revolving Debt In April 2022, a maximum of $ 3,000,000 5,000,000 The notes accrued interest at a monthly rate of 2 24 80 The maximum amount outstanding under the loan was the lesser of $ 5,000,000 80 In 2022, the Company repaid the $ 5,000,000 46,027 Debt Maturities The following represents the maturities of the Company’s various debt arrangements for each of the five (5) succeeding years and thereafter as follows: Schedule of Debt Maturities For the Year Ended December 31, Notes Payable - Related Parties Notes Payable - SBA Government Note Payable Total 2023 (6 Months) $ 1,108,150 $ - $ 21,078 $ 1,129,228 2024 4,026,413 - 42,455 4,068,868 2025 - - 10,680 10,680 2026 - - - - 2027 - - - - Thereafter - 465,633 - 465,633 Total $ 5,134,563 $ 465,633 $ 74,213 $ 5,674,409 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2023 | |
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. The Company did not have any assets or liabilities measured at fair value on a recurring basis at June 30, 2023 and December 31, 2022, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8 – Commitments and Contingencies Operating Leases We have entered into various operating lease agreements, including our corporate headquarters. We account for leases in accordance with ASC Topic 842: Leases, 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) 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. 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. At June 30, 2023 and December 31, 2022, respectively, the Company had no financing leases as defined in ASC 842, “Leases.” The tables below present information regarding the Company’s operating lease assets and liabilities at June 30, 2023 and 2022, respectively: Schedule of Lease Expense For the Six Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 Operating Leases $ 21,494 $ 34,294 Interest on lease liabilities 10,648 11,598 Total net lease cost $ 32,142 $ 45,892 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Supplemental balance sheet information related to leases was as follows: Schedule of Supplemental Information Related to Leases June 30, 2023 December 31, 2022 Operating leases Operating lease ROU assets - net $ 409,858 $ 431,352 Operating lease liabilities - current 41,290 39,490 Operating lease liabilities - non-current 378,284 399,413 Total operating lease liabilities $ 419,574 $ 438,903 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 Six Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 Cash paid for amounts included in measurement of lease liabilities Operating cash flows from operating leases $ 19,329 $ 30,948 ROU assets obtained in exchange for lease liabilities Operating leases $ - $ - Weighted average remaining lease term (in years) Operating leases 7.00 7.99 Weighted average discount rate Operating leases 5 % 5 % Future minimum lease payments for the years ended December 31: Schedule of Future Minimum Payments 2023 (6 Months) 32,412 2024 61,876 2025 63,460 Thereafter 347,083 Total lease payments 504,831 Less: amount representing interest (85,257 ) Total lease obligations $ 419,574 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Employment Agreements (Chief Executive Officer, Chief Financial Officer, and Chief Administrative Officer) The Company is currently finalizing amendments to the terms of its executive employment agreements with its Chief Executive Officer, Chief Financial Officer, and Chief Administrative Officer. These agreements are expected to be completed during the fourth quarter of 2023. Contingencies – Legal Matters 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. The case was dismissed without prejudice by the Court on December 15, 2022. 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. The case remains on the docket and has no court dates set at this time. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) 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 60,000 True Wireless and SurgePays – Litigation Blue Skies Connections, LLC, and True Wireless, Inc. v. SurgePays, Inc., et. al.: In the District Court of Oklahoma County, OK, CJ-2021-5327, filed on December 13, 2021. Plaintiffs petition alleges breach of a Stock Purchase Agreement by SurgePays, SurgePhone Wireless, LLC, and Kevin Brian Cox, and makes other allegations related to SurgePays’ consulting work with Jonathan Coffman, a True Wireless employee. Blue Skies believes the Defendants are in violation of their non-competition and non-solicitation agreements related to the sale of True Wireless from SurgePays to Blue Skies. Oklahoma state law does not recognize non-compete agreements and non-solicitation agreements in the manner alleged by Plaintiffs, as such we believe SurgePays, SurgePhone, and Cox have a strong defense against the claims asserted by Blue Skies and True Wireless. The matter continues in the discovery process. Mr. Coffman is no longer working for True Wireless. An attempt at mediation in July, 2022 did not achieve a settlement. The petition requests injunctive relief, general damages, punitive damages, attorney fees and costs for alleged breach of contract, tortious interference with a business relationship, and fraud. Plaintiffs have made a written demand for damages and the parties continue to discuss a potential resolution. This matter is an anti-competitive attempt by Blue Skies and True Wireless to damage SurgePays, SurgePhone, and Cox. Written discovery continues and depositions are anticipated to begin in the third quarter of 2023. Aliotta and Vasquesz v SurgePays – Litigation Robert Aliotta and Steve Vasquesz, on behalf of themselves and others similarly situated v. SurgePays, Inc. d/b/a Surge Logics, filed January 4, 2023, in the U.S. District Court for the Northern District of Illinois, Case No. 1:23-cv-00042. Plaintiffs allege violations of the Telephone Consumer Protection Act (TCPA) and the Florida Telephone Solicitations Act (FTSA) based on telephone solicitations allegedly made by or on behalf of SurgePays, Inc. Plaintiffs seek damages for themselves and seek certification of a class action on behalf of others similarly situated. Defendants intend to vigorously defend the action however most similar cases are eventually resolved by an out-of-court settlement. At this time, it is impossible to estimate the amount or range of potential loss, but similar matters are usually settled for $ 100,000 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Demiray v. SurgePays, Inc. Meral Demiray v Surge Holdings, Inc. a/k/a SurgePays, Inc.: In the United States District Court for the Northern District of Illinois, Case # 22-cv-6591, filed November 23, 2022. Plaintiff filed a claim against SurgePays following her dismissal from her position as an employee of the Company. Following negotiations among and between SurgePays, SurgePays’ insurance carrier and the Plaintiff, a settlement has been reached and documentation is currently being drafted for full settlement, release, and dismissal of the claim. The case was settled and dismissed in March 2023 for $ 7,500 SurgePays – Mike Fina Litigation SurgePays, Inc. et al. v. Fina et al., Case No. CJ-2022-2782, District Court of Oklahoma County, Oklahoma. Plaintiffs SurgePays, Inc. and Kevin Brian Cox initiated this case against its former officer Mike Fina, his companies Blue Skies Connections, LLC, True Wireless, Inc., Government Consulting Solutions, Inc., Mussell Communications LLC and others. This case also arises from the June 2021 transaction by which SurgePays sold True Wireless to Blue Skies. During the litigation of CJ-2021-5327 described above, SurgePays learned information that showed Mike Fina breached his duties owed to True Wireless during his employment and consulting work for True Wireless prior to SurgePays’ sale of True Wireless to Blue Skies. SurgePays alleges that Mike Fina conspired with the other defendants to damage True Wireless thereby harming the value of the company and causing its eventual sale at a greatly reduced price. SurgePays asserts claims for (i) breach of contract; (ii) breach of fiduciary duty; (iii) fraud; (iv) tortious interference; and (v) unjust enrichment. At this stage, no defendant has asserted a counter-claim against SurgePays. The case is still at the early pleadings stage. SurgePays filed a Second Amended Petition on January 27, 2023. Defendants Fina, Blue Skies, True Wireless, and Government Consulting Solutions filed a Motion to Dismiss on March 10, 2023. It is SurgePays’ present intent to vigorously prosecute this case. At this early stage, no attempts at settlement have been made. |
Stockholders_ Equity
Stockholders’ Equity | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Stockholders’ Equity | Note 9 – Stockholders’ Equity At June 30, 2023, the Company had one (1) class of stock: Common Stock - 500,000,000 - Par value - $ 0.001 - Voting at 1 vote per share In 2022, all Series A, Preferred stockholders, representing 260,000 1,300,000 0 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Securities and Incentive Plan In March 2023, the Company’s shareholders approved the 2022 Plan (the “Plan”) initially approved, authorized and adopted by the Board of Directors in August 2022. The Plan provides for the following: 1. 3,500,000 2. An annual increase on the first day of each calendar year beginning January 1, 2023 and ending on January 31, 2031 equal to the lesser of: a. 10 b. Such smaller amount of common stock as determined by the Board of Directors. 3. The shares may be issued as follows to directors, officers, employees, and consultants: a. Distribution equivalent rights b. Incentive share options c. Non-qualified share options d. Performance unit awards e. Restricted share awards f. Restricted share unit awards g. Share appreciation rights h. Tandem share appreciation rights i. Unrestricted share awards See the proxy statement filed with the SEC on January 19, 2023 for a complete detail of the Plan. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Equity Transactions for the Six Months Ended June 30, 2023 Stock Issued for Services The Company issued 125,009 618,644 4.19 9.40 Exercise of Warrants The Company issued 43,814 4.73 207,240 Equity Transactions for the Year Ended December 31, 2022 Stock Issued as Direct Offering Costs The Company issued 200,000 0 Stock Issued for Acquisition of Software The Company acquired software having a fair value of $ 711,400 300,000 85,000 411,400 4.84 Exercise of Warrants (Cashless) The Company issued 147,153 498,750 0 Exercise of Warrants The Company issued 100 473 473 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Stock Options Stock option transactions for the six months ended June 30, 2023 and the year ended December 31, 2022 are summarized as follows: Schedule of Stock Option Transactions Weighted Weighted Average Average Weighted Remaining Grant Average Contractual Aggregate Date Number of Exercise Term Intrinsic Fair Stock Options Options Price (Years) Value Value 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 $ - Granted - - $ - Exercised - - Cancelled/Forfeited - - Outstanding - December 31, 2022 17,004 $ 16.00 4.16 $ - - Vested and Exercisable - December 31, 2022 6,801 $ 16.00 4.16 $ - Unvested and non-exercisable - December 31, 2022 10,203 $ 16.00 4.16 $ - Granted - - $ - Exercised - - Cancelled/Forfeited - - Outstanding - June 30, 2023 17,004 $ 16.00 3.67 $ - - Vested and Exercisable - June 30, 2023 11,902 $ 16.00 3.67 $ - Unvested and non-exercisable - June 30, 2023 5,101 $ 16.00 3.67 $ - During 2023 and 2022, 5,101 3,401 Stock-based compensation expense for the three months ended June 30, 2023 and 2022 was $ 9,294 9,294 Stock-based compensation expense for the six months ended June 30, 2023 and 2022 was $ 18,588 18,588 As of June 30, 2023, compensation cost related to the unvested options not yet recognized was $ 24,783 Weighted average period in which compensation will vest (years) 0.67 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Warrants Warrant activity for the three months ended June 30, 2023 and the year ended December 31, 2022 are summarized as follows: Schedule of Warrants Activity Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Warrants Warrants Price Term (Years) Value Outstanding - December 31, 2021 6,082,984 $ 8.68 2.93 $ - Vested and Exercisable - December 31, 2021 5,852,984 $ 8.70 2.85 $ - Unvested - December 31, 2021 230,000 $ 8.00 4.85 $ - Granted 189,000 $ 4.73 - Exercised (498,850 ) $ 6.49 - Cancelled/Forfeited (91,743 ) $ 40.02 - Outstanding - December 31, 2022 5,681,392 $ 5.05 1.85 $ 10,026,387 Vested and Exercisable - December 31, 2022 5,681,392 $ 5.05 1.85 $ 10,026,387 Unvested - December 31, 2022 - $ - - $ - Granted - $ - - Exercised (43,814 ) $ 4.73 - Cancelled/Forfeited (15,286 ) $ 24.94 - Outstanding - June 30, 2023 5,622,292 $ 5.00 1.36 $ 12,718,101 Vested and Exercisable - June 30, 2023 5,622,292 $ 5.00 1.36 $ 12,718,101 Unvested and non-exercisable - June 30, 2023 - $ - - $ - Warrant Transactions for the Year Ended December 31, 2022 Warrants Issued as Debt Issue Costs In connection with $ 1,700,000 51,000 115,404 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) 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 Expected volatility 119 120 % Expected dividends 0 % Risk free interest rate 2.45 2.80 % Warrants Issued as Interest Expense A vendor increased the amount of credit the Company had for making purchases. In consideration for the increase, the Company issued 90,000 212,608 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 Expected volatility 120 % Expected dividends 0 % Risk free interest rate 2.71 % In 2022, the Company extended the due dates of certain notes payable totaling $ 1,600,000 48,000 153,186 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 Expected volatility 116 119 % Expected dividends 0 % Risk free interest rate 4.13 4.25 % SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2023 | |
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. All data below is prior to intercompany eliminations. Segment information for the Company’s operations for the three and six months ended June 30, 2023 and 2022, are as follows: Schedule of Operating Segments 2023 2022 2023 2022 For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 Revenues Surge Phone and Torch Wireless $ 30,214,830 $ 20,068,656 $ 58,874,214 $ 34,116,686 Surge Blockchain, LLC 9,433 17,842 21,301 47,671 LogicsIQ, Inc. 2,791,585 3,631,943 5,962,430 5,925,016 Surge Fintech & ECS 2,870,585 4,286,703 5,804,931 9,057,142 Total $ 35,886,433 $ 28,005,144 $ 70,662,876 $ 49,146,515 Cost of revenues Surge Phone and Torch Wireless $ 21,127,883 $ 18,659,046 $ 42,440,138 $ 30,538,048 Surge Blockchain, LLC 45 1,500 150 1,500 LogicsIQ, Inc. 1,932,731 2,763,592 4,810,719 4,764,012 Surge Fintech & ECS 2,800,046 4,390,015 5,691,658 9,018,334 Total $ 25,860,705 $ 25,814,153 $ 52,942,665 $ 44,321,894 Operating expenses Surge Phone and Torch Wireless $ 113,296 $ 68,564 $ 162,772 $ 130,889 Surge Blockchain, LLC 2,627 52,601 2,927 52,971 LogicsIQ, Inc. 280,290 348,303 568,683 1,008,197 Surge Fintech & ECS 344,114 300,195 669,791 642,319 SurgePays, Inc. 3,082,900 2,268,866 5,408,475 4,887,934 Total $ 3,823,227 $ 3,038,529 $ 6,812,648 $ 6,722,310 Income (loss) from operations Surge Phone and Torch Wireless $ 8,973,651 $ 1,341,046 $ 16,271,304 $ 3,447,749 Surge Blockchain, LLC 6,761 (36,259 ) 18,224 (6,800 ) LogicsIQ, Inc. 578,564 520,048 583,028 152,807 Surge Fintech & ECS (273,575 ) (403,507 ) (556,518 ) (603,511 ) SurgePays, Inc. (3,082,900 ) (2,268,866 ) (5,408,475 ) (4,887,934 ) Total $ 6,202,501 $ (847,538 ) $ 10,907,563 $ (1,897,689 ) SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Segment information for the Company’s assets and liabilities at June 30, 2023 and December 31, 2022, are as follows: June 30, 2023 December 31, 2022 Total Assets Surge Phone and Torch Wireless $ 40,793,701 $ 27,239,365 Surge Blockchain, LLC (532,558 ) (550,782 ) LogicsIQ, Inc. 2,092,814 2,500,499 Surge Fintech & ECS 1,342,290 1,906,212 SurgePays, Inc. (3,752,975 ) 2,908,212 Total $ 39,943,272 $ 34,003,506 Total Liabilities Surge Phone and Torch Wireless $ 12,767,029 $ 15,484,392 Surge Blockchain, LLC 198,198 198,197 LogicsIQ, Inc. 1,635,834 2,619,521 Surge Fintech & ECS 51,518 58,919 SurgePays, Inc. 8,725,256 10,524,224 Total $ 23,377,835 $ 28,885,253 |
Installment Sale Liability
Installment Sale Liability | 6 Months Ended |
Jun. 30, 2023 | |
Installment Sale Liability | |
Installment Sale Liability | Note 11 – Installment Sale Liability Agreement In 2022, the Company executed a two-year (2) financing arrangement with Affordable Connectivity Financing (“ACF”, “Seller”) to receive up to $ 25,000,000 This agreement is based upon the Company submitting a purchase order and ACF approving the request. The Company may cancel the purchase order prior to ACF paying for the devices. The agreement may be extended by a period of one (1) year upon mutual consent Under the terms of the agreement, ACF is directly purchasing products and reselling to the Company at a markup. At December 31, 2022, the markup was 9.85 Repayment Period Each installment sale contract shall be repaid over a period of nine (9) months. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Security This arrangement is fully secured by all assets of the Company. Minimum Outstanding Balance 3 month rolling average of 70% of the installment sale credit amount Prepayment Penalty The Company is subject to a cancellation fee of 3% during the first year and 2% during the second year Administrative Fee The Company is required to pay $ 2,000 Default Rate For any unpaid amounts under this agreement, the Company is subject to a fee of 1.35% per month (16.2% annualized). Commitment Fee ACF charged a 2 5,000,000 For example, if the initial installment sale credit amount is $15,000,000, the credit availability fee would be $300,000 (2%). Any subsequent increase of $5,000,000 or more would result in an additional fee of $100,000 (2%). Commitment fees are paid over a period of 12 months as part of the Seller’s monthly invoicing Covenants At June 30, 2023 and December 31, 2022, respectively, the Company was in compliance with all of the following ratios: 1. Company adjusted EBITDA, 2. Total Leverage Ratio, 3. Fixed Charge Coverage Ratio, 4. Minimum Subscriber Base; and 5. Minimum Liquidity Additionally, the Company is required to provide various data to the vendor on a periodic basis. The Company has not received notice from the vendor regarding any instances of non-compliance. Lockbox The Company will maintain a lockbox for the benefit of the Seller. Installment Sale Liability At June 30, 2023 and December 31, 2022, the Company has recorded an installment sale liability of $ 11,349,440 13,018,184 During the three and six months ended June 30, 2023, the Company paid fees of $ 135,500 266,500 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12 – Subsequent Events On July 12, 2023, Notice of Default was provided by SurgePays, Inc. to Blue Skies Connections, LLC for failure to pay amounts due under that certain Promissory Note dated June 14, 2021 by Blue Skies Connections, LLC in favor of SurgePays, Inc. in the original principal amount of $ 176,851 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Non-Controlling Interest | Principles of Consolidation and Non-Controlling Interest 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. For entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity is allocated to owners other than the Company. The aggregate of the income or loss and corresponding equity that is not owned by us is included in Non-controlling Interests in the consolidated financial statements. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) |
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 the 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. Effective January 1, 2022, the Company executed a management agreement with Torch Wireless (“Torch”). Generally, the Company was engaged to handle the following services: ● Oversee management of the business being conducted by Torch, ● Involved in the performance of Torch’s obligations under contracts regarding its business operations and maintenance of Torch’s customer relationships, ● Assist Torch with regulatory compliance, ● Manage all billing and collection functions, including the right to collect revenues related to Torch’s business operations, as part of the agreement, Torch may not participate in this function; and ● Manage all payment functions related to the business, including the right to disburse funds, as part of the agreement, Torch may not participate in this function Torch is a provider of subsidized mobile broadband services to consumers qualifying under the federal guidelines of the U.S. Federal Communication Commission’s Affordable Connectivity Program (“ACP”). The ACP provides the Company with up to a $ 100 30 With the purchase of Torch, the Company offers subsidized mobile broadband in all fifty (50) states. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) It was determined that the Company had acquired 100 At the time of acquisition, Torch had no significant assets or liabilities. The Company paid $ 800,000 800,000 At the time of acquisition, Torch had nominal revenues and losses. As a result, and given the immaterial nature of this acquisition, the Company elected not to present any pro-forma financial information during the year ended December 31, 2022. In addition, the Company was required to pay the Sellers monthly residual payments for customers enrolled by the Company through December 31, 2022 of either $ 2 3 For the six months ended June 30, 2023 and 2022, the Company incurred expenses of $ 0 321,243 This transaction did not involve the purchase of a “significant amount of assets” as defined in the Instructions to Item 2.01 of Form 8-K. Additionally, the acquisition of Torch was not deemed to be significant at any level under SEC Regulation S-X 3.05 and did not require the presentation of any additional historical audits. For financial reporting purposes, Torch has been consolidated into the Company’s consolidated statements of financial position, results of operations, and cash flows. At June 30, 2023 and December 31, 2022 goodwill was $ 1,666,782 , respectively. There were no SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) |
Note Receivable (Sale of Former Subsidiary) | Note Receivable (Sale of Former Subsidiary) On May 7, 2021, the Company disposed of its subsidiary True Wireless, Inc. In connection with the sale, the Company received an unsecured note receivable for $ 176,851 0.6 10 7,461 Payments are scheduled as follows: Schedule of Receivables For the Year Ended December 31, 2023 (6 months) $ 52,227 2024 89,532 2025 44,766 186,525 Less: amount representing interest (9,674 ) Total $ 176,851 As of June 30, 2023, the Company believes the note is collectible. On July 12, 2023, Notice of Default was provided by SurgePays, Inc. to Blue Skies Connections, LLC for failure to pay amounts due under that certain Promissory Note dated June 14, 2021 by Blue Skies Connections, LLC in favor of SurgePays, Inc. in the original principal amount of $ 176,851 See Note 8 regarding contingencies – legal matters. |
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. See Note 10 regarding segment disclosure. The SurgePhone and Torch Wireless business segment made up approximately 83 69 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Revenues related to this business segment are 100 Accounts receivable related to these programs made up 98 96 Customers in the United States accounted for 100 |
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 six months ended June 30, 2023 and 2022, respectively, include, allowance for doubtful accounts and other receivables, inventory reserves and classifications, valuation of loss contingencies, valuation of derivative liabilities, valuation of stock-based compensation, estimated useful lives related to intangible assets, capitalized internal-use software development costs, 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 changes 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 may 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) |
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 The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: ● Level 1 – Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; ● Level 2 – Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and ● Level 3 – Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate. Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values. The Company’s financial instruments, including cash, accounts receivable, accounts payable and accrued expenses, and accounts payable and accrued expenses – related party, are carried at historical cost. At June 30, 2023 and December 31, 2022, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) ASC 825-10 “Financial Instruments” |
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 June 30, 2023 and December 31, 2022, 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 At June 30, 2023 and December 31, 2022, respectively, the Company did not experience any losses on cash balances in excess of FDIC insured limits. |
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 $ 17,525 There was bad debt expense of $ 0 Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) |
Inventory | Inventory Inventory primarily consists of tablets, cell phones and sim cards. Inventories are stated at the lower of cost or net realizable value using the average cost valuation method. There were no At June 30, 2023 and December 31, 2022, the Company had inventory of $ 18,086,916 11,186,242 Of the total inventory balance at June 30, 2023, $ 677,118 |
Impairment of Long-lived Assets including Internal Use Capitalized Software Costs | Impairment of Long-lived Assets including Internal Use Capitalized Software Costs 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 impairment losses for the three and six months ended June 30, 2023 and 2022, respectively. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) |
Internal Use Software Development Costs | Internal Use Software Development Costs We capitalize certain internal use software development costs associated with creating and enhancing internally developed software related to our technology infrastructure. These costs include personnel and related employee benefits expenses for employees who are directly associated with and who devote time to software projects, and external direct costs of materials and services consumed in developing or obtaining the software. Software development costs that do not meet the qualification for capitalization, as further discussed below, are expensed as incurred and recorded in general and administrative expenses in the consolidated results of operations. Software development activities generally consist of three stages: (i) planning stage, (ii) application and infrastructure development stage, and (iii) post implementation stage. Costs incurred in the planning and post implementation stages of software development, including costs associated with the post-configuration training and repairs and maintenance of the developed technologies, are expensed as incurred. We capitalize costs associated with software developed for internal use when the planning stage is completed, management has authorized further funding for the completion of the project, and it is probable that the project will be completed and perform as intended. Costs incurred in the application and infrastructure development stages, including significant enhancements and upgrades, are capitalized. Capitalization ends once a project is substantially complete, and the software and technologies are ready for their intended purpose. There is judgment involved in estimating the stage of development as well as estimating time allocated to a particular project. A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods. We amortize internal use software development costs using a straight-line method over a three-year estimated useful life, commencing when the software is ready for its intended use. The straight-line recognition method approximates the manner in which the expected benefit will be derived. We determined the life of internal use software based on historical software upgrades and replacement. On an ongoing basis, we assess if the estimated remaining useful lives of capitalized projects continue to be reasonable based on the remaining expected benefit and usage. If the remaining useful life of a capitalized project is revised, it is accounted for as a change in estimate and the remaining unamortized cost of the underlying asset is amortized prospectively over the updated remaining useful life. We also evaluate internal use software for abandonment and use that as a significant indicator for impairment on a quarterly basis. |
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 JUNE 30, 2023 (UNAUDITED) 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. The Company’s operating leases contained renewal options 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 regarding operating leases. |
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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation. Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts contain 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) 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 Torch, TW and LogicsIQ are satisfied when services are performed. Performance obligations for ECS and SB are satisfied at point of sale. For each of our revenue streams we only have a single performance obligation. Surge Phone Wireless (SPW) and Torch Wireless SPW and Torch Wireless are licensed to provide subsidized mobile broadband services through the ACP to qualifying low-income customers to all fifty 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. Surge Blockchain Revenues are generated through the sale of various products such as energy drinks, CBD products, and other top selling products in convenience store and bodega nationwide. At the time in which our products are sold at the store our performance obligation is considered complete. At point of sale, our web portal platform initiates an automated clearing house transaction (ACH) resulting in the recording revenue. LogicsIQ LogicsIQ, Inc. is a lead generation and case management solutions company primarily serving law firms in the mass tort industry. Revenues are earned from our lead generation retained services offerings and call center activities through CenterCom. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) 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. Effective February 1, 2023, LogicsIQ started offering call center services to existing clients. These services are similar in nature to the services CenterCom offers LogicsIQ. The total revenue from these services for the three and six months ended June 30, 2023 was $ 443,244 871,030 , respectively. 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. Surge Fintech and ECS Revenues are generated through the 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. |
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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) At June 30, 2023 and December 31, 2022, the Company had deferred revenue of $ 43,200 243,110 The following represents the Company’s disaggregation of revenues for the six months ended June 30, 2023 and 2022: Schedule of Disaggregation of Revenue from Contracts With Customers For the Six Months Ended 2023 2022 Revenue Revenue % of Revenues Revenue % of Revenues Surge Phone and Torch Wireless $ 58,874,214 83.32 % $ 34,116,686 69.42 % Surge Blockchain, LLC 21,301 0.03 % 47,671 0.10 % LogicsIQ, Inc. 5,962,430 8.44 % 5,925,016 12.06 % Surge Fintech & ECS 5,804,931 8.21 % 9,057,142 18.43 % Total Revenues $ 70,662,876 100 % $ 49,146,515 100 % |
Cost of Revenues | Cost of Revenues Cost of revenues consists of purchased telecom services including data usage and access to wireless networks. Additionally, prepaid phone cards, commissions, and advertising costs. |
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 June 30, 2023 and December 31, 2022, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related to uncertain income tax positions were recorded for the three months ended June 30, 2023 and 2022, respectively. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) For the three and six months ended June 30, 2023, the Company generated net income. The Company currently has an unapplied net operating loss carryforward (deferred tax asset), which is currently being evaluated for applicability in offsetting the current taxable net income. The Company believes the current net operating loss carryforward is in excess of any amounts of income tax that may be due. At June 30, 2023, the Company has an estimated income tax liability of $ 0 |
Investment – Former Related Party | Investment – Former Related Party On January 17, 2019, we announced the completion of an agreement to acquire a 40 Anthony N. Nuzzo, a former director and officer and the holder of approximately 10% of our voting equity, had a controlling interest in CenterCom Global. During 2022, Mr. Nuzzo passed away. See Form 8-K filed on March 24, 2022. The strategic partnership with CenterCom as a bilingual operations hub has powered our growth and revenue. CenterCom has been built to support the infrastructure required to rapidly scale in synergy and efficiency to support our sales growth, customer service and development. We account for this investment under the equity method. Investments accounted for under the equity method are recorded based upon the amount of our investment and adjusted each period for our share of the investee’s income or loss. All investments are reviewed for changes in circumstance or the occurrence of events that suggest an other than temporary event where our investment may not be recoverable. The financial information used to account for the investment is unaudited. At June 30, 2023 and December 31, 2022, our investment in CenterCom was $ 397,948 354,206 During the three months ended June 30, 2023 and 2022, we recognized a gain of $ 10,713 35,519 During the six months ended June 30, 2023 and 2022, we recognized a gain of $ 43,742 10,336 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) |
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 $ 16,528 52,524 The Company recognized $ 48,864 136,006 |
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 uses the Black-Scholes model for measuring the fair value of options. The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods. When determining fair value of stock-based compensation, 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 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Stock Warrants In connection with certain financing (debt or equity), 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 warrants issued for compensation using the Black-Scholes option pricing model as of the measurement date. However, for warrants issued that meet the definition of a derivative liability, fair value is determined based upon the use of a binomial pricing model. 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 (for services) are recorded at fair value and expensed over the requisite service period or at the date of issuance if there is not a service period. |
Basic and Diluted Earnings (Loss) per Share | Basic and Diluted Earnings (Loss) per Share 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 contingently issuable shares, common stock issuable upon the conversion of stock options and warrants (using the treasury stock method), and convertible notes. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) The following potentially dilutive equity securities outstanding as of June 30, 2023 and 2022 were as follows: Schedule of Diluted Net Income (Loss) Per Share June 30, 2023 June 30, 2022 Warrants 5,622,292 5,852,127 Stock options 11,902 6,801 Series A, convertible preferred stock - 26,000 Total common stock equivalents 5,634,194 5,884,928 Warrants and stock options included as commons stock equivalents represent those that are fully vested and exercisable. See Note 9. Based on the potential common stock equivalents noted above at June 30, 2023, the Company has sufficient authorized shares of common stock ( 500,000,000 The following table shows the computation of basic and diluted earnings per share for the three and six months ended June 30, 2023. The Company had a net loss in 2022, as a result, basic and diluted earnings per share for the three and six months ended June 30, 2022 were the same. Schedule of Earnings per Share Basic and Diluted 3 Months Ended 6 Months Ended June 30, 2023 June 30, 2023 Numerator Net income $ 5,965,992 $ 10,512,333 Denominator Weighted average shares outstanding - basic 14,191,083 14,154,163 Effect of dilutive securities (warrants) 885,383 657,622 Weighted average shares outstanding - diluted 15,076,466 14,811,785 Earnings per share - basic $ 0.42 $ 0.74 Earnings per share - diluted $ 0.40 $ 0.71 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) |
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. During the six months ended June 30, 2023 and 2022, the Company incurred expenses with related parties in the normal course of business totaling $ 83,178 6,574,076 Schedule of Related Party Expenses Related Parties June 30, 2023 June 30, 2022 321 Communications, Inc. 3 $ - $ 5,869,444 Carddawg Investments, Inc. 1 83,178 30,744 CenterCom USA, Inc. 2 - 487,578 National Relief Telecom 3 - 186,310 Total $ 83,178 $ 6,574,076 1 - represents an affiliate of our Chief Executive Officer (Kevin Brian Cox) 2 - represents an entity controlled by a former officer and director (Anthony Nuzzo), who passed away in 2022. 3 - represents an entity controlled by a former director (Jay Jones), who resigned in 2022. From time to time, the Company may use credit cards to pay corporate expenses, these credit cards are in the names of certain of the Company’s officers and directors. These amounts are insignificant. |
Recent Accounting Standards | Recent Accounting Standards Changes to accounting principles are established by the FASB in the form of Accounting Standards Updates (“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’ equity, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements issued 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) In March 2022, the Financial Accounting Standards Board (the “FASB”) issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which eliminates the accounting guidance on troubled debt restructurings (“TDRs”) for creditors in ASC 310, Receivables (Topic 310), and requires entities to provide disclosures about current period gross write-offs by year of origination. Also, ASU 2022-02 updates the requirements related to accounting for credit losses under ASC 326, Financial Instruments – Credit Losses (Topic 326), and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. ASU 2022-02 was effective for the Company January 1, 2023. The adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial statements. This guidance was adopted on January 1, 2023. The adoption of ASU 2022-02 did not have a material impact 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 material effect on the consolidated results of operations, stockholders’ equity, or cash flows. |
Organization and Nature of Op_2
Organization and Nature of Operations (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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 Nevada 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 LogicsIQ, 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 ECS Prepaid, LLC June 9, 2009 Missouri Central States Legal Services, Inc. August 1, 2003 Missouri Electronic Check Services, Inc. May 19, 1999 Missouri Torch Wireless January 29, 2019 Wyoming |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Receivables | Payments are scheduled as follows: Schedule of Receivables For the Year Ended December 31, 2023 (6 months) $ 52,227 2024 89,532 2025 44,766 186,525 Less: amount representing interest (9,674 ) Total $ 176,851 |
Schedule of Disaggregation of Revenue from Contracts With Customers | The following represents the Company’s disaggregation of revenues for the six months ended June 30, 2023 and 2022: Schedule of Disaggregation of Revenue from Contracts With Customers For the Six Months Ended 2023 2022 Revenue Revenue % of Revenues Revenue % of Revenues Surge Phone and Torch Wireless $ 58,874,214 83.32 % $ 34,116,686 69.42 % Surge Blockchain, LLC 21,301 0.03 % 47,671 0.10 % LogicsIQ, Inc. 5,962,430 8.44 % 5,925,016 12.06 % Surge Fintech & ECS 5,804,931 8.21 % 9,057,142 18.43 % Total Revenues $ 70,662,876 100 % $ 49,146,515 100 % |
Schedule of Diluted Net Income (Loss) Per Share | The following potentially dilutive equity securities outstanding as of June 30, 2023 and 2022 were as follows: Schedule of Diluted Net Income (Loss) Per Share June 30, 2023 June 30, 2022 Warrants 5,622,292 5,852,127 Stock options 11,902 6,801 Series A, convertible preferred stock - 26,000 Total common stock equivalents 5,634,194 5,884,928 |
Schedule of Earnings per Share Basic and Diluted | The following table shows the computation of basic and diluted earnings per share for the three and six months ended June 30, 2023. The Company had a net loss in 2022, as a result, basic and diluted earnings per share for the three and six months ended June 30, 2022 were the same. Schedule of Earnings per Share Basic and Diluted 3 Months Ended 6 Months Ended June 30, 2023 June 30, 2023 Numerator Net income $ 5,965,992 $ 10,512,333 Denominator Weighted average shares outstanding - basic 14,191,083 14,154,163 Effect of dilutive securities (warrants) 885,383 657,622 Weighted average shares outstanding - diluted 15,076,466 14,811,785 Earnings per share - basic $ 0.42 $ 0.74 Earnings per share - diluted $ 0.40 $ 0.71 |
Schedule of Related Party Expenses | Schedule of Related Party Expenses Related Parties June 30, 2023 June 30, 2022 321 Communications, Inc. 3 $ - $ 5,869,444 Carddawg Investments, Inc. 1 83,178 30,744 CenterCom USA, Inc. 2 - 487,578 National Relief Telecom 3 - 186,310 Total $ 83,178 $ 6,574,076 1 - represents an affiliate of our Chief Executive Officer (Kevin Brian Cox) 2 - represents an entity controlled by a former officer and director (Anthony Nuzzo), who passed away in 2022. 3 - represents an entity controlled by a former director (Jay Jones), who resigned in 2022. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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 June 30, 2023 December 31, 2022 Lives (Years) Computer equipment and software $ 1,006,286 $ 1,006,286 3 5 Furniture and fixtures 82,752 82,752 5 7 1,089,038 1,089,038 Less: accumulated depreciation/amortization 586,431 445,665 Property and equipment - net $ 502,607 $ 643,373 |
Intangibles (Tables)
Intangibles (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangibles consisted of the following: Schedule of Intangible Assets Estimated Useful Type June 30, 2023 December 31, 2022 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 (3,300,296 ) (2,973,543 ) Intangibles - net $ 2,453,224 $ 2,779,977 |
Schedule of Estimated Amortization Expenses | Estimated amortization expense for each of the five (5) succeeding years is as follows: Schedule of Estimated Amortization Expenses For the Year Ended December 31: 2023 (6 Months) 326,753 2024 653,507 2025 653,507 2026 653,507 2027 165,950 Total $ 2,453,224 |
Internal Use Software Develop_2
Internal Use Software Development Costs (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment [Line Items] | |
Schedule of Intangible Assets | Intangibles consisted of the following: Schedule of Intangible Assets Estimated Useful Type June 30, 2023 December 31, 2022 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 (3,300,296 ) (2,973,543 ) Intangibles - net $ 2,453,224 $ 2,779,977 |
Schedule of Estimated Amortization Expenses | Estimated amortization expense for each of the five (5) succeeding years is as follows: Schedule of Estimated Amortization Expenses For the Year Ended December 31: 2023 (6 Months) 326,753 2024 653,507 2025 653,507 2026 653,507 2027 165,950 Total $ 2,453,224 |
Software and Software Development Costs [Member] | |
Property, Plant and Equipment [Line Items] | |
Schedule of Intangible Assets | Internal Use Software Development Costs consisted of the following: Schedule of Intangible Assets Estimated Useful Type June 30, 2023 December 31, 2022 Life (Years) Internal Use Software Development Costs $ 668,484 $ 387,180 3 Less: accumulated amortization 64,530 - Internal Use Software Development Costs - net $ 603,954 $ 387,180 |
Schedule of Estimated Amortization Expenses | Estimated amortization expense is as follows for the years ended December 31: Schedule of Estimated Amortization Expenses 2023 (6 Months) 64,530 2024 222,828 2025 222,828 2026 93,768 Total $ 603,954 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Short-Term Debt [Line Items] | |
Schedule of Debt Maturities | The following represents the maturities of the Company’s various debt arrangements for each of the five (5) succeeding years and thereafter as follows: Schedule of Debt Maturities For the Year Ended December 31, Notes Payable - Related Parties Notes Payable - SBA Government Note Payable Total 2023 (6 Months) $ 1,108,150 $ - $ 21,078 $ 1,129,228 2024 4,026,413 - 42,455 4,068,868 2025 - - 10,680 10,680 2026 - - - - 2027 - - - - Thereafter - 465,633 - 465,633 Total $ 5,134,563 $ 465,633 $ 74,213 $ 5,674,409 |
Notes Payable [Member] | |
Short-Term Debt [Line Items] | |
Schedule of Notes Payable | Notes Payable Schedule of Notes Payable 1 2 3 4 Terms Notes Payable Notes Payable Notes Payable Note Payable Total Issuance dates of notes April/May 2022 April/June 2022 March 2022 2022 Maturity date October/November 2022 January/February 2023 March 2023 2025 Interest rate 19 % 24 % 19 % 1 % Default interest rate 26 % N/A 26 % 0 % Collateral Unsecured All assets Unsecured Unsecured Warrants issued as debt discount/issue costs 36,000 N/A 15,000 N/A Balance - December 31, 2021 $ - $ - $ - $ - $ - Gross proceeds 1,200,000 5,000,000 500,000 - 6,700,000 Reclassification from SBA - PPP note payable - - - 126,418 126,418 Repayments (100,000 ) (5,000,000 ) (100,000 ) (31,251 ) (5,231,251 ) Debt issue costs (76,451 ) - (38,953 ) - (115,404 ) Amortization of debt issue costs 76,451 - 38, 953 - 115,404 Balance - December 31, 2022 1,100,000 - 400,000 95,167 1,595,167 Repayments (1,100,000 ) - (400,000 ) (20,954 ) (1,520,954 ) Balance - June 30, 2023 $ - $ - $ - $ 74,213 $ 74,213 1 - These notes were issued with 36,000 3 2 - The Company executed a $ 5,000,000 80 3 - These notes were issued with 15,000 3 12,000 3 400,000 400,000 36,204 436,204 100,000 400,000 4 – See Notes Payable – SBA Government Note Summary 1. |
Related Party [Member] | |
Short-Term Debt [Line Items] | |
Schedule of Notes Payable | Notes Payable – Related Parties Schedule of Notes Payable 1 2 Note Payable Note Payable Terms Related Party Related Party Total Issuance dates of notes Various August 2021 Maturity date December 31, 2023 and December 31, 2024 August 2031 Interest rate 10% 10% Collateral Unsecured Unsecured Conversion price N/A N/A Balance - December 31, 2021 $ 5,593,431 $ 467,385 6,060,816 Conversion of debt into common stock (1,086,413 ) - (1,086,413 ) Reclass of accrued interest to note payable 627,545 - 627,545 Balance - December 31, 2022 5,134,563 467,385 5,601,948 Less: short term 1,108,150 - 1,108,150 Long term $ 4,026,413 $ 467,385 $ 4,493,798 Balance - December 31, 2022 $ 5,134,563 $ 467,385 $ 5,601,948 Repayments - (467,385 ) (467,385 ) Balance - June 30, 2023 5,134,563 - 5,134,563 Less: short term 1,108,150 - 1,108,150 Long term $ 4,026,413 $ - $ 4,026,413 1 Activity is with the Company’s Chief Executive Officer and Board Member (Kevin Brian Cox). Of the total, $ 1,108,150 4,026,413 In 2022, the Company included $ 627,545 270,745 4.01 1,086,413 1,086,413 2 Activity is with David May, who is a Board Member. The note of $ 467,385 63,641 531,026 |
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 Total Issuance dates of SBA loans April 2020 May 2020 July 2020 March 2021 Term 18 months 30 30 5 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 Balance - December 31, 2021 $ 126,418 $ 150,000 $ 336,600 $ 518,167 $ 1,131,185 Forgiveness of loan - - - (518,167 ) (518,167 ) 1 Repayments - (4,078 ) (7,676 ) - (11,754 ) Reclassification to note payable (126,418 ) - - - (126,418 ) 2 Balance - December 31, 2022 - 145,922 328,924 - 474,846 Repayments - (2,223 ) (6,990 ) - (9,213 ) Balance - June 30, 2023 $ - $ 143,699 $ 321,934 $ - $ 465,633 1 – During 2022, the Company received a forgiveness on a PPP loan totaling $ 524,143 518,167 5,976 2 – 377,743 371,664 6,079 Monthly payments are $3,566/month |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Lease Expense | The tables below present information regarding the Company’s operating lease assets and liabilities at June 30, 2023 and 2022, respectively: Schedule of Lease Expense For the Six Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 Operating Leases $ 21,494 $ 34,294 Interest on lease liabilities 10,648 11,598 Total net lease cost $ 32,142 $ 45,892 |
Schedule of Supplemental Information Related to Leases | Supplemental balance sheet information related to leases was as follows: Schedule of Supplemental Information Related to Leases June 30, 2023 December 31, 2022 Operating leases Operating lease ROU assets - net $ 409,858 $ 431,352 Operating lease liabilities - current 41,290 39,490 Operating lease liabilities - non-current 378,284 399,413 Total operating lease liabilities $ 419,574 $ 438,903 |
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 Six Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 Cash paid for amounts included in measurement of lease liabilities Operating cash flows from operating leases $ 19,329 $ 30,948 ROU assets obtained in exchange for lease liabilities Operating leases $ - $ - Weighted average remaining lease term (in years) Operating leases 7.00 7.99 Weighted average discount rate Operating leases 5 % 5 % |
Schedule of Future Minimum Payments | Future minimum lease payments for the years ended December 31: Schedule of Future Minimum Payments 2023 (6 Months) 32,412 2024 61,876 2025 63,460 Thereafter 347,083 Total lease payments 504,831 Less: amount representing interest (85,257 ) Total lease obligations $ 419,574 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Schedule of Stock Option Transactions | Stock option transactions for the six months ended June 30, 2023 and the year ended December 31, 2022 are summarized as follows: Schedule of Stock Option Transactions Weighted Weighted Average Average Weighted Remaining Grant Average Contractual Aggregate Date Number of Exercise Term Intrinsic Fair Stock Options Options Price (Years) Value Value 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 $ - Granted - - $ - Exercised - - Cancelled/Forfeited - - Outstanding - December 31, 2022 17,004 $ 16.00 4.16 $ - - Vested and Exercisable - December 31, 2022 6,801 $ 16.00 4.16 $ - Unvested and non-exercisable - December 31, 2022 10,203 $ 16.00 4.16 $ - Granted - - $ - Exercised - - Cancelled/Forfeited - - Outstanding - June 30, 2023 17,004 $ 16.00 3.67 $ - - Vested and Exercisable - June 30, 2023 11,902 $ 16.00 3.67 $ - Unvested and non-exercisable - June 30, 2023 5,101 $ 16.00 3.67 $ - |
Schedule of Warrants Activity | Warrant activity for the three months ended June 30, 2023 and the year ended December 31, 2022 are summarized as follows: Schedule of Warrants Activity Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Warrants Warrants Price Term (Years) Value Outstanding - December 31, 2021 6,082,984 $ 8.68 2.93 $ - Vested and Exercisable - December 31, 2021 5,852,984 $ 8.70 2.85 $ - Unvested - December 31, 2021 230,000 $ 8.00 4.85 $ - Granted 189,000 $ 4.73 - Exercised (498,850 ) $ 6.49 - Cancelled/Forfeited (91,743 ) $ 40.02 - Outstanding - December 31, 2022 5,681,392 $ 5.05 1.85 $ 10,026,387 Vested and Exercisable - December 31, 2022 5,681,392 $ 5.05 1.85 $ 10,026,387 Unvested - December 31, 2022 - $ - - $ - Granted - $ - - Exercised (43,814 ) $ 4.73 - Cancelled/Forfeited (15,286 ) $ 24.94 - Outstanding - June 30, 2023 5,622,292 $ 5.00 1.36 $ 12,718,101 Vested and Exercisable - June 30, 2023 5,622,292 $ 5.00 1.36 $ 12,718,101 Unvested and non-exercisable - June 30, 2023 - $ - - $ - |
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 Expected volatility 119 120 % Expected dividends 0 % Risk free interest rate 2.45 2.80 % |
Warrant Four [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 Expected volatility 120 % Expected dividends 0 % Risk free interest rate 2.71 % |
Warrant Five [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 Expected volatility 116 119 % Expected dividends 0 % Risk free interest rate 4.13 4.25 % |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Operating Segments | Segment information for the Company’s operations for the three and six months ended June 30, 2023 and 2022, are as follows: Schedule of Operating Segments 2023 2022 2023 2022 For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 Revenues Surge Phone and Torch Wireless $ 30,214,830 $ 20,068,656 $ 58,874,214 $ 34,116,686 Surge Blockchain, LLC 9,433 17,842 21,301 47,671 LogicsIQ, Inc. 2,791,585 3,631,943 5,962,430 5,925,016 Surge Fintech & ECS 2,870,585 4,286,703 5,804,931 9,057,142 Total $ 35,886,433 $ 28,005,144 $ 70,662,876 $ 49,146,515 Cost of revenues Surge Phone and Torch Wireless $ 21,127,883 $ 18,659,046 $ 42,440,138 $ 30,538,048 Surge Blockchain, LLC 45 1,500 150 1,500 LogicsIQ, Inc. 1,932,731 2,763,592 4,810,719 4,764,012 Surge Fintech & ECS 2,800,046 4,390,015 5,691,658 9,018,334 Total $ 25,860,705 $ 25,814,153 $ 52,942,665 $ 44,321,894 Operating expenses Surge Phone and Torch Wireless $ 113,296 $ 68,564 $ 162,772 $ 130,889 Surge Blockchain, LLC 2,627 52,601 2,927 52,971 LogicsIQ, Inc. 280,290 348,303 568,683 1,008,197 Surge Fintech & ECS 344,114 300,195 669,791 642,319 SurgePays, Inc. 3,082,900 2,268,866 5,408,475 4,887,934 Total $ 3,823,227 $ 3,038,529 $ 6,812,648 $ 6,722,310 Income (loss) from operations Surge Phone and Torch Wireless $ 8,973,651 $ 1,341,046 $ 16,271,304 $ 3,447,749 Surge Blockchain, LLC 6,761 (36,259 ) 18,224 (6,800 ) LogicsIQ, Inc. 578,564 520,048 583,028 152,807 Surge Fintech & ECS (273,575 ) (403,507 ) (556,518 ) (603,511 ) SurgePays, Inc. (3,082,900 ) (2,268,866 ) (5,408,475 ) (4,887,934 ) Total $ 6,202,501 $ (847,538 ) $ 10,907,563 $ (1,897,689 ) SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Segment information for the Company’s assets and liabilities at June 30, 2023 and December 31, 2022, are as follows: June 30, 2023 December 31, 2022 Total Assets Surge Phone and Torch Wireless $ 40,793,701 $ 27,239,365 Surge Blockchain, LLC (532,558 ) (550,782 ) LogicsIQ, Inc. 2,092,814 2,500,499 Surge Fintech & ECS 1,342,290 1,906,212 SurgePays, Inc. (3,752,975 ) 2,908,212 Total $ 39,943,272 $ 34,003,506 Total Liabilities Surge Phone and Torch Wireless $ 12,767,029 $ 15,484,392 Surge Blockchain, LLC 198,198 198,197 LogicsIQ, Inc. 1,635,834 2,619,521 Surge Fintech & ECS 51,518 58,919 SurgePays, Inc. 8,725,256 10,524,224 Total $ 23,377,835 $ 28,885,253 |
Schedule of Subsidiaries (Detai
Schedule of Subsidiaries (Details) | 6 Months Ended |
Jun. 30, 2023 | |
Entity incorporation, state or country code | NV |
Surge Pays, Inc. [Member] | |
Name of subsidiary | SurgePays, Inc. |
Incorporation date | Aug. 18, 2006 |
Entity incorporation, state or country code | NV |
KSIX Media, Inc. [Member] | |
Name of subsidiary | KSIX Media, Inc. |
Incorporation date | Nov. 05, 2014 |
Entity incorporation, state or country code | NV |
KSIX, LLC [Member] | |
Name of subsidiary | KSIX, LLC |
Incorporation date | Sep. 14, 2011 |
Entity incorporation, state or country code | NV |
Surge Blockchain, LLC [Member] | |
Name of subsidiary | Surge Blockchain, LLC |
Incorporation date | Jan. 29, 2009 |
Entity incorporation, state or country code | NV |
Injury Survey, LLC [Member] | |
Name of subsidiary | Injury Survey, LLC |
Incorporation date | Jul. 28, 2020 |
Entity incorporation, state or country code | NV |
DigitizeIQ, LLC [Member] | |
Name of subsidiary | DigitizeIQ, LLC |
Incorporation date | Jul. 23, 2014 |
Entity incorporation, state or country code | IL |
LogicsIQ, Inc [Member] | |
Name of subsidiary | LogicsIQ, Inc. |
Incorporation date | Oct. 02, 2018 |
Entity incorporation, state or country code | NV |
Surge Payments, LLC [Member] | |
Name of subsidiary | Surge Payments, LLC |
Incorporation date | Dec. 17, 2018 |
Entity incorporation, state or country code | NV |
SurgePhone Wireless, LLC [Member] | |
Name of subsidiary | SurgePhone Wireless, LLC |
Incorporation date | Aug. 29, 2019 |
Entity incorporation, state or country code | NV |
SurgePays Fintech, Inc [Member] | |
Name of subsidiary | SurgePays Fintech, Inc. |
Incorporation date | Aug. 22, 2019 |
Entity incorporation, state or country code | NV |
ECS Prepaid, LLC [Member] | |
Name of subsidiary | ECS Prepaid, LLC |
Incorporation date | Jun. 09, 2009 |
Entity incorporation, state or country code | MO |
Central States Legal Services, Inc. [Member] | |
Name of subsidiary | Central States Legal Services, Inc. |
Incorporation date | Aug. 01, 2003 |
Entity incorporation, state or country code | MO |
Electronic Check Services, Inc. [Member] | |
Name of subsidiary | Electronic Check Services, Inc. |
Incorporation date | May 19, 1999 |
Entity incorporation, state or country code | MO |
Torch Wireless [Member] | |
Name of subsidiary | Torch Wireless |
Incorporation date | Jan. 29, 2019 |
Entity incorporation, state or country code | WY |
Organization and Nature of Op_3
Organization and Nature of Operations (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||
Net income | $ 5,965,992 | $ 4,546,341 | $ (973,037) | $ (1,212,334) | $ 10,512,333 | $ (2,185,371) | ||
Net cash provided by operations | 224,060 | (3,148,073) | ||||||
Accumulated deficit | 25,291,773 | 25,291,773 | $ 35,804,106 | |||||
Stockholders equity | 16,565,437 | $ 9,980,770 | $ 2,172,399 | $ 2,354,589 | 16,565,437 | $ 2,172,399 | 5,118,253 | $ 3,551,321 |
Working capital | 15,256,513 | 15,256,513 | ||||||
Cash on hand | $ 5,188,098 | $ 5,188,098 | $ 7,035,654 |
Schedule of Receivables (Detail
Schedule of Receivables (Details) - USD ($) | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Accounting Policies [Abstract] | |||
2023 (9 months) | $ 52,227 | ||
2024 | 89,532 | ||
2025 | 44,766 | ||
Receivables, gross | 186,525 | ||
Less: amount representing interest | (9,674) | ||
Total | $ 176,851 | $ 176,851 | $ 176,851 |
Schedule of Disaggregation of R
Schedule of Disaggregation of Revenue from Contracts With Customers (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Total revenue | $ 35,886,433 | $ 28,005,144 | $ 70,662,876 | $ 49,146,515 |
Percentage of revenues | 100% | 100% | 100% | 100% |
Surge Phone and Torck Wireless [Member] | ||||
Total revenue | $ 58,874,214 | $ 34,116,686 | ||
Percentage of revenues | 83.32% | 69.42% | 83.32% | 69.42% |
Surge Blockchain, LLC [Member] | ||||
Total revenue | $ 21,301 | $ 47,671 | ||
Percentage of revenues | 0.03% | 0.10% | 0.03% | 0.10% |
LogicsIQ, Inc [Member] | ||||
Total revenue | $ 5,962,430 | $ 5,925,016 | ||
Percentage of revenues | 8.44% | 12.06% | 8.44% | 12.06% |
Surge Fintech and ECS [Member] | ||||
Total revenue | $ 5,804,931 | $ 9,057,142 | ||
Percentage of revenues | 8.21% | 18.43% | 8.21% | 18.43% |
Schedule of Diluted Net Income
Schedule of Diluted Net Income (Loss) Per Share (Details) - shares | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents | 5,634,194 | 5,884,928 | |
Common Stock Warrants [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents | [1] | 5,622,292 | 5,852,127 |
Share-Based Payment Arrangement, Option [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents | [2] | 11,902 | 6,801 |
Series A Preferred Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents | 26,000 | ||
[1]- represents an entity controlled by a former officer and director (Anthony Nuzzo), who passed away in 2022.[2]- represents an entity controlled by a former director (Jay Jones), who resigned in 2022. |
Schedule of Earnings per Share
Schedule of Earnings per Share Basic and Diluted (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator | ||||||
Net income | $ 5,965,992 | $ 4,546,341 | $ (973,037) | $ (1,212,334) | $ 10,512,333 | $ (2,185,371) |
Denominator | ||||||
Weighted average shares outstanding - basic | 14,191,083 | 12,268,669 | 14,154,163 | 12,166,817 | ||
Effect of dilutive securities (warrants) | 885,383 | 657,622 | ||||
Weighted average shares outstanding - diluted | 15,076,466 | 12,268,669 | 14,811,785 | 12,166,817 | ||
Earnings per share - basic | $ 0.42 | $ (0.08) | $ 0.74 | $ (0.18) | ||
Earnings per share - diluted | $ 0.40 | $ (0.08) | $ 0.71 | $ (0.18) |
Schedule of Related Party Expen
Schedule of Related Party Expenses (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | ||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | $ 83,178 | $ 6,574,076 | |
Three Two One Communications Inc [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | [1] | 5,869,444 | |
Carddawg Investments Inc [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | [2] | 83,178 | 30,744 |
Center Com U S A Inc [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | [3] | 487,578 | |
National Relief Telecom [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | [1] | $ 186,310 | |
[1]- represents an entity controlled by a former director (Jay Jones), who resigned in 2022.[2]- represents an affiliate of our Chief Executive Officer (Kevin Brian Cox)[3]- represents an entity controlled by a former officer and director (Anthony Nuzzo), who passed away in 2022. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Jul. 12, 2023 | Mar. 31, 2023 | Jan. 17, 2019 | |
Product Information [Line Items] | ||||||||
Reimbursement cost | $ 100 | |||||||
Reimbursement cost per customer | 30 | |||||||
Payments to acquire businesses | $ 800,000 | |||||||
Goodwill | $ 1,666,782 | 1,666,782 | $ 1,666,782 | |||||
Expenses incurred to residual payments | 0 | 321,243 | ||||||
Impairment losses | 0 | 0 | ||||||
Note receivable | 176,851 | 176,851 | 176,851 | $ 176,851 | ||||
Insured by FDIC | 250,000 | 250,000 | ||||||
Allowance for doubtful accounts | $ 17,525 | 17,525 | 17,525 | |||||
Bad debt expense | 0 | 0 | ||||||
Provision for inventory obsolescence | 0 | 0 | ||||||
Inventory, net | 18,086,916 | 18,086,916 | 11,186,242 | |||||
Revenues | 35,886,433 | 28,005,144 | 70,662,876 | 49,146,515 | ||||
Deferred revenue | 43,200 | 43,200 | 243,110 | |||||
Income tax liability | 0 | 0 | ||||||
Investments | 397,948 | 397,948 | $ 354,206 | |||||
Gain on investment | 10,713 | 35,519 | 43,742 | 10,336 | ||||
Advertising expenses | $ 16,528 | $ 52,524 | $ 48,864 | 136,006 | ||||
Authorized shares | 500,000,000 | 500,000,000 | 500,000,000 | |||||
Expenses with related parties | $ 83,178 | $ 6,574,076 | ||||||
Deposits [Member] | ||||||||
Product Information [Line Items] | ||||||||
Inventory, net | $ 677,118 | $ 677,118 | ||||||
Customer Concentration Risk [Member] | Surge Phone and Torck Wireless [Member] | Revenue Benchmark [Member] | ||||||||
Product Information [Line Items] | ||||||||
Concentrations risk percentage | 83% | 69% | ||||||
Customer Concentration Risk [Member] | Federal Communications Commission [Member] | Revenue Benchmark [Member] | ||||||||
Product Information [Line Items] | ||||||||
Concentrations risk percentage | 100% | |||||||
Customer Concentration Risk [Member] | Federal Communications Commission [Member] | Accounts Receivable [Member] | ||||||||
Product Information [Line Items] | ||||||||
Concentrations risk percentage | 98% | 96% | ||||||
True Wireless, Inc. [Member] | ||||||||
Product Information [Line Items] | ||||||||
Note receivable | $ 176,851 | $ 176,851 | ||||||
Interest rate | 60% | 60% | ||||||
Default interest rate | 1,000% | |||||||
Repayment of principal and interest | $ 7,461 | |||||||
Blue Skies Connections L L C [Member] | Subsequent Event [Member] | ||||||||
Product Information [Line Items] | ||||||||
Note receivable | $ 176,851 | |||||||
Logics IQ [Member] | ||||||||
Product Information [Line Items] | ||||||||
Revenues | $ 443,244 | 871,030 | ||||||
Customer One [Member] | ||||||||
Product Information [Line Items] | ||||||||
Residual payments | 2 | |||||||
Customer Two [Member] | ||||||||
Product Information [Line Items] | ||||||||
Residual payments | $ 3 | |||||||
Customer [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member] | ||||||||
Product Information [Line Items] | ||||||||
Concentrations risk percentage | 100% | |||||||
Torch Wireless Inc [Member] | ||||||||
Product Information [Line Items] | ||||||||
Payments to acquire businesses | $ 800,000 | |||||||
Goodwill | $ 800,000 | $ 800,000 | ||||||
CenterCom Global [Member] | ||||||||
Product Information [Line Items] | ||||||||
Equity method investment ownership percentage | 40% | |||||||
Torch Wireless Inc [Member] | ||||||||
Product Information [Line Items] | ||||||||
Percentage of business acquisition | 100% | 100% |
Schedule of Property and Equipm
Schedule of Property and Equipment (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Computer Equipment and Software | $ 1,006,286 | $ 1,006,286 |
Furniture and Fixtures | 82,752 | 82,752 |
Property and equipment, gross | 1,089,038 | 1,089,038 |
Less: accumulated depreciation/amortization | 586,431 | 445,665 |
Property and equipment, net | $ 502,607 | $ 643,373 |
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 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |||||
Software acquire fair value | $ 711,400 | $ 711,400 | $ 711,400 | ||
Payments for software | $ 300,000 | ||||
Purchase of assets, shares | 85,000 | ||||
Purchase of assets, value | $ 411,400 | ||||
Price per share | $ 4.84 | $ 4.84 | $ 4.84 | ||
Depreciation expense | $ 70,383 | $ 28,184 | $ 140,766 | $ 35,875 |
Schedule of Intangible Assets (
Schedule of Intangible Assets (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
Internal Use Software Development Costs | $ 5,753,520 | $ 5,753,520 |
Internal Use Software Development Costs | (3,300,296) | (2,973,543) |
Internal Use Software Development Costs | 2,453,224 | 2,779,977 |
Software and Software Development Costs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Internal Use Software Development Costs | 668,484 | 387,180 |
Internal Use Software Development Costs | 64,530 | |
Internal Use Software Development Costs | $ 603,954 | 387,180 |
Estimated Useful Life (Years) | 3 years | |
Computer Software, Intangible Asset [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Internal Use Software Development Costs | $ 4,286,402 | 4,286,402 |
Weighted average remaining useful lives | 7 years | |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Internal Use Software Development Costs | $ 617,474 | 617,474 |
Weighted average remaining useful lives | 15 years | |
ECS Membership Agreement [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Internal Use Software Development Costs | $ 465,000 | 465,000 |
Weighted average remaining useful lives | 1 year | |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Internal Use Software Development Costs | $ 201,389 | 201,389 |
Weighted average remaining useful lives | 2 years | |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Internal Use Software Development Costs | $ 183,255 | $ 183,255 |
Weighted average remaining useful lives | 5 years |
Schedule of Estimated Amortizat
Schedule of Estimated Amortization Expenses (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
2023 (6 Months) | $ 326,753 | |
2024 | 653,507 | |
2025 | 653,507 | |
2026 | 653,507 | |
2027 | 165,950 | |
Total | 2,453,224 | $ 2,779,977 |
Software and Software Development Costs [Member] | ||
Property, Plant and Equipment [Line Items] | ||
2023 (6 Months) | 64,530 | |
2024 | 222,828 | |
2025 | 222,828 | |
2026 | 93,768 | |
Total | $ 603,954 | $ 387,180 |
Intangibles (Details Narrative)
Intangibles (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 163,377 | $ 163,377 | $ 326,753 | $ 326,753 |
Internal Use Software Develop_3
Internal Use Software Development Costs (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Property, Plant and Equipment [Line Items] | ||||
Amortization of internal use software development costs | $ 32,265 | $ 64,530 | ||
Software and Software Development Costs [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Additional costs | $ 281,304 | |||
Estimated Useful Life (Years) | 3 years | 3 years |
Schedule of Notes Payable (Deta
Schedule of Notes Payable (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Dec. 31, 2022 | |||
Short-Term Debt [Line Items] | ||||
Beginning Balance | $ 474,846 | $ 1,131,185 | ||
Forgiveness of loan | [1] | (518,167) | ||
Repayments | (9,213) | (11,754) | ||
Reclassification to note payable | [2] | (126,418) | ||
Ending Balance | 465,633 | 474,846 | ||
Long-Term Debt | $ 5,674,409 | |||
Warrants issued as discount/issue costs | 12,000 | |||
Ending Balance | $ 400,000 | |||
Notes Payable One [Member] | ||||
Short-Term Debt [Line Items] | ||||
Warrants issued as discount/issue costs | 36,000 | |||
Notes Payable Three [Member] | ||||
Short-Term Debt [Line Items] | ||||
Warrants issued as discount/issue costs | 15,000 | |||
Repayments | $ (400,000) | |||
Related Party [Member] | ||||
Short-Term Debt [Line Items] | ||||
Beginning Balance | 5,601,948 | 6,060,816 | ||
Repayments | (467,385) | |||
Ending Balance | 5,134,563 | 5,601,948 | ||
[custom:ConversionOfDebtIntoCommonStock] | (1,086,413) | |||
[custom:ReclassOfAccruedInterestToNotePayable] | 627,545 | |||
Short-Term Debt | 1,108,150 | 1,108,150 | ||
Long-Term Debt | 4,026,413 | 4,493,798 | ||
Nonrelated Party [Member] | ||||
Short-Term Debt [Line Items] | ||||
Repayments | (5,231,251) | |||
Long-Term Debt | 74,213 | |||
Beginning Balance | 1,595,167 | |||
Gross proceeds | 6,700,000 | |||
Reclassification from SBA - PPP note payable | 126,418 | |||
Debt issue costs | (115,404) | |||
Debt issue costs | 115,404 | |||
Amortization of debt issue costs | [3] | 115,404 | ||
Repayments | (1,520,954) | |||
Ending Balance | $ 74,213 | 1,595,167 | ||
Nonrelated Party [Member] | Notes Payable One [Member] | ||||
Short-Term Debt [Line Items] | ||||
Issuance dates of notes | [4] | April/May 2022 | ||
Maturity date | [4] | October/November 2022 | ||
Interest rate | [4] | 19% | ||
Collateral | [4] | Unsecured | ||
Repayments | [4] | (100,000) | ||
Default interest rate | [4] | 26% | ||
Warrants issued as discount/issue costs | [4] | 36,000 | ||
Beginning Balance | [4] | $ 1,100,000 | ||
Gross proceeds | [4] | 1,200,000 | ||
Reclassification from SBA - PPP note payable | [4] | |||
Debt issue costs | [4] | (76,451) | ||
Debt issue costs | [4] | 76,451 | ||
Amortization of debt issue costs | [4] | 76,451 | ||
Repayments | [4] | (1,100,000) | ||
Ending Balance | [4] | 1,100,000 | ||
Nonrelated Party [Member] | Notes Payable Two [Member] | ||||
Short-Term Debt [Line Items] | ||||
Issuance dates of notes | [5] | April/June 2022 | ||
Maturity date | [5] | January/February 2023 | ||
Interest rate | [5] | 24% | ||
Collateral | [5] | All assets | ||
Repayments | [3] | (100,000) | ||
Beginning Balance | [5] | |||
Gross proceeds | [5] | 5,000,000 | ||
Reclassification from SBA - PPP note payable | [5] | |||
Debt issue costs | [5] | |||
Debt issue costs | [5] | |||
Amortization of debt issue costs | [5] | |||
Repayments | [5] | |||
Ending Balance | [5] | |||
Nonrelated Party [Member] | Notes Payable Three [Member] | ||||
Short-Term Debt [Line Items] | ||||
Issuance dates of notes | [3] | March 2022 | ||
Maturity date | [3] | March 2023 | ||
Interest rate | [3] | 19% | ||
Collateral | [3] | Unsecured | ||
Repayments | [5] | (5,000,000) | ||
Default interest rate | [3] | 26% | ||
Warrants issued as discount/issue costs | [3] | 15,000 | ||
Beginning Balance | [3] | $ 400,000 | ||
Gross proceeds | [3] | 500,000 | ||
Reclassification from SBA - PPP note payable | [3] | |||
Debt issue costs | [3] | (38,953) | ||
Debt issue costs | [3] | 38,953 | ||
Amortization of debt issue costs | [3] | 38 | ||
Repayments | [3] | (400,000) | ||
Ending Balance | [3] | 400,000 | ||
Nonrelated Party [Member] | Notes Payable Four [Member] | ||||
Short-Term Debt [Line Items] | ||||
Issuance dates of notes | [6] | 2022 | ||
Maturity date | [6] | 2025 | ||
Interest rate | [6] | 100% | ||
Repayments | [6] | (31,251) | ||
Default interest rate | [6] | 0% | ||
Beginning Balance | [6] | $ 95,167 | ||
Gross proceeds | [6] | |||
Reclassification from SBA - PPP note payable | [6] | 126,418 | ||
Amortization of debt issue costs | [6] | |||
Repayments | [6] | (20,954) | ||
Ending Balance | [6] | $ 74,213 | 95,167 | |
Nonrelated Party [Member] | Notes Payable [Member] | ||||
Short-Term Debt [Line Items] | ||||
Collateral | Unsecured | |||
Nonrelated Party [Member] | Paycheck Protection Program And Economic Injury Disaster Loan [Member] | ||||
Short-Term Debt [Line Items] | ||||
Debt issue costs | ||||
Debt issue costs | ||||
Chief Executive Officer [Member] | Related Party [Member] | ||||
Short-Term Debt [Line Items] | ||||
Issuance dates of notes | [7] | Various | ||
Maturity date | [7] | December 31, 2023 and December 31, 2024 | ||
Interest rate | [7] | 10% | ||
Collateral | [7] | Unsecured | ||
Beginning Balance | [7] | $ 5,134,563 | 5,593,431 | |
Repayments | ||||
Ending Balance | [7] | 5,134,563 | 5,134,563 | |
[custom:ConversionOfDebtIntoCommonStock] | [7] | (1,086,413) | ||
[custom:ReclassOfAccruedInterestToNotePayable] | [7] | 627,545 | ||
Short-Term Debt | 1,108,150 | 1,108,150 | [7] | |
Long-Term Debt | 4,026,413 | 4,026,413 | [7] | |
Board Member [Member] | ||||
Short-Term Debt [Line Items] | ||||
Ending Balance | 467,385 | |||
Board Member [Member] | Notes Payable to Related Parties [Member] | ||||
Short-Term Debt [Line Items] | ||||
Long-Term Debt | ||||
Board Member [Member] | Related Party [Member] | ||||
Short-Term Debt [Line Items] | ||||
Issuance dates of notes | [8] | August 2021 | ||
Maturity date | [8] | August 2031 | ||
Interest rate | [8] | 10% | ||
Collateral | [8] | Unsecured | ||
Beginning Balance | [8] | $ 467,385 | 467,385 | |
Repayments | (467,385) | |||
Ending Balance | 467,385 | [8] | ||
[custom:ConversionOfDebtIntoCommonStock] | [8] | |||
[custom:ReclassOfAccruedInterestToNotePayable] | [8] | |||
Short-Term Debt | [8] | |||
Long-Term Debt | [8] | 467,385 | ||
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% | |||
Collateral | Unsecured | |||
Beginning Balance | 126,418 | |||
Forgiveness of loan | [1] | |||
Repayments | ||||
Reclassification to note payable | [2] | (126,418) | ||
Ending Balance | ||||
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 | |||
Beginning Balance | $ 145,922 | 150,000 | ||
Forgiveness of loan | [1] | |||
Repayments | (2,223) | (4,078) | ||
Reclassification to note payable | [2] | |||
Ending Balance | $ 143,699 | 145,922 | ||
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 | |||
Beginning Balance | $ 328,924 | 336,600 | ||
Forgiveness of loan | [1] | |||
Repayments | (6,990) | (7,676) | ||
Reclassification to note payable | [2] | |||
Ending Balance | $ 321,934 | 328,924 | ||
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% | |||
Collateral | Unsecured | |||
Beginning Balance | 518,167 | |||
Forgiveness of loan | [1] | (518,167) | ||
Repayments | ||||
Reclassification to note payable | [2] | |||
Ending Balance | ||||
[1]– During 2022, the Company received a forgiveness on a PPP loan totaling $ 524,143 518,167 5,976 15,000 3 12,000 3 400,000 400,000 36,204 436,204 100,000 400,000 36,000 3 5,000,000 80 1,108,150 4,026,413 467,385 63,641 531,026 |
Schedule of Notes Payable (De_2
Schedule of Notes Payable (Details) (Parenthetical) - USD ($) | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Oct. 31, 2022 | ||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, decrease, forgiveness | $ 524,143 | $ 377,743 | ||||||
Debt instrument, frequency of periodic payment | Monthly payments are $3,566/month | |||||||
Long term debt | $ 5,674,409 | |||||||
Stock issued during period, shares, conversion of convertible securities | 270,745 | |||||||
Shares issued, price per share | $ 4.84 | |||||||
Notes payable | 400,000 | $ 100,000 | ||||||
Long term debt, gross | 465,633 | $ 474,846 | $ 1,131,185 | |||||
Repayments of related party debt | $ 467,385 | |||||||
Warrants issued, shares | 12,000 | |||||||
Warrant term | 3 years | |||||||
Interest expense | $ 400,000 | |||||||
Notes Payable One [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Warrants issued, shares | 36,000 | |||||||
Warrant term | 3 years | |||||||
Notes Payable Two [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Secured, revolving promissory note | 5,000,000 | |||||||
Accounts receivable eligible percentage | 80% | |||||||
Notes Payable Three [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Accrued interest | $ 36,204 | |||||||
Warrants issued, shares | 15,000 | |||||||
Warrant term | 3 years | |||||||
Repayments | $ 400,000 | |||||||
Repayments of related party debt | 436,204 | |||||||
Related Party [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Short term borrowings | 1,108,150 | 1,108,150 | ||||||
Long term debt | 4,026,413 | 4,493,798 | ||||||
Long term debt, gross | 5,134,563 | 5,601,948 | 6,060,816 | |||||
Chief Executive Officer [Member] | Related Party [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Short term borrowings | 1,108,150 | 1,108,150 | [1] | |||||
Long term debt | 4,026,413 | 4,026,413 | [1] | |||||
Long term debt, gross | [1] | 5,134,563 | 5,134,563 | 5,593,431 | ||||
Chief Executive Officer And Board Director [Member] | Related Party [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Notes payable | 1,086,413 | |||||||
Chief Executive Officer And Board Director [Member] | Kevin Brian Cox [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Accrued interest | $ 627,545 | |||||||
Shares issued, price per share | $ 4.01 | |||||||
Adjustment to additional paid-in capital, convertible debt instrument issued at substantial premium | $ 1,086,413 | |||||||
Board Member [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Accrued interest | 63,641 | |||||||
Long term debt, gross | 467,385 | |||||||
Repayments of related party debt | 531,026 | |||||||
Board Member [Member] | Related Party [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Short term borrowings | [2] | |||||||
Long term debt | [2] | 467,385 | ||||||
Long term debt, gross | 467,385 | [2] | 467,385 | [2] | ||||
Principal Amount [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, decrease, forgiveness | 518,167 | 371,664 | ||||||
Accrued Interest [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, decrease, forgiveness | $ 5,976 | $ 6,079 | ||||||
[1]Activity is with the Company’s Chief Executive Officer and Board Member (Kevin Brian Cox). Of the total, $ 1,108,150 4,026,413 467,385 63,641 531,026 |
Schedule of Debt Maturities (De
Schedule of Debt Maturities (Details) | Jun. 30, 2023 USD ($) |
Defined Benefit Plan Disclosure [Line Items] | |
2023 (6 Months) | $ 1,129,228 |
2024 | 4,068,868 |
2025 | 10,680 |
2026 | |
2027 | |
Thereafter | 465,633 |
Total | 5,674,409 |
Notes Payable Related Parties [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2023 (6 Months) | 1,108,150 |
2024 | 4,026,413 |
2025 | |
2026 | |
2027 | |
Thereafter | |
Total | 5,134,563 |
SBA Government [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2023 (6 Months) | |
2024 | |
2025 | |
2026 | |
2027 | |
Thereafter | 465,633 |
Total | 465,633 |
Nonrelated Party [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2023 (6 Months) | 21,078 |
2024 | 42,455 |
2025 | 10,680 |
2026 | |
2027 | |
Thereafter | |
Total | $ 74,213 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Apr. 30, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | |
Secured Revolving Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 3,000,000 | |||
Increased amount | $ 5,000,000 | |||
Interest rate | 2% | |||
Annual interest rate | 24% | |||
Accounts receivable eligible percentage | 80% | |||
Outstanding amount | $ 5,000,000 | |||
Accounts receivable eligible percentage | 80% | |||
Repayments of debt | $ 5,000,000 | |||
Accrued interest | $ 46,027 | |||
Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, periodic payment | $ 109 | |||
Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, periodic payment | $ 751 |
Schedule of Lease Expense (Deta
Schedule of Lease Expense (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating Leases | $ 21,494 | $ 34,294 |
Interest on lease liabilities | 10,648 | 11,598 |
Total net lease cost | $ 32,142 | $ 45,892 |
Schedule of Supplemental Inform
Schedule of Supplemental Information Related to Leases (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease ROU assets - net | $ 409,858 | $ 431,352 |
Operating lease liabilities - current | 41,290 | 39,490 |
Operating lease liabilities - non-current | 378,284 | 399,413 |
Total operating lease liabilities | $ 419,574 | $ 438,903 |
Schedule of Supplemental Cash F
Schedule of Supplemental Cash Flow and Other Information Related to Leases (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating cash flows from operating leases | $ 19,329 | $ 30,948 |
Operating leases | ||
Weighted average remaining lease term (in years) Operating leases | 7 years | 7 years 11 months 26 days |
Weighted average discount rate Operating leases | 5% | 5% |
Schedule of Future Minimum Paym
Schedule of Future Minimum Payments (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] | ||
2023 (6 Months) | $ 32,412 | |
2024 | 61,876 | |
2025 | 63,460 | |
Thereafter | 347,083 | |
Total lease payments | 504,831 | |
Less: amount representing interest | (85,257) | |
Total lease obligations | $ 419,574 | $ 438,903 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Dec. 17, 2021 | Mar. 31, 2023 | Jan. 31, 2023 | Jun. 30, 2023 | |
Litigation settlement expense | $ 100,000 | |||
Meral Demiray V [Member] | ||||
Litigation settlement expense | $ 7,500 | |||
Ambess Litigation [Member] | ||||
Plaintiff amount | $ 73,000 | |||
Litigation settlement expense | $ 60,000 |
Schedule of Stock Option Transa
Schedule of Stock Option Transactions (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Equity [Abstract] | |||
Number of options, outstanding beginning | 17,004 | 17,004 | |
Weighted average exercise price, beginning | $ 16 | $ 16 | |
Weighted average remaining contractual term (Years) outstanding | 3 years 8 months 1 day | 4 years 1 month 28 days | 5 years 1 month 28 days |
Aggregate intrinsic value, outstanding beginning | |||
Weighted average grant-date fair value, outstanding beginning | |||
Number of options, vested and exercisable, beginning | 6,801 | 3,401 | |
Weighted average exercise price, vested and exercisable | $ 16 | $ 16 | |
Weighted average remaining contractual term (Years) vested and exercisable | 3 years 8 months 1 day | 4 years 1 month 28 days | 5 years 1 month 28 days |
Number of options, unvested and non-exercisable, beginning | 10,203 | 13,603 | |
Weighted average exercise price, unvested and non-exercisable, beginning | $ 16 | $ 16 | |
Weighted average remaining contractual term (Years) vested and exercisable | 3 years 8 months 1 day | 4 years 1 month 28 days | 5 years 1 month 28 days |
Number of options, granted | |||
Weighted average exercise price - granted | |||
Number of options, exercised | |||
Weighted average exercise price - exercised | |||
Number of options, cancelled/forfeited | |||
Weighted average exercise price - cancelled/forfeited | |||
Number of options, outstanding ending | 17,004 | 17,004 | 17,004 |
Weighted average exercise price, ending | $ 16 | $ 16 | $ 16 |
Aggregate intrinsic value, outstanding ending | |||
Weighted average grant-date fair value, outstanding ending | |||
Number of options, vested and exercisable, ending | 11,902 | 6,801 | 3,401 |
Weighted average exercise price, vested and exercisable, ending | $ 16 | $ 16 | $ 16 |
Number of options, unvested and non-exercisable, ending | 5,101 | 10,203 | 13,603 |
Weighted average exercise price, unvested and non-exercisable, ending | $ 16 | $ 16 | $ 16 |
Schedule of Warrants Activity (
Schedule of Warrants Activity (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Equity [Abstract] | |||
Number of warrants outstanding, Beginning balance | 5,681,392 | 6,082,984 | |
Weighted Average Exercise Price Outstanding, Beginning balance | $ 5.05 | $ 8.68 | |
Weighted Average Remaining Contractual Life (in years), Outstanding | 1 year 4 months 9 days | 1 year 10 months 6 days | 2 years 11 months 4 days |
Aggregate Intrinsic Value, Outstanding Beginning balance | $ 10,026,387 | ||
Number of warrants, Vested and Exercisable, Beginning balance | 5,681,392 | 5,852,984 | |
Weighted Average Exercise Price, Vested and Exercisable, Beginning balance | $ 5.05 | $ 8.70 | |
Weighted Average Remaining Contractual Life (in years), Vetsed and Exercisable | 1 year 4 months 9 days | 1 year 10 months 6 days | 2 years 10 months 6 days |
Aggregate Intrinsic Value, Vested and Exercisable, Beginning balance | $ 10,026,387 | ||
Number of warrants, Unvested Beginning balance | 230,000 | ||
Weighted Average Exercise Price, Unvested, Beginning balance | $ 8 | ||
Weighted Average Remaining Contractual Life (in years), Unvested and Non-exercisable | 4 years 10 months 6 days | ||
Number of warrants outstanding, Granted | 189,000 | ||
Warrants, Weighted Average Exercise Price, Granted | $ 4.73 | ||
Number of warrants outstanding, Exercised | (43,814) | (498,850) | |
Warrants, Weighted Average Exercise Price, Exercised | $ 4.73 | $ 6.49 | |
Number of warrants outstanding, Cancelled/Forfeited | (15,286) | (91,743) | |
Weighted Average Exercise Price, Cancelled/Forfeited | $ 24.94 | $ 40.02 | |
Aggregate Intrinsic Value, Unvested, Beginning balance | |||
Number of warrants outstanding, Ending balance | 5,622,292 | 5,681,392 | 6,082,984 |
Weighted Average Exercise Price Outstanding, Ending balance | $ 5 | $ 5.05 | $ 8.68 |
Aggregate Intrinsic Value, Outstanding Ending balance | $ 12,718,101 | $ 10,026,387 | |
Number of warrants, Vested and Exercisable, Ending balance | 5,622,292 | 5,681,392 | 5,852,984 |
Weighted Average Exercise Price, Vested and Exercisable, Ending balance | $ 5 | $ 5.05 | $ 8.70 |
Aggregate Intrinsic Value, Vested and Exercisable, Ending balance | $ 12,718,101 | $ 10,026,387 | |
Number of warrants, Unvested Ending balance | 230,000 | ||
Weighted Average Exercise Price, Unvested, Ending balance | $ 8 | ||
Aggregate Intrinsic Value, Unvested, Ending balance |
Schedule of Fair Value of Warra
Schedule of Fair Value of Warrants (Details) | Jun. 30, 2023 | Dec. 31, 2022 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Expected term (years) | 3 years | |
Warrant Three [Member] | Measurement Input, Expected Term [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Expected term (years) | 3 years | |
Warrant Three [Member] | Measurement Input, Price Volatility [Member] | Minimum [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants measurement input | 1.19 | |
Warrant Three [Member] | Measurement Input, Price Volatility [Member] | Maximum [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants measurement input | 1.20 | |
Warrant Three [Member] | Measurement Input, Expected Dividend Rate [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants measurement input | 0 | |
Warrant Three [Member] | Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants measurement input | 0.0245 | |
Warrant Three [Member] | Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants measurement input | 0.0280 | |
Warrant Four [Member] | Measurement Input, Expected Term [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Expected term (years) | 3 years | |
Warrant Four [Member] | Measurement Input, Price Volatility [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants measurement input | 120 | |
Warrant Four [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants measurement input | 2.71 | |
Warrant Five [Member] | Measurement Input, Expected Term [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Expected term (years) | 3 years | |
Warrant Five [Member] | Measurement Input, Price Volatility [Member] | Minimum [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants measurement input | 1.16 | |
Warrant Five [Member] | Measurement Input, Price Volatility [Member] | Maximum [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants measurement input | 1.19 | |
Warrant Five [Member] | Measurement Input, Expected Dividend Rate [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants measurement input | 0 | |
Warrant Five [Member] | Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants measurement input | 0.0413 | |
Warrant Five [Member] | Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants measurement input | 0.0425 |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2022 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Oct. 31, 2022 | Dec. 31, 2021 | |
Class of Stock [Line Items] | |||||||||
Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 | ||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Common stock, voting rights | Voting at 1 vote per share | ||||||||
Net effect on stockholders' deficit | $ 0 | ||||||||
Stock issued for services rendered | 125,009 | 200,000 | |||||||
Common stock for services, value | $ 311,186 | $ 307,458 | $ 618,644 | ||||||
Shares issued price per share | $ 4.84 | $ 4.84 | $ 4.84 | ||||||
Fair value of software | $ 711,400 | ||||||||
Payment for software | $ 300,000 | 300,000 | |||||||
Number of stock issued for purchasing asset | 85,000 | ||||||||
Fair value of shares issued for purchasing asset | $ 411,400 | ||||||||
Number of warrants outstanding, exercise cashless | 12,000 | 12,000 | |||||||
Net effect on stockholders' deficit | $ 16,347,523 | $ 16,347,523 | $ 4,990,718 | ||||||
Compensation expense | 9,294 | $ 9,294 | 18,588 | $ 18,588 | |||||
Compensation cost related to unvested options not yet recognized | 24,783 | $ 24,783 | |||||||
Weighted average period cost not yet recognized, period for recognition | 8 months 1 day | ||||||||
Number of warrants outstanding, exercise | 51,000 | ||||||||
Debt and warrants fair value | $ 115,404 | ||||||||
Notes payable, total | 400,000 | $ 400,000 | $ 100,000 | ||||||
Notes Payable [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Number of warrants outstanding, exercise | 48,000 | ||||||||
Notes payable, total | $ 1,600,000 | ||||||||
Interest expense, fair value | $ 153,186 | ||||||||
Interest Expense [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Number of warrants outstanding, exercise | 90,000 | ||||||||
Debt and warrants fair value | $ 212,608 | ||||||||
Nonrelated Party [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Notes issued | 1,700,000 | ||||||||
Notes payable, total | $ 74,213 | $ 74,213 | $ 1,595,167 | ||||||
Chief Financial Officer [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested, Number of Shares | 5,101 | 3,401 | |||||||
Computer Software, Intangible Asset [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Number of stock issued for purchasing asset | 85,000 | ||||||||
Minimum [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued price per share | $ 4.19 | $ 4.19 | |||||||
Maximum [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued price per share | $ 9.40 | $ 9.40 | |||||||
Common Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Stock issued for employee stock purchase plans ,shares | 3,500,000 | ||||||||
Common stock outstanding percentage | 10% | ||||||||
Stock issued for services rendered | 64,927 | 60,082 | |||||||
Common stock for services, value | $ 65 | $ 60 | |||||||
Number of warrants outstanding, exercise | 200,000 | ||||||||
Common Stock [Member] | Computer Software, Intangible Asset [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued price per share | $ 4.84 | ||||||||
Fair value of shares issued for purchasing asset | $ 411,400 | ||||||||
Warrant [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Exercise of warrants. shares | 43,814 | 43,814 | 100 | ||||||
Exercise price | $ 4.73 | $ 4.73 | |||||||
Warrants issued value | $ 207,240 | $ 207,240 | $ 473 | ||||||
Cashless exercise of warrants | 147,153 | ||||||||
Number of warrants outstanding, exercise cashless | 498,750 | ||||||||
Net effect on stockholders' deficit | $ 0 | ||||||||
Number of warrants outstanding, exercise | 473 | ||||||||
Series A Preferred Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Preferred stock, shares issued | 260,000 | ||||||||
Preferred stock, shares outstanding | 260,000 | ||||||||
Common stock converted shares | 1,300,000 | ||||||||
Net effect on stockholders' deficit | $ 0 |
Schedule of Operating Segments
Schedule of Operating Segments (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Segment Reporting Information [Line Items] | |||||
Revenues | $ 35,886,433 | $ 28,005,144 | $ 70,662,876 | $ 49,146,515 | |
Cost of revenue | 25,860,705 | 25,814,153 | 52,942,665 | 44,321,894 | |
Operating expenses | 3,823,227 | 3,038,529 | 6,812,648 | 6,722,310 | |
Operating income loss | 6,202,501 | (847,538) | 10,907,563 | (1,897,689) | |
Total assets | 39,943,272 | 39,943,272 | $ 34,003,506 | ||
Total liabilities | 23,377,835 | 23,377,835 | 28,885,253 | ||
Surge Phone Wireless And Torch Wireless [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total assets | 40,793,701 | 40,793,701 | 27,239,365 | ||
Total liabilities | 12,767,029 | 12,767,029 | 15,484,392 | ||
Surge Blockchain, LLC [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total assets | (532,558) | (532,558) | (550,782) | ||
Total liabilities | 198,198 | 198,198 | 198,197 | ||
LogicsIQ, Inc [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total assets | 2,092,814 | 2,092,814 | 2,500,499 | ||
Total liabilities | 1,635,834 | 1,635,834 | 2,619,521 | ||
Surge Fintech E C S [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total assets | 1,342,290 | 1,342,290 | 1,906,212 | ||
Total liabilities | 51,518 | 51,518 | 58,919 | ||
Surge Pays, Inc. [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total assets | (3,752,975) | (3,752,975) | 2,908,212 | ||
Total liabilities | 8,725,256 | 8,725,256 | $ 10,524,224 | ||
Surge Phone Wireless And Torch Wireless [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 30,214,830 | 20,068,656 | 58,874,214 | 34,116,686 | |
Cost of revenue | 21,127,883 | 18,659,046 | 42,440,138 | 30,538,048 | |
Operating expenses | 113,296 | 68,564 | 162,772 | 130,889 | |
Operating income loss | 8,973,651 | 1,341,046 | 16,271,304 | 3,447,749 | |
Surge Blockchain, LLC [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 9,433 | 17,842 | 21,301 | 47,671 | |
Cost of revenue | 45 | 1,500 | 150 | 1,500 | |
Operating expenses | 2,627 | 52,601 | 2,927 | 52,971 | |
Operating income loss | 6,761 | (36,259) | 18,224 | (6,800) | |
LogicsIQ, Inc [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 2,791,585 | 3,631,943 | 5,962,430 | 5,925,016 | |
Cost of revenue | 1,932,731 | 2,763,592 | 4,810,719 | 4,764,012 | |
Operating expenses | 280,290 | 348,303 | 568,683 | 1,008,197 | |
Operating income loss | 578,564 | 520,048 | 583,028 | 152,807 | |
Surge Fintech E C S [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 2,870,585 | 4,286,703 | 5,804,931 | 9,057,142 | |
Cost of revenue | 2,800,046 | 4,390,015 | 5,691,658 | 9,018,334 | |
Operating expenses | 344,114 | 300,195 | 669,791 | 642,319 | |
Operating income loss | (273,575) | (403,507) | (556,518) | (603,511) | |
Surge Pays, Inc. [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Operating expenses | 3,082,900 | 2,268,866 | 5,408,475 | 4,887,934 | |
Operating income loss | $ (3,082,900) | $ (2,268,866) | $ (5,408,475) | $ (4,887,934) |
Installment Sale Liability (Det
Installment Sale Liability (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | |
Installment Sale Liability | |||
Purchase asset | $ 25,000,000 | ||
Agreement extended period | The agreement may be extended by a period of one (1) year upon mutual consent | ||
Sale of asset percentage | 9.85% | 9.85% | |
Installment sale credit amount | 3 month rolling average of 70% of the installment sale credit amount | ||
Prepayment cancellation fee | The Company is subject to a cancellation fee of 3% during the first year and 2% during the second year | ||
Administrative fees | $ 2,000 | ||
Default rate | For any unpaid amounts under this agreement, the Company is subject to a fee of 1.35% per month (16.2% annualized). | ||
Commitment fee percentage | 2% | ||
Increase incremental commitment fee | $ 5,000,000 | ||
Commitment fee details | For example, if the initial installment sale credit amount is $15,000,000, the credit availability fee would be $300,000 (2%). Any subsequent increase of $5,000,000 or more would result in an additional fee of $100,000 (2%). Commitment fees are paid over a period of 12 months as part of the Seller’s monthly invoicing | ||
Installment sale liability | $ 11,349,440 | $ 11,349,440 | $ 13,018,184 |
Professional Fees | $ 135,500 | $ 266,500 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Jul. 12, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Subsequent Event [Line Items] | ||||
Note receivable | $ 176,851 | $ 176,851 | $ 176,851 | |
Blue Skies Connections L L C [Member] | Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Note receivable | $ 176,851 |