This statement contains forward-looking statements within the meaning of the Securities Act. Discussions containing such forward-looking statements may be found throughout this statement. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including the matters set forth in this statement. The accompanying consolidated financial statements as of March 31, 2022 and 2021 and for the three months then ended includes the accounts of SurgePays, Inc. and its wholly owned subsidiaries during the period owned by SurgePays, Inc.

SurgePays, Inc ("SurgePays", "we" the "Company") was incorporated in Nevada on August 18, 2006, is a technology-driven company building a next generation supply chain software platform that offers wholesale goods and services in a cost-efficient manner as an alternative to traditional wholesale supply chain distribution models. We offer goods and services direct to convenience stores, bodegas, minimarts, tiendas and other corner stores, providing goods and services primarily to the underbanked community. Our products are currently distributed nationwide using our direct to store distribution ("DSD") system that reaches more than 8,000 outlets. We market our products using a range of marketing mediums, including in-store merchandising and promotions, experiential marketing, sales spiffs and incentives, digital marketing and social media, and internal regional salespeople.

About SurgePays, Inc.

SurgePays, Inc. is a financial technology and telecom company focused on providing essential services to the underbanked community. The Company's blockchain fintech platform utilizes a suite of financial and prepaid products to convert corner stores into tech-hubs for underbanked neighborhoods. The Company's telecom subsidiaries provide mobile broadband, voice and SMS text messaging to both subsidized and direct retail prepaid customers.

SurgePhone Wireless, Torch Wireless and LocoRabbit Wireless

SurgePhone and Torch, wholly owned subsidiaries of SurgePays, are a mobile virtual network operator (MVNO) company with 2 branded channels of business. SurgePhone and Torch are licensed by the U.S. Federal Communications Commission (the "FCC") to provide subsidized mobile broadband services to consumers qualifying under the federal guidelines of the Affordable Connectivity Program (the "ACP"). The ACP (the successor program, as of March 1, 2022 to the Emergency Broadband Benefit program) provides SurgePhone up to a $100 reimbursement for the cost of each tablet device distributed and a $30 per customer, per month subsidy for mobile broadband (internet connectivity) services. SurgePhone has received approval to offer subsidized mobile broadband in these 14 states: California, Colorado, Florida, Illinois, Maryland, Mississippi, Missouri, Nevada, New Jersey, Ohio, Oklahoma, Rhode Island, Tennessee, and Texas. Torch Wireless has received approval to offer subsidized mobile broadband to all fifty states and Puerto Rico.

LocoRabbit is the retail pure prepaid wireless offering with talk, text, and 4G LTE data at prices that are lower than other well-known prepaid competitors. Available nationwide, LocoRabbit is sold online direct to consumers through the nationwide network of convenience stores, gas stations, mini-marts, bodegas and tiendas connected to the SurgePays software platform. The SIM kits usually hang from a peg hook on the SurgePays gift card rack. Due to owning the payment platform, SurgePays is able to exclusively offer an industry high commission to the retailer for top-ups paid monthly at the client's store.



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SurgePays Fintech (ECS Business)

We refer to the collective operations of ECS Prepaid, LLC, a Missouri limited liability company, Electronic Check Services, Inc., a Missouri corporation, and Central States Legal Services, Inc., a Missouri corporation, as "SurgePays Fintech." This was previously referred to as the "ECS Business."

SurgePays Fintech has been a financial technology tech and wireless top-up platform for over 15 years. Through a series of transactions between October 2019 and January 2020, we acquired the ECS Business primarily for the favorable ACH banking relationship; a fintech transactions platform processing over 20,000 transactions a day at approximately 8,000 independently owned retail stores. The goal was to incorporate our blockchain components into the existing ECS Business network. As of January 1, 2021, we believe the ECS Business platform has been successfully merged into our platform with secure ledger data backups and will continue to serve as the proven backbone for wireless top-up transactions and wireless product aggregation for the SurgePays nationwide network.

Surge Blockchain

SurgePays Blockchain Software is a back-office marketplace platform offering wholesale consumable goods direct to convenience stores, bodegas, minimarts, tiendas and other corner stores who are transacting on the SurgePays Fintech platform. The wholesale e-commerce platform is easily accessed through the secure app interface - similar to a website. We believe what makes this sales platform unique is that it also offers the merchant the ability to order wholesale consumable goods at a significant discount from traditional distributors with one touch ease. We are able to sell products at a significant discount by using on demand Direct Store Delivery (DSD.) Our platform is connected directly to manufactures, who ship products direct to the store while cutting out the middleman. The goal of the SurgePays Portal is to leverage the competitive advantage and efficiencies of e-commerce to provide as many commonly sold consumable products as possible to convenience stores, corner markets, bodegas, and supermarkets while increasing profit margins for these stores. These products include herbal stimulants, energy pills and shot drinks, dry foods, communication accessories, novelties, PPP products, bagged snacks, processed meats, automotive parts and many more goods, all in one convenient wholesale e-commerce platform.

LogicsIQ, Inc.

LogicsIQ, Inc. is a software development company providing marketing business intelligence ("BI"), lead generation, and case management solutions primarily to law firms in the mass tort industry. The company's CRM "Intake Logics" facilitates the entire life cycle of converting a potential lead into a signed retainer client integrated into the law firms case management software. Our proven strategy of delivering cost-effective retained cases to our attorney and law firm clients means those clients are better able to manage their media and advertising budgets and reach targeted audiences more quickly and effectively when utilizing our proprietary data driven analytics dashboards. Our ability to deliver transparent results has bolstered our reputation as an industry leader and solidified a solid client base.

On April 29, 2022, we confidentially submitted an amended draft registration statement on Form S-1 with the SEC relating to an initial public offering of LogicsIQ's common stock. If, after the SEC completes its review process, and subject to market and other conditions, the registration statement is declared effective and the initial public offering closes, LogicsIQ will still remain majority owned by SurgePays.

Centercom

Since 2019, we have owned a 40% equity interest in Centercom Global, S.A. de C.V. ("Centercom"). Centercom is a bilingual operations center providing the Company with sales support, customer service, IT infrastructure design, graphic media, database programming, software development, revenue assurance, lead generation, and other various operational support services. Centercom is based in El Salvador.

As the Company announced on March 24, 2022 via the filing of a Current Report on Form 8-K, Anthony P. Nuzzo, Jr., the Company's President, a member of the Company's Board of Directors (the "Board"), and the Chief Executive Officer of LogicsIQ, a subsidiary of which we own over 90%, died suddenly on March 18, 2022. The entire Company mourns this terrible loss.

Mr. Nuzzo owned 50% of Centercom.

COMPARISON OF THREE MONTHS ENDED March 31, 2022 AND 2021

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the consolidated results of operations, stockholders' deficit, or cash flows.

At March 31, 2022 and December 31, 2020, respectively, on the consolidated balance sheets, the Company separated its various types of debt into more distinct categories. Certain accounts payable were reclassified from non-current to current.

For the three months ended March 31, 2022 and 2021, respectively, on the consolidated statements of operations, the Company reclassified certain expenses amongst general and administrative and cost of revenues.



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Revenues during the three months ended March 31, 2022 and 2021 consisted of the
following:

                                                     2022                 2021
                                                 (unaudited)          (unaudited)
Revenue                                        $     21,141,372     $     10,988,948
Cost of revenue (exclusive of depreciation
and amortization)                                    18,507,741            9,859,434
General and administrative expenses                   3,683,782            3,237,684
Loss from operations                           $     (1,050,151 )   $     (2,082,170 )

Revenue increased $10,152,424 (92%) primarily as a result of an increases in revenue for: SurgePhone Wireless of $10,984,801 and Torch Wireless of $3,062,153 offset by a decrease in Surge Fintech/ECS of $2,144,816 and LogicsIQ of $1,115,331. Loss from operations decreased by $1,032,019 (50%) primarily as a result of an increase in operating income in SurgePhone Wireless and Torch Wireless.

General and administrative expenses during the three months ended March 31, 2022 and 2021 consisted of the following:



                                          2022             2021
                                      (unaudited)      (unaudited)

Depreciation and amortization $ 171,068 $ 217,958 Selling, general and administration 3,512,714 3,019,726 Total

$  3,683,782     $  3,237,684

Depreciation and amortization decreased $46,890 primarily as a result of fully depreciated assets.

Selling, general and administrative expenses during the three months ended March 31, 2022 and 2021 consisted of the following:



                                  2022             2021
                              (unaudited)      (unaudited)
Contractors and consultants   $    552,089     $    378,549
Professional services              163,791          537,319
Compensation                     1,728,482          961,202
Webhosting/internet                 93,999          218,400
Advertising and marketing           86,637          446,759
Other                              887,716          477,497
Total                         $  3,512,714     $  3,019,726



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Selling, general and administrative costs (S, G & A) increased by $492,988 (16%). The detail changes are discussed below:

* Contractors and consultants increased to $552,089 in 2022 from $378,549 in 2021

primarily due to an increase in call center expenses related to the increase in

subscribers of the ACP program. This program did not exist during the first

quarter of 2021.

* Professional services decreased from $537,319 in 2021 to $163,791 in 2022

primarily as a result of placement fees for various funding sources paid in

2021.

* Compensation increased from $961,202 in 2021 to $1,728,482 in 2022 primarily as

a result of one-time bonuses paid to various management personnel in 2022.

* Webhosting/internet costs decreased to $93,999 in 2022 from $218,400 in 2021.

* Advertising and marketing costs decreased to $86,637 in 2022 from $446,759 in

2021 primarily due to a normalization of advertising costs in 2022. The Company

implementing new advertising and marketing campaigns in the first quarter of

2021.

* Other costs increased to $887,716 in 2022 from $477,497 in 2021 primarily due

to the following changes period over period:

? Building expenses decreased by $13,922

? insurance expense increased by $353,788 as a result of additional coverages

required as part of uplisting to Nasdaq in the fourth quarter of 2021.

? Officed expenses increased by $12,638

? other operating expense decreased by $6,585





Other (expense) income during the three months ended March 31, 2022 and 2021
consisted of the following:

                                                   2022              2021
                                                (unaudited)      (unaudited)
Interest, net                                  $    (169,645 )   $   (599,635 )
Change in fair value of derivative liability               -          303,850
Derivative expense                                         -       (1,775,057 )
Amortization of debt discount                              -         (704,225 )
Gain on equity investment in Centercom               (25,183 )        (73,773 )
Gain (loss) on settlement of liabilities                   -          141,579
Total Other (expense) income                   $    (194,828 )   $ (2,707,261 )

Interest expense decreased due to the repayment of various notes during 2021.

The loss on equity investment in Centercom of $25,183 in 2022 compared to an equity loss of $73,773 in 2021.

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.



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The Company evaluated performance of its operating segments based on revenue and operating loss. Segment information for the three and nine months ended March 31, 2022 and 2021, are as follows:



                             For the Three Months Ended March 31,
                                 2022                     2021
                             (unaudited)              (unaudited)

Revenues
SurgePhone Wireless       $       10,985,878       $            1,077
Torch Wireless                     3,062,153                        -
Surge Blockchain                      29,829                   35,887
LogicsIQ                           2,293,072                3,408,403
Surge Fintech & ECS                4,770,440                6,915,256
True Wireless                              -                  628,325
SurgePays                                  -                        -
Total                     $       21,141,372       $       10,988,948

Cost of revenues
SurgePhone Wireless       $        8,786,793       $            2,469
Torch Wireless                     3,092,209                        -
Surge Blockchain                           -                    1,966
LogicsIQ                           2,000,420                2,966,953
Surge Fintech & ECS                4,628,319                6,700,585
True Wireless                              -                  187,461
SurgePays                                  -                        -
Total                     $       18,507,741       $        9,859,434

Operating expenses
SurgePhone Wireless       $           35,195       $           11,762
Torch Wireless                        27,131                        -
Surge Blockchain                         369                    8,475
LogicsIQ                             659,894                  355,630
Surge Fintech & ECS                  342,124                  397,540
True Wireless                              -                  232,066
SurgePays                          2,619,069                2,232,211
Total                     $        3,683,782       $        3,327,684

Operating income (loss)
SurgePhone Wireless       $        2,163,890       $          (13,154 )
Torch Wireless                       (57,187 )                      -
Surge Blockchain                      29,460                   25,446
LogicsIQ                            (367,242 )                 85,820
Surge Fintech & ECS                 (200,003 )               (182,869 )
True Wireless                              -                  208,798
SurgePays                         (2,619,069 )             (2,232,211 )
Total                     $       (1,050,151 )     $       (2,108,170 )



                       March 31,       December 31,
                          2022             2021
                      (unaudited)        (audited)

Total Assets
SurgePhone Wireless   $  2,007,043     $    (161,110 )
Torch Wireless               6,067                 -
Surge Blockchain          (578,728 )        (608,188 )
LogicsIQ                 1,437,247         1,284,562
Surge Fintech & ECS      3,694,102         3,870,409
True Wireless                    -                 -
SurgePays               11,234,963        15,114,529
Total                 $ 17,800,694     $  19,500,202

Total Liabilities
SurgePhone Wireless   $     10,036     $       5,773
Torch Wireless              63,254                 -
Surge Blockchain           197,614           197,614
LogicsIQ                 2,577,559         2,056,886
Surge Fintech & ECS         72,043            48,346
True Wireless                    -                 -
SurgePays               12,525,160        13,640,262
Total                 $ 15,445,666     $  15,948,881



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SurgePhone Wireless and Torch Wireless

The SurgePhone Wireless revenue for the three months ended March 31,2022 increased by $10,984,801 as compared to the three months ended March 31, 2021. The increase was a result of being newly licensed to provide the Emergency Broadband Benefit ("EBB") program and Affordable Connectivity Program ("ACP"). These programs provided $10,985,878 in new revenue for the quarter ended March 31, 2022. Cost of revenues for the three months ended March 31, 2022, increased by $8,784,324 from the same period ended March 31, 2021, as a result of the purchases of devices, data usage expenses and commission paid for the ACP program. The operating income increased from a loss of $13,154 as of the three months ended March 31, 2021, to operating income of $2,163,890 as of three months ended March 31, 2022.

The Torch Wireless revenue for the three months ended March 31,2022 increased by $3,062,153 as compared to the three months ended March 31, 2021. The increase was a result of the acquisition of Torch Wireless on March 31, 2022 which is licensed to provide the Emergency Broadband Benefit ("EBB") program and Affordable Connectivity Program ("ACP"). This program provided $3,062,153in new revenue from the same period ended March 31, 2021, Cost of revenues for the three months ended March 31, 2022 increased by $3,092,209 as a result of the purchases of devices, data usage expenses and commission paid for the ACP program. The operating loss was $57,187 as of three months ended March 31, 2022.

Surge Blockchain

The revenue for the three months ended March 31, 2022 decreased by $6,058 compared to the three months March 31, 2021. The operating income for the three months ended March 31, 2022 increased by $4,014 compared to the same period in 2021.

LogicsIQ

The revenue for the three months ended March 31, 2022 decreased by $1,115,331 compared to the three months ended March 31, 2021. LogicsIQ has two main revenue streams, leads generation and retained services. The lead generation segment decreased by $587,070 as of the three months ended March 31, 2022 from the same period in 2021. The retained services segment decreased by $528,261 as of the three months ended March 31, 2022 from the same period in 2021. Operating income decreased by $453,062 for comparable periods of 2022 to 2021. LogicsIQ ended with an operating loss of $367,242 for the three months ended March 31, 2022 compared to an operating income of $85,820 for the same period in 2021.

Surge Fintech and ECS

The revenue for the three months ended March 31, 2022 was $4,770,440 compared to $6,915,256 for the same period in 2021. The decrease of 31% was a continuing result of the impact of COVID-19 and our strategic plan to move our salesforce from independent contractors to employed salespersons.

True Wireless (TW)

On May 7, 2021, the Company disposed of its subsidiary True Wireless, Inc. ("TW"), however we retained $1,097,659 in liabilities which consisted of $1,077,659 in accounts payable and accrued expenses as well as $20,000 in related party loans. In connection with the sale, the Company received an unsecured note receivable for $176,851, bearing interest at 0.6%, with a default interest rate of 10%. The Company will receive 25 payments of principal and accrued interest totaling $7,461 commencing in September 2023.



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Overall

Each segment was impacted by COVID-19 in varying degrees, however, the overall increase in revenue of $10,152,424 from 2021 to 2022 for the three months ended March 31, can be attributable to opening of some markets and the new revenue stream of the EBB program. The net operating loss improved by $1,058,019 from three months ended March 31, 2021 to the three months ended March 31, 2022.

LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN

At March 31, 2022 and December 31, 2021, our current assets were $12,401,975 and $13,892,681, respectively, and our current liabilities were $8,916,776 and $9,998,194, respectively, which resulted in a working capital surplus of $3,485,199 on March 31, 2022 and a working capital deficit of $3,894,487 on December 31, 2021.

Total assets at March 31, 2022 and December 31, 2021 amounted to $17,800,694 and $19,500,202, respectively. At March 31, 2022, assets consisted of current assets of $12,401,975, net property and equipment of $204,158, net intangible assets of $3,270,107, goodwill of $866,782, equity investment in Centercom (related party) of $418,105, note receivable of $176,850 and net operating lease right of use asset of $462,716, as compared to current assets of $13,892,681, net property and equipment of $200,448, net intangible assets of $3,433,484, goodwill of $866,782, equity investment in Centercom (related party) of $443,288, notes receivable of $176,851 and net operating lease right of use asset of $486,668 at December 31, 2021.



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At March 31, 2022, our total liabilities of $15,446,105 decreased by $502,776 from $15,948,881 at December 31, 2021.

At March 31, 2022, our total stockholders' equity was $2,354,589 as compared to $3,551,321 at December 31, 2021. The principal reason for the decrease in stockholders' equity was the impact of the net loss for the period.

The following table sets forth the major sources and uses of cash for the three months ended March 31, 2022 and 2021.

March 31, 2022       March 31, 2021

Net cash used in operating activities $ (3,323,556 ) $ (3,435,354 ) Net cash used in investing activities

                (11,401 )             (2,615 )
Net cash provided by financing activities            494,387            4,366,448

Net change in cash and cash equivalents $ (2,840,570 ) $ 928,479

At December 31, 2021, the Company had the following material commitments and contingencies.

Debt See Note 5 to the Consolidated Financial Statements.

Related party transactions - See Notes 2, 5 and 8 to the Consolidated Financial Statements.

Cash requirements and capital expenditures - At the current level of operations, the Company has to borrow funds to meet basic operating costs.

Known trends and uncertainties - The Company is planning to acquire other businesses with similar business operations. The uncertainty of the economy may increase the difficulty of raising funds to support the planned business expansion.

We believe we will have a net income for the three months ended June 30, 2022 and continue to increase net income over the remaining periods of 2022. We expect the ACP revenue stream to increase month over month for the remainder of 2022. Our attention will shift quickly from our hyper growth in the broadband sector to the emphasis of on-boarding merchants and stores on our fintech platform. This will allow us to fully implement our sales strategy, resulting in increased revenue in all segments of our business. At this point in time, the Company does not anticipate the need to raise capital through any equity plays. We may need from time to time a line of credit to enhance the hyper growth in the ACP programs.



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On March 27, 2020 the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was enacted and included a provision for the Small Business Administration ("SBA") to implement its Paycheck Protection Program ("PPP"). The PPP provides small businesses with funds to pay up to eight (8) weeks of payroll costs, including benefits. Funds received under the PPP may also be used to pay interest on mortgages, rent, and utilities. Subject to certain criteria being met, all or a portion of the loans may be forgiven. The loans bear interest at an annual rate of one percent (1%), are due two (2) years from the date of issuance, and all payments are deferred for the first nine (6) months of the loan. Any unforgiven balance of loan principal and accrued interest at the end of the nine (6) month loan deferral period is amortized in equal monthly installments over the remaining 18-months of the loan term. On January 25, 2022, the Company was notified of $371,665 in forgiveness of the $498,082 SBA guaranteed PPP loan with Bank3. The outstanding balance of $126,418 is a 30-year, 1% annual interest rate. In addition, the Company received $636,600 in several Economic Injury Disaster Loans with the Small Business Administration. These loans all carry a 3.75% interest rate payable over 30 years. First payment due 12 months from date of note.

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