SURGEPAYS, INC. Second Quarter 2022 Financial Highlights
- Revenue of
$28.0 million in the second quarter, an increase of 146% compared to the second quarter of 2021 - Gross profit of
$2.2 million in the second quarter, an increase of 65% compared to the second quarter of 2021 - Net loss of
$(973) thousand in the second quarter compared to a net loss of$(214) thousand in the year ago period - EBITDA loss of
$(86) thousand in the second quarter of 2022
Chairman and CEO
“Our efforts to expand our broadband footprint should be enhanced by our recent acquisition of a CRM tool that helps set up new subscribers, houses customer information and is integrated with wireless carriers. This CRM allows us to better serve our customer base while ultimately lowering costs.”
Business Outlook
For the full year 2022, the Company expects to achieve the following financial targets:
- Total revenues of at least
$130 million . - EBITDA is expected to be at least
$15 million . - Greater than 200,000 subscribers in the mobile broadband business.
Conference Call and Webcast Information
A live webcast will be available on
About
About Non-GAAP Financial Measures
The Company believes that EBITDA (earnings before interest, taxes, depreciation and amortization) is useful to investors because it is commonly used to evaluate companies on the basis of operating performance and leverage. Adjusted EBITDA provides an adjusted view of EBITDA that takes into account certain significant non-recurring transactions, if any, such as impairment losses and expenses associated with pending acquisitions, which vary significantly between periods and are not recurring in nature, as well as certain recurring non-cash charges such as changes in fair value of the Company’s derivative liabilities and stock-based compensation. The Company believes that Adjusted EBITDA provides investors with a measure of the Company’s operational and financial progress that corresponds with the measurements used by management as a basis for allocating resources and making other operating decisions.
EBITDA and Adjusted EBITDA are not intended to represent cash flows for the periods presented, nor have they been presented as an alternative to operating income or as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with accounting principles generally accepted in
Cautionary Note Regarding Forward-Looking Statements
This press release includes express or implied statements that are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Forward-looking statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance and may contain projections of our future results of operations or of our financial information or state other forward-looking information. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.
Although we believe that the expectations reflected in these forward-looking statements such as regarding our market potential along with the statements under the heading Business Outlook are reasonable, these statements relate to future events or our future operational or financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control, including, without limitation, statements about our future financial performance, including our revenue, cash flows, costs of revenue and operating expenses; our anticipated growth; our predictions about our industry; the impact of the COVID-19 pandemic on our business and our ability to attract, retain and cross-sell to clients. The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in our filings with the
Investor Relations
SURG@mzgroup.us
561 489 5315
| Consolidated Statements of Operations | ||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Revenues | $ | 28,005,144 | $ | 11,377,928 | $ | 49,146,515 | $ | 22,366,876 | ||||||||
| Costs and expenses | ||||||||||||||||
| Cost of revenue | 25,814,153 | 10,051,119 | 44,321,894 | 19,908,428 | ||||||||||||
| General and administrative expenses | 3,038,529 | 2,736,435 | 6,722,310 | 5,976,244 | ||||||||||||
| Total costs and expenses | 28,852,682 | 12,787,554 | 51,044,204 | 25,884,672 | ||||||||||||
| Loss from operations | (847,538 | ) | (1,409,626 | ) | (1,897,689 | ) | (3,517,796 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (566,999 | ) | (2,096,600 | ) | (736,644 | ) | (3,400,459 | ) | ||||||||
| Derivative expense | - | - | - | (1,775,057 | ) | |||||||||||
| Change in fair value of derivative liabilities | - | 645,830 | - | 949,680 | ||||||||||||
| Gain (loss) on investment in Centercom | 35,519 | 49,145 | 10,336 | (24,628 | ) | |||||||||||
| Gain on settlement of liabilities | - | 701,404 | - | 842,982 | ||||||||||||
| Amortization of debt discount | (37,068 | ) | 1,895,871 | (37,068 | ) | 1,895,871 | ||||||||||
| Gain on forgiveness of PPP loan - government | 524,143 | - | 524,143 | - | ||||||||||||
| Total other income (expense) - net | (44,405 | ) | 1,195,650 | (239,233 | ) | (1,511,611 | ) | |||||||||
| Net loss including non-controlling interest | (891,943 | ) | (213,976 | ) | (2,136,922 | ) | (5,029,407 | ) | ||||||||
| Non-controlling interest | 81,094 | - | 48,449 | - | ||||||||||||
| Net loss available to common stockholders | $ | (973,037 | ) | $ | (213,976 | ) | $ | (2,185,371 | ) | $ | (5,029,407 | ) | ||||
| Loss per share - basic and diluted | $ | (0.07 | ) | $ | (0.07 | ) | $ | (0.18 | ) | $ | (1.73 | ) | ||||
| Weighted average number of shares - basic and diluted | 12,268,669 | 3,087,881 | 12,166,817 | 2,902,607 | ||||||||||||
| Consolidated Balance Sheets | ||||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 8,704,526 | $ | 6,283,496 | ||||
| Accounts receivable - net | 8,322,807 | 3,249,889 | ||||||
| Inventory | 5,675,741 | 4,359,296 | ||||||
| Prepaids | 44,054 | - | ||||||
| Total Current Assets | 22,747,128 | 13,892,681 | ||||||
| Property and equipment - net | 887,374 | 200,448 | ||||||
| Other Assets | ||||||||
| Note receivable | 176,851 | 176,851 | ||||||
| Intangibles - net | 3,106,730 | 3,433,484 | ||||||
| 1,666,782 | 866,782 | |||||||
| Investment in Centercom - former related party | 453,624 | 443,288 | ||||||
| Operating lease - right of use asset - net | 452,374 | 486,668 | ||||||
| Total Other Assets | 5,856,361 | 5,407,073 | ||||||
| Total Assets | $ | 29,490,863 | $ | 19,500,202 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 11,292,759 | $ | 6,602,577 | ||||
| Accounts payable and accrued expenses - related party | 2,184,896 | 1,389,798 | ||||||
| Deferred revenue | 107,500 | 276,250 | ||||||
| Operating lease liability | 37,733 | 49,352 | ||||||
| Loans payable - related parties | 1,086,413 | 1,553,799 | ||||||
| Notes payable - SBA government | - | 126,418 | ||||||
| Notes payable - net | 6,621,664 | - | ||||||
| Total Current Liabilities | 21,330,965 | 9,998,194 | ||||||
| Long Term Liabilities | ||||||||
| Loans payable - related parties | 4,974,403 | 4,507,017 | ||||||
| Notes payable - SBA government | 593,522 | 1,004,767 | ||||||
| Operating lease liability | 419,574 | 438,903 | ||||||
| Total Long-Term Liabilities | 5,987,499 | 5,950,687 | ||||||
| Total Liabilities | 27,318,464 | 15,948,881 | ||||||
| Commitments and Contingencies (Note 8) | ||||||||
| Stockholders’ Equity | ||||||||
| Series A, Convertible Preferred stock, | 260 | 260 | ||||||
| Series C, Convertible Preferred stock, | - | - | ||||||
| Common stock, | 12,349 | 12,064 | ||||||
| Additional paid-in capital | 39,420,055 | 38,662,340 | ||||||
| Accumulated deficit | (37,308,714 | ) | (35,123,343 | ) | ||||
| Stockholders’ equity | 2,123,950 | 3,551,321 | ||||||
| Non-controlling interest | 48,449 | - | ||||||
| Total Stockholders’ Equity | 2,172,399 | 3,551,321 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 29,490,863 | $ | 19,500,202 | ||||
| Consolidated Statements of Cash Flows | ||||||||
| | ||||||||
| For the Six Months Ended | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Operating activities | ||||||||
| Net loss - including non-controlling interest | $ | (2,136,922 | ) | $ | (5,029,407 | ) | ||
| Adjustments to reconcile net loss to net cash used in operations | ||||||||
| Depreciation and amortization | 362,629 | 398,240 | ||||||
| Amortization of right-of-use assets | 34,294 | 92,531 | ||||||
| Amortization of debt discount/debt issue costs | 37,068 | 1,351,351 | ||||||
| Recognition of share-based compensation | 18,588 | 45,099 | ||||||
| Warrants issued for interest expense | 212,608 | - | ||||||
| Change in fair value of derivative liabilities | - | (949,680 | ) | |||||
| Derivative expense | - | 1,775,057 | ||||||
| Gain on settlement of liabilities | - | (840,932 | ) | |||||
| (Gain) loss on equity method investment - Centercom - former related party | (10,336 | ) | 24,628 | |||||
| Gain on forgiveness of PPP loan | (524,143 | ) | - | |||||
| Gain on deconsolidation of subsidiary ( | - | (1,895,871 | ) | |||||
| Changes in operating assets and liabilities | ||||||||
| (Increase) decrease in | ||||||||
| Accounts receivable | (5,072,918 | ) | (411,943 | ) | ||||
| Lifeline revenue - due from USAC | - | 105,532 | ||||||
| Inventory | (1,316,445 | ) | (71,700 | ) | ||||
| Prepaids | (44,054 | ) | (462 | ) | ||||
| Increase (decrease) in | ||||||||
| Accounts payable and accrued expenses | 4,696,158 | 1,824,604 | ||||||
| Accounts payable and accrued expenses - related party | 795,098 | (1,305,278 | ) | |||||
| Deferred revenue | (168,750 | ) | 122,600 | |||||
| Operating lease liability | (30,948 | ) | (89,616 | ) | ||||
| Net cash used in operating activities | (3,148,073 | ) | (4,855,247 | ) | ||||
| Investing activities | ||||||||
| Purchase of property and equipment | (11,401 | ) | (45,983 | ) | ||||
| Purchase of software | (300,000 | ) | - | |||||
| Acquisition of | (800,000 | ) | - | |||||
| Cash disposed in deconsolidation of subsidiary ( | - | (325,316 | ) | |||||
| Net cash used in investing activities | (1,111,401 | ) | (371,299 | ) | ||||
| Financing activities | ||||||||
| Proceeds from stock and warrants issued for cash | - | 1,510,000 | ||||||
| Proceeds from loans - related party | - | 2,123,000 | ||||||
| Repayments of loans - related party | - | (63,000 | ) | |||||
| Proceeds from notes payable | 6,700,000 | - | ||||||
| Repayments on notes payable | - | (250,000 | ) | |||||
| Proceeds from SBA notes | - | 518,167 | ||||||
| Repayments on SBA notes | (19,496 | ) | - | |||||
| Proceeds from convertible notes | - | 2,550,000 | ||||||
| Repayments on convertible notes - net of overpayment | - | (1,260,792 | ) | |||||
| Net cash provided by financing activities | 6,680,504 | 5,127,375 | ||||||
| Net increase (decrease) in cash | 2,421,030 | (99,171 | ) | |||||
| Cash - beginning of period | 6,283,496 | 673,995 | ||||||
| Cash - end of period | $ | 8,704,526 | $ | 574,824 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | 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 | ||||||
| Debt discount/issue costs recorded in connection with debt/derivative liabilities | $ | - | $ | 2,140,829 | ||||
| Stock issued in settlement of liabilities | $ | - | $ | 1,755,150 | ||||
| Conversion of debt into equity | $ | - | $ | 858,158 | ||||
| Right-of-use asset obtained in exchange for new operating lease liability | $ | - | $ | 515,848 | ||||
| Termination of ECS ROU lease | $ | - | $ | 228,752 | ||||
| Stock issued in connection with debt modification | $ | - | $ | 108,931 | ||||
| Stock issued under make-whole arrangement | $ | - | $ | 90,401 | ||||
| Stock issued for acquisition of membership interest in ECS | $ | - | $ | 17,900 | ||||
| Deconsolidation of subsidiary ( | $ | - | $ | 2,434,552 | ||||
| Reconciliation of Net Income (loss) from Operations to EBITDA | ||||||||
| 6 Months Ended | 6 Months Ended | |||||||
| Net loss - including non-controlling interest | $ | (2,136,922 | ) | $ | (5,029,407 | ) | ||
| Depreciation and amortization | 362,629 | 398,240 | ||||||
| Amortization of right-of-use assets | 34,294 | 92,531 | ||||||
| Amortization of debt discount/debt issue costs | 37,068 | 1,351,351 | ||||||
| Interest expense | 736,644 | 3,400,459 | ||||||
| EBITDA | $ | (966,287 | ) | $ | 213,174 | |||
| 3 Months Ended | 3 Months Ended | |||||||
| Net loss - including non-controlling interest | $ | (891,943 | ) | $ | (213,976 | ) | ||
| Depreciation and amortization | 191,561 | 180,282 | ||||||
| Amortization of right-of-use assets | 10,342 | 27,677 | ||||||
| Amortization of debt discount/debt issue costs | 37,068 | 647,128 | ||||||
| Interest expense | 566,999 | 2,800,823 | ||||||
| EBITDA | $ | (85,973 | ) | $ | 3,441,934 | |||
| 3 Months Ended | 3 Months Ended | |||||||
| Net loss - including non-controlling interest | $ | (1,244,979 | ) | $ | (4,815,431 | ) | ||
| Depreciation and amortization | 171,068 | 217,958 | ||||||
| Amortization of right-of-use assets | 23,952 | 64,854 | ||||||
| Amortization of debt discount/debt issue costs | - | 704,223 | ||||||
| Interest expense | 169,645 | 599,636 | ||||||
| EBITDA | $ | (880,314 | ) | $ | (3,228,760 | ) | ||
2022 GlobeNewswire, Inc., source
