SurgePays Reports Second Quarter 2021 Financial Results and Provides Corporate Update

BARTLETT, Tenn., Aug. 26, 2021 (GLOBE NEWSWIRE) -- SurgePays, Inc. (OTCQB: SURG) (“SurgePays” or the “Company”), a blockchain financial technology company building a next generation supply chain network in the U.S. for convenience stores, mini-marts, tiendas, bodegas, gas stations, and other merchants serving underbanked consumers, today announces financial results for the second quarter ended June 30, 2021 and provides a corporate update.

Recent Corporate Highlights:

• Continued to progress towards an expected Nasdaq up-list of the Company through the customary regulatory process and filings

• Continued to progress towards an IPO of the Company’s SaaS subsidiary LogicsIQ, Inc. (formerly Surge Logics, Inc.)

• Announced approval from the Emergency Broadband Benefit (EBB) Program to provide discounted broadband services through the Company’s SurgePhone mobile virtual network operator (MVNO) subsidiary to qualified users

• Acquired Commander Communication, a provider of prepaid wireless payment products to approximately 500 convenience stores with intent to cross-sell other products and services into Commander’s customer base

• Signed national distribution agreement with 1606 Corp. to distribute smokable-hemp products into the 8,000 convenience stores on the Company’s platform

• Launched a proprietary, blockchain-supported, customer relationship management (CRM) and business intelligence (BI) platform called BLITZ to further penetrate the 34,000 retail stores in the Company’s U.S. database

• Launched new custom private label gift card program for the Company’s independent retail store clients to provide additional convenience and loyalty opportunities for these locations’ customers

“The revenue initiatives we have announced in the last few months speak to the numerous market opportunities we have to execute our ‘wide and deep’ strategy. We are poised to offer the thousands of convenience stores, mini-marts, and bodegas we serve additional higher margin products and services beyond the lower-margin prepaid wireless top-ups on which we founded the Company,” said SurgePays Chief Executive Officer Brian Cox. “We now have the ability to offer thousands of stores and, ultimately, the underbanked population that shop there, access to higher margin, innovative products and services, such as the smokable-hemp products from our partner 1606 Corp., more affordable wireless handsets and monthly wireless plans, retail gift cards, and even discounted broadband service through the EBB Program, that may otherwise be very difficult for them to purchase. Our expanded in-house sales team is dedicated to establishing and nurturing relationships with store owners to help us expand our network of customer stores, and acquisitions like Commander Communications will help us expand our geographical reach.

“Meanwhile, our LogicsIQ subsidiary has seen a reacceleration in its business following a COVID-related slow-down in the second half of 2020. LogicsIQ had the second-best quarter of its existence with revenue in the second quarter of 2021 up nearly 32% over the first quarter of 2021, and this momentum has continued thus far into the third quarter. Anthony Nuzzo and his team at LogicsIQ have executed well during the leaner months with continued development and innovation and managed to continue to strategize for future growth despite the pressures from the pandemic.

“Lastly, we believe we are making good progress in the legal and regulatory process involved in SurgePays’ up-list to the Nasdaq as well as the anticipated IPO of LogicsIQ. We believe both events will be transformational corporate moments for SurgePays that will create value for our shareholders over the longer term,” Mr. Cox concluded.

Financial Results for Second Quarter 2021

Revenue in the second quarter of 2021 was $11.38 million vs. $14.51 million in the year-ago period. General and administrative expenses declined from $4.17 million in the second quarter of 2020 to $2.74 million in the second quarter of 2021. Net loss in the second quarter of 2021 improved to ($214,000) from ($2.43 million) in the year-ago period.

Cash and cash equivalents as of June 30, 2021 totaled $574,824, as compared to $673,995 as of December 31, 2020.

About SurgePays, Inc.

SurgePays, Inc. utilizes its blockchain software platform to offer a comprehensive suite of prepaid, financial services for the underbanked and top selling wholesale products to independently owned convenience stores, mini-marts, tiendas, and bodegas more cost efficiently than existing wholesale distribution models. Please visit www.SurgePays.com for more information.

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 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 Securities and Exchange Commission (“SEC”), including in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The forward-looking statements in this press release speak only as of the date on which the statements are made. We undertake no obligation to update, and expressly disclaim the obligation to update, any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

Company Contact:
Tony Evers CPA, CIA
Chief Financial Officer
Phone: (847) 648-7542 ext. 104
tevers@surgeholdings.com

Media Relations:
Henry Feintuch / Doug Wright
Feintuch Communications
914-548-6924 / 201-952-6033
surgepays@feintuchpr.com

Investor Relations:
CORE IR
516-222-2560
invest@surgeholdings.com

SURGEPAYS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets

	June 30, 2021				December 31, 2020
	(Unaudited)				(Audited)
Assets
Current Assets
Cash	$	574,824			$	673,995
Accounts receivable - net		592,442				180,499
Lifeline revenue - due from USAC		-				212,621
Inventory		175,359				178,309
Prepaids		6,067				5,605
Total Current Assets		1,348,692				1,251,029
Property and equipment - net		229,411				236,810
Other Assets
Note receivable		176,851				-
Intangibles - net		3,760,238				4,125,742
Goodwill		866,782				866,782
Investment in Centercom - related party		389,984				414,612
Operating lease - right of use asset - net		552,222				368,638
Other		61,458				61,458
Total Other Assets		5,807,535				5,837,232
Total Assets	$	7,385,638			$	7,325,071
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable and accrued expenses	$	5,800,859			$	6,827,487
Accounts payable and accrued expenses - related party		448,559				1,753,837
Deferred revenue		565,900				443,300
Operating lease liability		97,880				210,556
Line of credit		-				912,870
Loans payable - related parties		4,419,000				2,389,000
Notes payable		-				250,000
Convertible notes payable - net		837,741				1,516,170
Derivative liabilities		1,459,167				1,357,528
Total Current Liabilities		13,629,106				15,660,748
Long Term Liabilities
Loans payable - related parties		1,130,440				1,100,440
Notes payable - SBA government		1,502,849				1,134,682
Operating lease liability		454,342				155,167
Total Long Term Liabilities		3,087,631				2,390,289
Total Liabilities		16,716,737				18,051,037
Stockholders’ Deficit
Series A, Convertible Preferred stock, $0.001 par value, 100,000,000 shares authorized, 13,000,000 and 13,000,000 shares issued and outstanding, respectively		13,000				13,000
Series C, Convertible Preferred stock, $0.001 par value, 1,000,000 shares authorized, 721,598 and 721,598 shares issued and outstanding, respectively		722				722
Common stock, $0.001 par value, 500,000,000 shares authorized 161,504,920 and 127,131,210 shares issued and outstanding, respectively		161,505				127,131
Additional paid-in capital		17,115,280				10,725,380
Accumulated deficit		(26,621,606	)			(21,592,199	)
Total Stockholders’ Deficit		(9,331,099	)			(10,725,966	)
Total Liabilities and Stockholders’ Deficit	$	7,385,638			$	7,325,071

SURGEPAYS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2021				2020				2021				2020
Revenues	$	11,377,928			$	14,514,796			$	22,366,876			$	30,302,595
Costs and expenses
Cost of revenue		10,051,119				14,381,822				19,908,428				29,835,974
General and administrative expenses		2,736,435				4,165,436				5,976,244				7,174,322
Total costs and expenses		12,787,554				18,547,258				25,884,672				37,010,296
Loss from operations		(1,409,626	)			(4,032,462	)			(3,517,796	)			(6,707,701	)
Other income (expense)
Interest expense		(2,096,600	)			(701,044	)			(3,400,459	)			(1,183,766	)
Derivative expense		-				(147,721	)			(1,775,057	)			(496,055	)
Change in fair value of derivative liabilities		645,830				224,378				949,680				192,562
Gain (loss) on investment in Centercom - related party		49,145				112,967				(24,628	)			145,336
Gain on settlement of liabilities		701,404				2,108,543				842,982				2,556,979
Gain on deconsolidation of True Wireless		1,895,871				-				1,895,871				-
Other income		-				10,000				-				10,000
Total other income (expense) - net		1,195,650				1,607,123				(1,511,611	)			1,225,056
Net loss	$	(213,976	)		$	(2,425,339	)		$	(5,029,407	)		$	(5,482,645	)
Loss per share - basic and diluted	$	(0.00	)		$	(0.02	)		$	(0.03	)		$	(0.05	)
Weighted average number of shares - basic		154,394,068				106,063,237				145,130,334				104,974,691

SURGEPAYS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)

	For the Six Months Ended June 30,
	2021				2020
Operating activities
Net loss	$	(5,029,407	)		$	(5,482,645	)
Adjustments to reconcile net loss to net cash used in operations
Depreciation and amortization		398,240				569,811
Amortization of right-of-use assets		92,531				92,867
Amortization of debt discount		1,351,351				796,863
Recognition of share based compensation		45,099				68,169
Change in fair value of derivative liabilities		(949,680	)			(192,562	)
Derivative expense		1,775,057				496,055
Gain on settlement of liabilities		(840,932	)			(2,681,586	)
Gain (loss) on equity method investment - Centercom - related party		24,628				(145,336	)
Gain on deconsolidation of subsidiary (True Wireless)		(1,895,871	)			-
Changes in operating assets and liabilities
(Increase) decrease in
Accounts receivable		(411,943	)			2,241,635
Lifeline revenue - due from USAC		105,532				(172,300	)
Inventory		(71,700	)			(102,682	)
Prepaids		(462	)			64,534
Other		-				66,457
Increase (decrease) in
Accounts payable and accrued expenses		1,824,604				1,971,652
Accounts payable and accrued expenses - related party		(1,305,278	)			-
Deferred revenue		122,600				317,148
Gain contingency		-				(38,040	)
Operating lease liability		(89,616	)			(101,029	)
Net cash used in operating activities		(4,855,247	)			(2,230,989	)
Investing activities
Purchase of property and equipment		(45,983	)			(2,836	)
Cash disposed in deconsolidation of subsidiary (True Wireless)		(325,316	)			-
Net cash used in investing activities		(371,299	)			(2,836	)
Financing activities
Proceeds from stock and warrants issued for cash		1,510,000				705,000
Repurchase of common stock		-				(500,000	)
Proceeds from loans - related party		2,123,000				200,000
Repayments of loans - related party		(63,000	)			(100,000	)
Proceeds from notes payable		-				648,082
Repayments on notes payable		(250,000	)			(27,500	)
Proceeds from SBA notes		518,167				-
Proceeds from convertible notes		2,550,000				1,912,000
Repayments on convertible notes - net of overpayment		(1,260,792	)			(468,000	)
Cash paid for debt issuance costs		-				(142,000	)
Net cash provided by financing activities		5,127,375				2,227,582
Net decrease in cash		(99,171	)			(6,243	)
Cash - beginning of period		673,995				346,040
Cash - end of period	$	574,824			$	339,797
Supplemental disclosure of cash flow information
Cash paid for interest	$	113,810			$	64,646
Cash paid for income tax	$	-			$	-
Supplemental disclosure of non-cash investing and financing activities
Deconsolidation of subsidiary (True Wireless)	$	2,434,552			$	-
Debt discount/issue costs recorded in connection with derivative liabilities	$	2,140,829			$	1,234,546
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			$	355,203
Termination of ECS right-of-use 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			$	-
Stock issued for acquisition	$	-			$	165,000
Stock and warrants issued with debt recorded as a debt discount	$	-			$	801,636