Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 30, 2023 | Jun. 30, 2022 | |
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 35,232,507 | ||
Entity Common Stock, Shares Outstanding | 14,121,773 | ||
ICFR Auditor Attestation Flag | false | ||
Auditor Firm ID | 910 | ||
Auditor Name | Rodefer Moss & Co, PLLC | ||
Auditor Location | Brentwood, Tennessee | ||
Common Stock [Member] | |||
Title of 12(b) Security | Common Stock | ||
Trading Symbol | SURG | ||
Security Exchange Name | NASDAQ | ||
Common Stock Purchase Warrants | |||
Title of 12(b) Security | Common Stock Purchase Warrants | ||
Trading Symbol | SURGW | ||
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash | $ 7,035,654 | $ 6,283,496 |
Accounts receivable - net | 9,230,365 | 3,249,889 |
Inventory | 11,186,242 | 4,359,296 |
Prepaids | 111,524 | |
Total Current Assets | 27,563,785 | 13,892,681 |
Property and equipment - net | 643,373 | 200,448 |
Other Assets | ||
Note receivable | 176,851 | 176,851 |
Intangibles - net | 2,779,977 | 3,433,484 |
Internal use software development costs - net | 387,180 | |
Goodwill | 1,666,782 | 866,782 |
Investment in CenterCom | 354,206 | 443,288 |
Operating lease - right of use asset - net | 431,352 | 486,668 |
Total Other Assets | 5,796,348 | 5,407,073 |
Total Assets | 34,003,506 | 19,500,202 |
Current Liabilities | ||
Accounts payable and accrued expenses | 5,784,374 | 6,602,577 |
Accounts payable and accrued expenses - related party | 1,728,721 | 1,389,798 |
Installment sale liability | 13,018,184 | |
Deferred revenue | 243,110 | 276,250 |
Operating lease liability | 39,490 | 49,352 |
Notes payable - related parties | 1,108,150 | 1,553,799 |
Notes payable - SBA government | 126,418 | |
Notes payable - net | 1,542,033 | |
Total Current Liabilities | 23,464,062 | 9,998,194 |
Long Term Liabilities | ||
Note payable | 53,134 | |
Loans payable - related parties | 4,493,798 | 4,507,017 |
Notes payable - SBA government | 474,846 | 1,004,767 |
Operating lease liability | 399,413 | 438,903 |
Total Long-Term Liabilities | 5,421,191 | 5,950,687 |
Total Liabilities | 28,885,253 | 15,948,881 |
Commitments and Contingencies (Note 9) | ||
Stockholders’ Equity | ||
Common stock, $0.001 par value, 500,000,000 shares authorized 14,116,832 and 12,063,834 shares issued and outstanding, respectively | 14,117 | 12,064 |
Additional paid-in capital | 40,780,707 | 38,662,340 |
Accumulated deficit | (35,804,106) | (35,123,343) |
Stockholders’ equity | 4,990,718 | 3,551,321 |
Non-controlling interest | 127,535 | |
Total Stockholders’ Equity | 5,118,253 | 3,551,321 |
Total Liabilities and Stockholders’ Equity | 34,003,506 | 19,500,202 |
Series A Convertible Preferred Stock [Member] | ||
Stockholders’ Equity | ||
Preferred stock, value | 260 | |
Series C Convertible Preferred Stock [Member] | ||
Stockholders’ Equity | ||
Preferred stock, value |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 14,116,832 | 12,063,834 |
Common stock, shares outstanding | 14,116,832 | 12,063,834 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 13,000,000 |
Preferred stock, shares outstanding | 0 | 13,000,000 |
Series C Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Revenues | $ 121,544,190 | $ 51,060,589 |
Costs and expenses | ||
Cost of revenue | 108,074,782 | 44,890,610 |
General and administrative expenses | 12,835,623 | 12,162,547 |
Total costs and expenses | 120,910,405 | 57,053,157 |
Income (loss) from operations | 633,785 | (5,992,568) |
Other income (expense) | ||
Interest expense | (1,843,396) | (3,840,616) |
Derivative expense | (1,775,057) | |
Change in fair value of derivative liabilities | 1,806,763 | |
Gain (loss) on investment in CenterCom | (89,082) | 28,676 |
Gain on settlement of liabilities | 1,469,641 | |
Amortization of debt discount | (115,404) | (3,677,121) |
Gain on deconsolidation of True Wireless | 1,895,871 | |
Settlement expense | (3,750,000) | |
Warrant modification expense | (74,476) | |
Gain on forgiveness of PPP loan - government | 524,143 | |
Other income | 336,726 | 377,743 |
Total other income (expense) - net | (1,187,013) | (7,538,576) |
Net loss including non-controlling interest | (553,228) | (13,531,144) |
Non-controlling interest | 127,535 | |
Net loss available to common stockholders | $ (680,763) | $ (13,531,144) |
Loss per share - basic and diluted | $ (0.05) | $ (3.09) |
Weighted average number of shares - basic and diluted | 12,395,364 | 4,381,709 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholder's Equity (Deficit) - 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 |
Beginning balance, value at Dec. 31, 2020 | $ 260 | $ 722 | $ 2,543 | $ 10,862,708 | $ (21,592,199) | $ (10,725,966) | |
Beginning balance, shares at Dec. 31, 2020 | 260,000 | 721,598 | 2,542,624 | ||||
Conversion of debt into common stock - related party, shares | 270,745 | 561,758 | |||||
Exercise of warrants ($0.001/share) | $ 2 | (2) | |||||
Exercise of warrants, shares | 2,133 | ||||||
Non-controlling interest | |||||||
Net loss | (13,531,144) | (13,531,144) | |||||
Stock issued for services rendered and recognition of share-based compensation ($5 - $14.05/share) | $ 13 | 3,562 | 3,575 | ||||
Stock issued for services rendered and recognition of share based compensation, shares | 13,411 | ||||||
Conversion of Series C, preferred stock into common stock | $ (722) | $ 3,608 | (2,886) | ||||
Conversion of Series C, preferred stock into common stock, shares | (721,598) | 3,607,980 | |||||
Stock issued for cash ($4.30 - $8/share) | $ 4,862 | 21,294,800 | 21,299,662 | ||||
Stock issued for cash, shares | 4,862,247 | ||||||
Direct offering costs paid in connection with stock issued for cash | (2,222,952) | (2,222,952) | |||||
Stock and warrants issued with debt recorded as a debt discount | $ 18 | 2,645,872 | 2,645,890 | ||||
Stock and warrants issued with debt recorded as a debt discount, shares | 18,000 | ||||||
Conversion of debt ($.05 - $10.38/share) | $ 710 | 3,362,851 | 3,363,561 | ||||
Conversion of debt, shares | 709,674 | ||||||
Stock issued under make-whole arrangement ($5.60 - $6/share) | $ 15 | 90,386 | 90,401 | ||||
Stock issued under make-whole arrangement, shares | 15,147 | ||||||
Stock issued in connection with debt modification ($5.60 - $8/share) | $ 14 | 108,917 | 108,931 | ||||
Stock issued in connection with debt modification, shares | 13,916 | ||||||
Stock issued in settlement of liabilities ($4.50 - $15.99/share) | $ 277 | 1,997,700 | 1,997,977 | ||||
Stock issued in settlement of liabilities, shares | 276,702 | ||||||
Stock issued for acquisition of membership interest in ECS ($8.95/share) | $ 2 | 17,898 | 17,900 | ||||
Stock issued for acquisition of membership interest in ECS, shares | 2,000 | ||||||
Warrant modification expense | 74,476 | 74,476 | |||||
Forgiveness of accounts payable - CenterCom - related party | 429,010 | 429,010 | |||||
Ending balance, value at Dec. 31, 2021 | $ 260 | $ 12,064 | 38,662,340 | (35,123,343) | 3,551,321 | ||
Ending balance, shares at Dec. 31, 2021 | 260,000 | 12,063,834 | |||||
Conversion of preferred stock to common stock - related parties | $ (260) | $ 1,300 | (1,040) | ||||
Conversion of preferred stock to common stock - related parties, shares | (260,000) | 1,300,000 | |||||
Conversion of debt into common stock - related party | $ 271 | 1,086,142 | $ 1,086,413 | ||||
Conversion of debt into common stock - related party, shares | 270,745 | ||||||
Stock issued for services | $ 50 | 103,450 | $ 103,500 | ||||
Stock issued for services, shares | 50,000 | ||||||
Recognition of stock-based compensation - stock options | 37,176 | 37,176 | |||||
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 debt issue costs | 115,404 | 115,404 | |||||
Warrants issued as interest expense | 365,794 | 365,794 | |||||
Exercise of warrants (cashless) | 147 | (147) | |||||
Exercise of warrants (cashless), shares | 147,153 | ||||||
Exercise of warrants ($0.001/share) | 473 | 473 | |||||
Exercise of warrants, shares | |||||||
Exercise of warrants, shares | 100 | ||||||
Non-controlling interest | 127,535 | 127,535 | |||||
Net loss | (680,763) | (680,763) | |||||
Ending balance, value at Dec. 31, 2022 | $ 14,117 | $ 40,780,707 | $ (35,804,105) | $ 127,535 | $ 5,118,253 | ||
Ending balance, shares at Dec. 31, 2022 | 14,116,832 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholder's Equity (Deficit) (Parenthetical) | Dec. 31, 2021 $ / shares |
Stock Issued for Service [Member] | Minimum [Member] | |
Shares issued, price per share | $ 5 |
Stock Issued for Service [Member] | Maximum [Member] | |
Shares issued, price per share | 14.05 |
Stock Issued for Cash [Member] | Minimum [Member] | |
Shares issued, price per share | 4.30 |
Stock Issued for Cash [Member] | Maximum [Member] | |
Shares issued, price per share | 8 |
Common Stock [Member] | Minimum [Member] | |
Shares issued, price per share | 5 |
Debt instrument, convertible, conversion price | 0.05 |
Common Stock [Member] | Maximum [Member] | |
Shares issued, price per share | 14.05 |
Debt instrument, convertible, conversion price | 10.38 |
Stock Issued Under Make Hole Arrangement [Member] | Minimum [Member] | |
Shares issued, price per share | 5.60 |
Stock Issued Under Make Hole Arrangement [Member] | Maximum [Member] | |
Shares issued, price per share | 6 |
Stock Issued For Debt Modification [Member] | Minimum [Member] | |
Shares issued, price per share | 5.60 |
Stock Issued For Debt Modification [Member] | Maximum [Member] | |
Shares issued, price per share | 8 |
Stock Issued For Settlement Liabilities [Member] | Minimum [Member] | |
Shares issued, price per share | 4.50 |
Stock Issued For Settlement Liabilities [Member] | Maximum [Member] | |
Shares issued, price per share | 15.99 |
Stock Issued For Acquisition [Member] | |
Shares issued, price per share | 8.95 |
Stock Issued For Warrants [Member] | |
Shares issued, price per share | $ 0.001 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating activities | ||
Net loss - including non-controlling interest | $ (553,228) | $ (13,531,144) |
Adjustments to reconcile net loss to net cash provided by (used in) operations | ||
Bad debt expense (recovery) | (59,485) | 24,841 |
Provision for inventory obsolescence | 51,718 | |
Depreciation and amortization | 933,384 | 759,383 |
Amortization of right-of-use assets | 55,316 | 158,085 |
Amortization of debt discount/debt issue costs | 115,404 | 3,677,121 |
Recognition of share-based compensation | 140,676 | 3,575 |
Warrants issued for interest expense | 365,794 | |
Change in fair value of derivative liabilities | (1,806,763) | |
Derivative expense | 1,775,057 | |
Gain on settlement of liabilities | (1,443,016) | |
(Gain) loss on equity method investment - CenterCom | 89,082 | (28,676) |
Gain on forgiveness of PPP loan | (524,143) | (371,664) |
Gain on deconsolidation of subsidiary (True Wireless) | (1,895,871) | |
Warrant modification expense | 74,476 | |
(Increase) decrease in | ||
Accounts receivable | (5,920,991) | (3,094,231) |
Lifeline revenue - due from USAC | 105,532 | |
Inventory | (6,878,664) | (4,255,637) |
Prepaids | (111,524) | 5,605 |
Other | 61,458 | |
Increase (decrease) in | ||
Accounts payable and accrued expenses | (812,227) | 4,056,812 |
Accounts payable and accrued expenses - related party | 966,468 | 757,429 |
Installment sale liability - net | (13,018,184) | |
Deferred revenue | (33,140) | (167,050) |
Operating lease liability | (49,352) | (153,583) |
Net cash provided by (used in) operating activities | 793,272 | (15,288,261) |
Investing activities | ||
Purchase of property and equipment | (11,402) | (51,408) |
Capitalized internal use software development costs | (387,180) | |
Purchase of software | (300,000) | |
Acquisition of Torch, Inc. | (800,000) | |
Cash disposed in deconsolidation of subsidiary (True Wireless) | (325,316) | |
Net cash used in investing activities | (1,498,582) | (376,724) |
Financing activities | ||
Proceeds from stock and warrants issued for cash | 473 | 21,299,662 |
Cash paid for direct offering costs | (2,222,952) | |
Proceeds from loans - related party | 4,355,386 | |
Repayments of loans - related party | (2,476,468) | |
Proceeds from notes payable | 6,700,000 | 1,101,000 |
Repayments on notes payable | (5,231,251) | (1,377,257) |
Proceeds from SBA notes | 518,167 | |
Repayments on SBA notes | (11,754) | |
Proceeds from convertible notes | 2,550,000 | |
Repayments on convertible notes - net of overpayment | (2,473,052) | |
Net cash provided by financing activities | 1,457,468 | 21,274,486 |
Net increase in cash | 752,158 | 5,609,501 |
Cash - beginning of year | 6,283,496 | 673,995 |
Cash - end of year | 7,035,654 | 6,283,496 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 523,005 | 866,684 |
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 | 2,748,084 | |
Conversion of Series C, preferred stock into common stock | 722 | |
Gain on forgiveness of CenterCom AP - Related Party | 429,010 | |
Stock issued in settlement of liabilities | 1,997,977 | |
Conversion of debt into equity | 3,363,561 | |
Conversion of debt into equity - related party | 1,086,413 | |
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 | |
Reclassification of SBA note payable - government to note payable | 126,418 | |
Reclassification of accrued interest - related party to note payable - related party | 627,545 | 692,458 |
Deconsolidation of subsidiary (True Wireless) | $ 2,434,552 |
Organization and Nature of Oper
Organization and Nature of Operations | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | Note 1 - Organization and Nature of Operations Organization and Nature of Operations SurgePays, Inc. (“SurgePays,” “SP,” “we,” “our” or “the Company”), and its operating subsidiaries, is a technology-driven company building a next generation supply chain software platform that can offer wholesale goods and services more cost efficiently than traditional and existing wholesale distribution models. The parent (SurgePays, Inc.) and subsidiaries are organized as follows: Schedule of Subsidiaries Company Name Incorporation Date State of Incorporation SurgePays, Inc. August 18, 2006 Tennessee KSIX Media, Inc. November 5, 2014 Nevada KSIX, LLC September 14, 2011 Nevada Surge Blockchain, LLC January 29, 2009 Nevada Injury Survey, LLC July 28, 2020 Nevada DigitizeIQ, LLC July 23, 2014 Illinois 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 True Wireless, Inc. * October 29, 2020 Oklahoma ECS Prepaid, LLC June 9, 2009 Missouri Central States Legal Services, Inc. August 1, 2003 Missouri Electronic Check Services, Inc. May 19, 1999 Missouri Torch Wireless ** January 29, 2019 Wyoming * Entity was disposed of on May 7, 2021. ** Effective January 1, 2022, the Company acquired Torch Wireless Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Liquidity and Management’s Plans As reflected in the accompanying consolidated financial statements, for the year ended December 31, 2022, the Company had: ● Net loss available to common stockholders of $ 680,763 ● Net cash used in operations was $ 793,272 Additionally, at December 31, 2022, the Company had: ● Accumulated deficit of $ 35,804,106 ● Stockholders’ equity of $ 5,118,253 ● Working capital of $ 4,099,723 We manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company has cash on hand of $ 7,035,654 The Company has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieve profitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the twelve months ended December 31, 2023, 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Management’s strategic plans include the following: ● Continue the 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 | 12 Months Ended |
Dec. 31, 2022 | |
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. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 up to a $ 100 30 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 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 At the time of acquisition, Torch had nominal revenues and losses. As a result, and given the immaterial nature of this acquisition, the Company has elected not to present any pro-forma financial information. In addition, the Company will pay the Sellers monthly residual payments for customers enrolled by the Company through December 31, 2022 of either $ 2 3 For the year ended December 31, 2022, the Company incurred expenses of $1,679,723 related to the residual payments. All expenses are included as a component of cost of goods sold. This transaction does 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 does not require the presentation of any additional historical audits. For financial reporting purposes, at December 31, 2022, Torch has been consolidated into the Company’s consolidated statements of financial position, results of operations, and cash flows. At December 31, 2022 and 2021 goodwill was $ 1,666,782 866,782 There were no impairment losses for the years ended December 31, 2022 or 2021, respectively. Deconsolidation of Subsidiary In accordance with ASC Topic 810-10-40, a parent company must deconsolidate a subsidiary as of the date the parent ceases to have a controlling interest in that subsidiary and recognize a gain or loss in net income at that time. On May 7, 2021, the Company disposed of its subsidiary True Wireless, Inc. (“TW”), however we retained $ 1,097,659 1,077,659 20,000 20,000 In connection with the sale, the Company received an unsecured note receivable for $ 176,851 0.6% 10% 7,461 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Payments are scheduled as follows: Schedule of Receivables For the Year Ended December 31, 2022: 2023 $ 52,227 2024 89,532 2025 44,766 186,525 Less: amount representing interest (9,674 ) Total $ 176,851 As a result of the sale, we deconsolidated our entire ownership interest in TW from our consolidated financial statements on May 7, 2021, (the effective date of the sale agreement), and recognized a gain on deconsolidation of $ 1,895,871 Schedule of Deconsolidated Ownership Consideration Note receivable $ 176,851 Fair value of consideration received 176,851 Recognized amounts of identifiable assets sold and liabilities assumed by buyer: Cash 325,316 Lifeline revenue due from USAC 74,650 Inventory 107,089 Property and equipment - net 20,645 Operating lease - right of use asset - net 10,981 Total assets sold 538,681 Accounts payable and accrued expenses 1,183,850 Line of credit 912,870 Note payable - SBA government 150,000 Operating lease liability 10,981 Total liabilities assumed by buyer 2,257,701 Total net liabilities assumed by buyer 1,719,020 Gain on deconsolidation of True Wireless 1,895,871 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 11 regarding segment disclosure. The SurgePhone and Torch Wireless business segment made up approximately 73 100 96 The SurgePhone and Torch Wireless business segment made up approximately 17 100 89 Customers in the United States accounted for 100 See Note 11 regarding segment disclosure. Use of Estimates Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material. Significant estimates during the years ended December 31, 2022 and 2021, 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 change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values. The Company’s financial instruments, including cash, accounts receivable, accounts payable and accrued expenses, and accounts payable and accrued expenses – related party, are carried at historical cost. At December 31, 2022 and 2021, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. ASC 825-10 “Financial Instruments” Cash and Cash Equivalents and Concentration of Credit Risk For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At December 31, 2022 and 2021, respectively, the Company did not have any cash equivalents. The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $ 250,000 Accounts Receivable Accounts receivable are stated at the amount management expects to collect from outstanding customer balances. Credit is extended to customers based on an evaluation of their financial condition and other factors. Interest is not accrued on overdue accounts receivable. The Company does not require collateral. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 $ 17,525 137,218 There was a bad debt recovery of $ 59,485 There was bad debt expense of $ 24,841 Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations. 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. During the years ended December 31, 2022 and 2021, the Company recorded a provision for inventory obsolescence of $ 51,718 0 At December 31, 2022 and 2021, the Company had inventory of $ 11,186,242 4,359,296 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 years ended December 31, 2022 and 2021, respectively. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 DECEMBER 31, 2022 AND 2021 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 9. Derivative Liabilities The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”), “ Distinguishing Liabilities from Equity” Derivatives and Hedging” Upon conversion of a note for shares of common stock where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company records the shares at fair value, relieves all related notes, derivatives, and debt discounts, and recognizes a net gain or loss on debt extinguishment. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. Debt Issue Cost Debt issuance cost paid to lenders, or third parties are amortized to interest expense in the consolidated statements of operations, over the life of the underlying debt instrument. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Revenue Recognition The Company recognizes revenue in accordance with ASC 606 to align revenue recognition more closely with the delivery of the Company’s services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps: Identify the contract with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of December 31, 2022 and December 31, 2021, respectively, contained a significant financing component. Allocate the transaction price to performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 revenue stream 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 FCC’s Affordable Connectivity Program (ACP) to qualifying low-income customers in 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 LogicsIQ LogicsIQ is an enterprise software development company providing marketing business intelligence (“BI”), plaintiff generation and case load management solutions for law firms representing plaintiffs in Mass Tort legal cases. Revenues are earned from our lead generation and retained services offerings. Lead generation consist of sourcing leads, which requires us to drive traffic to our landing pages for a specific marketing campaign. We also achieve this in certain marketing campaigns by using third-party preferred vendors to meet the needs of our clients. Revenues are recognized at the time the lead is delivered to the client. If payment is received in advance of the delivery of services, it is included in deferred revenue, and subsequently recognized once the performance obligation has been completed. Retained service offerings consist of turning leads into a retained legal case. To provide this service to our customers, we qualify leads through verification of information collected during the lead generation process. Additionally, we further qualify these leads using a client questionnaire which assists in determining the services to be provided. The qualification process is completed using our call center operations. If payment is received in advance of the delivery of services, it is included in deferred revenue, and subsequently recognized once the performance obligation has been completed. At the time of delivery of leads and the creation of retained cases (customers are qualified at this point), our performance obligation has been completed and revenues are recognized. Arrangements with customers do not provide the customer with the right to take possession of our software or platform at any time. Once the advertising is delivered, it is non-refundable. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 True Wireless (TW) (Former Subsidiary) TW was licensed to provide wireless services to qualifying low-income customers in five states. Revenues were recognized when a lifeline application was completed and accepted. Each month we reconciled subscriber usage to ensure the service was utilized. A monthly file was submitted to the Universal Service Administrative Company for review and approval, at which time we completed our performance obligation and recognized accounts receivable and revenue. Revenues were recorded in the month when services were rendered, with payment typically received on the 15 th TW was sold in May 2021 and was deconsolidated at the disposal date. Contract Liabilities (Deferred Revenue Contract liabilities represent deposits made by customers before the satisfaction of performance obligation and recognition of revenue. Upon completion of the performance obligation(s) that the Company has with the customer based on the terms of the contract, the liability for the customer deposit is relieved and revenue is recognized. At December 31, 2022 and 2021, the Company had deferred revenue of $ 243,110 276,250 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 The following represents the Company’s disaggregation of revenues for the years ended December 31, 2022 and 2021: Schedule of Disaggregation of Revenue from Contracts with Customers For the Year Ended December 31, 2022 2021 Revenue Revenue % of Revenues Revenue % of Revenues Surge Phone and Torch Wireless $ 88,351,547 72.69 % $ 7,289,239 14.28 % Surge Blockchain, LLC 112,911 0.09 % 138,106 0.27 % LogicsIQ, Inc. 16,760,656 13.79 % 17,846,698 34.95 % Surge Fintech & ECS 16,319,076 13.43 % 24,628,566 48.23 % True Wireless - 0.00 % 1,157,980 2.27 % Total Revenues $ 121,544,190 100 % $ 51,060,589 100 % Cost of Revenues Cost of revenues consists of purchased telecom services including data usage |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3 – Property and Equipment Property and equipment consisted of the following: Schedule of Property and Equipment Estimated Useful Type December 31, 2022 December 31, 2021 Lives (Years) Computer equipment and software $ 1,006,286 $ 283,484 3 5 Furniture and fixtures 82,752 82,752 5 7 1,089,038 366,236 Less: accumulated depreciation/amortization (445,665 ) (165,788 ) Property and equipment - net $ 643,373 $ 200,448 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 DECEMBER 31, 2022 AND 2021 Depreciation and amortization expense for the years ended December 31, 2022 and 2021 was $ 279,877 67,125 5,019 These amounts are included as a component of general and administrative expenses in the accompanying consolidated statements of operations. |
Intangibles
Intangibles | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles | Note 4 – Intangibles Intangibles consisted of the following: Schedule of Intangible Assets Estimated Useful Type December 31, 2022 December 31, 2021 Lives (Years) Proprietary Software $ 4,286,402 $ 4,286,402 7 Tradenames/trademarks 617,474 617,474 15 ECS membership agreement 465,000 465,000 1 Noncompetition agreement 201,389 201,389 2 Customer Relationships 183,255 183,255 5 5,753,520 5,753,520 Less: accumulated amortization (2,973,543 ) (2,320,036 ) Intangibles - net $ 2,779,977 $ 3,433,484 Amortization expense for the years ended December 31, 2022 and 2021 was $ 653,507 692,258 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 653,507 2024 653,507 2025 653,507 2026 653,507 2027 165,949 Total $ 2,779,977 |
Internal Use Software Developme
Internal Use Software Development Costs | 12 Months Ended |
Dec. 31, 2022 | |
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 Property Plant and Equipment Estimated Useful Type December 31, 2022 December 31, 2021 Life (Years) Internal Use Software Development Costs $ 387,180 $ - 3 Less: accumulated amortization - - Property and equipment - net $ 387,180 $ - Management has determined that all costs incurred in 2022 related to internal use software development costs related to the application and infrastructure development stage were completed at December 31, 2022. Amortization of these costs will begin in 2023. Based on the Company’s internal use software development costs at December 31, 2022, excluding projects that are not ready for their intended use with a value of $ 387,180 Schedule of Amortization Expenses 2023 129,060 2024 129,060 2025 129,060 Total $ 387,180 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
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 December 31, 2022 and 2021, 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. (2) Economic Injury Disaster Loan (“EIDL”) This program was made available to eligible borrowers in light of the impact of the COVID-19 pandemic and the negative economic impact on the Company’s business. Proceeds from the EIDL are to be used for working capital purposes. Installment payments, including principal and interest, are due monthly (beginning twelve (12) months from the date of the promissory note) in amounts ranging from $ 109 751 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 Principal $ 498,082 $ 150,000 $ 486,600 $ 518,167 $ 1,652,849 Balance - December 31, 2020 $ 498,082 $ 150,000 $ 486,600 $ - $ 1,134,682 Gross proceeds - - - 518,167 518,167 Forgiveness of loan (371,664 ) - - - (371,664 ) 1 Deconsolidation of subsidiary (“TW”) - - (150,000 ) - (150,000 ) 2 Balance - December 31, 2021 126,418 150,000 336,600 518,167 1,131,185 Forgiveness of loan - - - (518,167 ) (518,167 ) 3 Repayments - (4,078 ) (7,676 ) - (11,754 ) Reclassification to note payable (126,418 ) - - - (126,418 ) Balance - December 31, 2022 $ - $ 145,922 $ 328,924 $ - $ 474,846 1 – During 2021, the Company received a partial forgiveness on a PPP loan totaling $ 377,743 , of which $ 371,664 was for principal and $ 6,079 Monthly payments are $3,566/month 2 – In connection with the deconsolidation of TW in 2021, $ 150,000 3 – During 2022, the Company received a forgiveness on a PPP loan totaling $ 524,143 , of which $ 518,167 was for principal and $ 5,976 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Notes Payable – Related Parties Schedule of Notes Payable 1 2 3 Loan Payable Loan Payable Loan Payable Terms Related Party Related Party Related Party Total Issuance dates of notes Various May 2020/January 2021 August 2021 Maturity date January 1, 2023/January 1, 2024 March 2021 August 2031 Interest rate 10% 15% 10% Collateral Unsecured Unsecured Unsecured Conversion price N/A N/A N/A Balance - December 31, 2020 $ 3,341,940 $ 147,500 $ - $ 3,489,440 Gross proceeds 3,825,000 63,000 467,385 4,355,385 Accrued interest included in note balance 692,458 - - 692,458 Conversion of debt into common stock (2,265,967 ) - - (2,265,967 ) Repayments - (210,500 ) - (210,500 ) Balance - December 31, 2021 5,593,431 - 467,385 6,060,816 Less: short term 1,553,799 - - 1,553,799 Long term $ 4,039,632 $ - $ 467,385 $ 4,507,017 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 1 Activity is with the Company’s Chief Executive Officer and Board Member (Kevin Brian Cox). Prior to September 30, 2021, these notes were either due on demand or had a specific due date. Additionally, these advances had interest rates from 6 % - 15 %. On September 30, 2021, all notes and related accrued interest were combined into two (2) new notes. The new notes had due dates of June 30, 2022 or January 1, 2023. In April 2022, the notes were extended to January 1, 2023 and January 1, 2024, respectively. All notes bear interest at 10%. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 In 2021, the Company included $ 692,458 561,758 4.30 2,415,560 2,265,967 149,593 2,415,560 In 2022, the Company included $ 627,545 270,745 4.01 1,086,413 1,086,413 2 Activity is with the Company’s former President, Chief Operating Officer and Board Member (Anthony Nuzzo). Mr. Nuzzo passed away in March 2022. 3 Activity is with David May, who is a Board Member. In January 2023, the Company repaid principal of $ 467,385 63,258 530,643 Notes Payable Schedule of Notes Payable 1 2 3 4 5 Terms Notes Payable Notes Payable Notes Payable Note Payable Notes Payable Note Payable Total Issuance dates of notes April/May 2022 April/June 2022 March 2022 2019 2021 2022 Maturity date October/November 2022 January/February 2023 March 2023 2020 2022 2025 Interest rate 19% 24% 19% 18% 10% 1.00% Default interest rate 26% N/A 26% 0% 0% 0% Collateral Unsecured All assets Unsecured Unsecured Unsecured Unsecured Warrants issued as debt discount/issue costs 36,000 N/A 15,000 N/A 2,406,250 N/A Balance - December 31, 2020 $ - $ - $ - $ 250,000 $ - $ - $ 250,000 Gross proceeds - - - - 1,101,000 - 1,101,000 Debt discount - - - - (672,254 ) - (672,254 ) Amortization of debt discount - - - - 698,511 - 698,511 Repayments - - - (250,000 ) (1,127,257 ) - (1,377,257 ) Balance - December 31, 2021 - - - - - - - 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 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 1 - These notes were issued with 36,000 , three ( 3 ) year warrants, which have been reflected as debt issue costs and are amortized over the life of the debt. 2 - The Company executed a $ 5,000,000 , secured, revolving promissory note with a third party. The Company may draw down on the note at 80 % of eligible accounts receivable. The note was repaid in full in November 2022. See below secured revolving debt. 3 - These notes were issued with 15,000 , three ( 3 ) year warrants, which have been reflected as debt issue costs and were amortized over the life of the debt. Additionally, in 2022, the Company issued an additional 12,000 , three ( 3 ) year warrants, which have been treated as interest expense in connection with extending the maturity date for notes totaling $ 400,000 to March 2023. In October 2022, the Company repaid $ 100,000 . In March 2023, the remaining $ 400,000 4 - In the event of default, these notes were convertible at 75 % of the market price based upon the VWAP in the preceding 10 days. Debt discount on notes totaling $ 1,101,000 in principle included original issue discounts of $ 101,000 and debt discounts associated with warrants totaling $ 229,268 . Additionally, the Company computed a beneficial conversion feature of $ 341,986 . 5 – See Notes Payable – SBA government note summary 1. 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 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Convertible Notes Payable – Net Schedule of Notes Payable Convertible Convertible Terms Notes Payable Notes Payable Total Issuance dates of notes February 2020 - December 2020 January 2021 - March 2021 Maturity date February 2021 - September 2021 May 2021 - March 2022 Interest rate 10 14 5 12 Collateral Unsecured Unsecured Conversion price - A - B Balance - December 31, 2020 $ 1,516,170 $ - $ 1,516,170 Gross proceeds - 2,550,000 2,550,000 Debt discount - (2,460,829 ) (2,460,829 ) Amortization of debt discount 517,781 2,460,829 2,978,610 Repayments - cash - (2,550,000 ) D (2,550,000 ) Conversion to equity/debt modification (2,110,898 ) - (2,110,898 ) Reclassified to receivable 76,947 C - 76,947 Balance - December 31, 2021 $ - $ - $ - A - Convertible at 65 B - Convertible at 70 75 C - During 2021, the Company overpaid a note holder by $ 76,947 D - During 2021, the Company repaid the $ 2,550,000 2,300,000 120 465,239 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Line of Credit The Company had a $ 1,000,000 6 0 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, Loans Payable - Notes Payable - Note Payable Total 2023 $ 1,108,150 $ - $ 1,542,033 $ 2,650,183 2024 4,493,798 - 42,455 4,536,253 2025 - - 10,679 10,679 2026 - - - - 2027 - - - - Thereafter - 474,846 - 474,846 Total $ 5,601,948 $ 474,846 $ 1,595,167 $ 7,671,961 |
Derivative Liabilities
Derivative Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Liabilities | Note 7 – Derivative Liabilities During 2021, the above convertible notes contained embedded conversion options with a conversion price that could result in issuing an undeterminable amount of future common stock to settle the host contract. Accordingly, the embedded conversion option is required to be bifurcated from the host instrument (convertible note) and treated as a liability, which is calculated at fair value, and marked to market at each reporting period. The Company used the binomial pricing model to estimate the fair value of its embedded conversion option liabilities with the following inputs: Schedule of Weighted Average Assumptions December 31, 2021 Expected term (years) 0.20 1 Expected volatility 143 291 % Expected dividends 0 % Risk free interest rate 0.03 0.09 % SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 A reconciliation of the beginning and ending balances for the derivative liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows at December 31, 2021: Summary of Changes in Fair Value Derivative liability - December 31, 2020 $ 1,357,528 Fair value at commitment date 1,877,250 Fair value mark to market adjustment (1,806,763 ) Gain on derivative liability upon related debt settled (1,428,015 ) Derivative liability - December 31, 2021 $ - Changes in fair value of derivative liabilities are included in other income (expense) in the accompanying consolidated statements of operations. During the years ended December 31, 2022 and 2021, the Company recorded a change in fair value of derivative liabilities of $ 0 1,806,763 In connection with bifurcating the embedded conversion option and accounting for this instrument at fair value, the Company computed a fair value on the commitment date, and upon the initial valuation of this instrument, determined that the fair value of the liability exceeded the proceeds of the debt host instrument. As a result, the Company recorded a debt discount at the maximum amount allowed (the face amount of the debt), which required the overage to be recorded as a derivative expense. For the years ended December 31, 2022 and 2021, the Company recorded a derivative expense of $ 0 1,775,057 During the year ended December 31, 2021, in connection with the repayment of convertible notes which contained embedded conversion features, the related derivative liabilities ceased to exist. During the years ended December 31, 2022 and 2021, the Company recorded a gain of $ 0 136,487 During the years ended December 31, 2022 and 2021, the Company recorded a gain of $ 0 1,469,641 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2022 | |
Investments, All Other Investments [Abstract] | |
Fair Value of Financial Instruments | Note 8 – 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 December 31, 2022 and 2021, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9 – Commitments and Contingencies Operating Lease We have entered into various operating lease agreements, including our corporate headquarters. We account for leases in accordance with ASC Topic 842: Leases, 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 DECEMBER 31, 2022 AND 2021 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 December 31, 2022 and 2021, respectively, the Company has no financing leases as defined in ASC 842, “Leases.” The tables below present information regarding the Company’s operating lease assets and liabilities at December 31, 2022 and 2021, respectively: Schedule of Lease Expense For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Operating Leases $ 55,316 $ 170,962 Interest on lease liabilities 22,718 38,093 Total net lease cost $ 78,034 $ 209,055 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Supplemental balance sheet information related to leases was as follows: Schedule of Supplemental Information Related to Leases December 31, 2022 December 31, 2021 Operating leases Operating lease ROU assets - net $ 431,352 $ 486,668 Operating lease liabilities - current 39,490 49,352 Operating lease liabilities - non-current 399,413 438,903 Total operating lease liabilities $ 438,903 $ 488,255 Supplemental cash flow and other information related to leases was as follows: Schedule of Supplemental Cash Flow and Other Information Related to Leases For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Cash paid for amounts included in measurement of lease liabilities Operating cash flows from operating leases $ 49,352 $ 145,684 ROU assets obtained in exchange for lease liabilities Operating leases $ - $ 515,848 Weighted average remaining lease term (in years) Operating leases 7.49 8.25 Weighted average discount rate Operating leases 5 % 5 % Future minimum lease payments at December 31: Schedule of Future Minimum Payments 2023 60,294 2024 61,876 2025 63,460 Thereafter 353,485 Total lease payments 539,115 Less: amount representing interest (100,212 ) Total lease obligations $ 438,903 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 In May 2021, the Company and its landlord mutually agreed to terminate the outstanding lease for ECS. The Company had an outstanding ROU liability of $ 228,752 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. SurgePays – Ambess Litigation On December 17, 2021, Ambess Enterprises, Inc. v SurgePays, Inc., Blair County Pa. case number 2021 GN 3222. Plaintiff alleges breach of contract and prays for damages of approximately $ 73,000.00 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 True Wireless and SurgePays – Litigation Blue Skies Connections, LLC, and True Wireless, Inc. v. SurgePays, Inc., et. al. nd rd 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 100,000.00 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. |
Stockholders_ Equity
Stockholders’ Equity | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Stockholders’ Equity | Note 10 – Stockholders’ Equity Reverse Stock Split On November 2, 2021, the Company effected a 1 for 50 reverse stock split of all classes of its stock At December 31, 2022, the Company had three (3) classes of stock: Common Stock - 500,000,000 - Par value - $ 0.001 - Voting at 1 vote per share SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Series A, Convertible Preferred Stock - 13,000,000 - none - Par value - $ 0.001 - Voting at 10 votes per share - Ranks senior to any other class of preferred stock - Dividends - none - Liquidation preference – none - Rights of redemption - none - Conversion into 1/10 of a share of common stock for each share held In 2022, all Series A, Preferred stockholders, representing 260,000 1,300,000 0 Series C, Convertible Preferred Stock - 1,000,000 - None - Par value - $ 0.001 - Voting at 250 votes per share - Ranks junior to any other class of preferred stock - Dividends – equal to the per share amount (as converted basis) as the common stockholders should the Board of Directors declare a dividend - Liquidation preference – original issue price plus any declared yet unpaid accrued dividends - Rights of redemption - none - Conversion into 250 shares of common stock for each share held In 2021, all Series C, Preferred stockholders, representing 721,598 3,607,980 0 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Equity Transactions for the Year Ended December 31, 2022 Stock Issued as Direct Offering Costs The Company issued 200,000 shares of common stock for services rendered in connection with the listing of our common stock on the Nasdaq Capital Market in 2021. As a result, the Company recorded the par value of the common stock issued with a corresponding charge to additional paid-in capital, resulting in a net effect of $0 to stockholders’ equity. 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 100 100 4.73 473 Equity Transactions for the Year Ended December 31, 2021 NASDAQ Listing On November 2, 2021, the Company was approved to be uplisted to NASDAQ. The common stock and warrants are traded on the Nasdaq Capital Market under the symbols SURG and SURGW, respectively. Stock Issued for Services The Company issued 13,411 99,436 5 14.05 Stock and Warrants Issued for Cash and Related Direct Offering Costs The Company issued an aggregate 4,862,247 21,294,800 4.30 8 2,222,952 19,076,710 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Of the 4,862,247 4,600,000 690,000 On November 4, 2021, the Company issued 4,600,000 one share of common stock and one warrant 690,000 4.30 19,786,900 19,780,000 4,600,000 4.30 6,900 690,000 0.01 4.73 3 In connection with the Company’s sale of common stock, the Company incurred direct offering costs of $ 2,222,952 19,076,710 On November 4, 2021, the Company issued 230,000 5 4.73 647,897 Schedule of Fair Value of Warrants Expected term (years) 3 Expected volatility 118 % Expected dividends 0 % Risk free interest rate 0.53 % Since these warrants were issued as direct offering costs associated with the offering, the Company has accounted for these warrants as both a charge and increase to additional paid-in capital, resulting in a net effect on stockholders’ equity of $ 0 These 230,000 68,161 0 Exercise of Warrants The Company issued 2,133 0 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Stock and Warrants Issued as Debt Discount During 2021, the Company issued stock and warrants in connection with the issuance of debt and derivative liabilities totaling $ 3,562,829 18,000 137,500 3 8 2,645,890 102,194 2,748,084 Fair value of the warrants was determined using a Black-Scholes option pricing model with the following inputs: Schedule of Fair Value of Warrants Expected term (years) 3 Expected volatility 118 % Expected dividends 0 % Risk free interest rate 0.53 % Conversion of Debt The Company issued 709,674 3,363,561 0.05 10.38 Make-whole Arrangement The Company issued 15,147 90,401 5.60 6 Stock Issued for Debt Modification The Company issued 13,916 108,931 5.60 8 Stock Issued in Settlement of Liabilities The Company issued 276,702 1,997,977 4.50 15.99 1,469,641 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Stock Issued in Acquisition of Membership Interest in ECS On January 30, 2020, the Company entered into a Membership Interest Purchase Agreement and Stock Purchase Agreement with ECS Prepaid, ECS, CSLS and the Winfrey’s. Pursuant to the agreements, the Company acquired all the membership interests of ECS Prepaid and all of the issued and outstanding stock of each ECS and CSLS. The agreements provide that the consideration is to be paid by the Company through the issuance of 10,000 500 2,000 17,900 8.95 5,500 Stock Options Stock option transactions for the years ended December 31, 2022 and 2021 are summarized as follows: Schedule of Stock Option Transactions Weighted Weighted Weighted Average Average Average Remaining Aggregate Grant Number of Exercise Contractual Intrinsic Date Stock Options Options Price Term (Years) Value Fair Value Outstanding - December 31, 2020 17,004 $ 16.00 6.16 $ - $ - Vested and Exercisable - December 31, 2020 - $ - - $ - $ - Unvested and non-exercisable - December 31, 2020 17,004 $ 16.00 6.16 $ - $ - Granted - - $ - Exercised - - Cancelled/Forfeited - - Outstanding - December 31, 2021 17,004 $ 16.00 5.16 $ - $ - Vested and Exercisable - December 31, 2021 3,401 $ 16.00 5.16 $ - $ - Unvested and non-exercisable - December 31, 2021 13,603 $ 16.00 5.16 $ - $ - Granted - - $ - Exercised - - Cancelled/Forfeited - - Outstanding - December 31, 2022 17,004 $ 16.00 1.16 $ - $ - Vested and Exercisable - December 31, 2022 6,801 $ 16.00 1.16 $ - $ - Unvested and non-exercisable - December 31, 2022 10,203 $ 16.00 1.16 $ - $ - SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 During 2022 and 2021, 3,400 6,801 Compensation expense recorded for stock-based compensation is as follows for the years ended December 31, 2022 and 2021, was $ 37,176 37,176 As of December 31, 2022, compensation cost related to the unvested options not yet recognized was $ 43,370 Weighted average period in which compensation will vest (years) 1.16 Warrants Warrant activity for the years ended December 31, 2022 and 2021 are summarized as follows: Schedule of Warrants Activity Weighted Average Weighted Remaining Aggregate Number of Average Contractual Intrinsic Warrants Warrants Exercise Price Term (Years) Value Outstanding - December 31, 2020 194,317 $ 32.50 1.52 $ - Vested and Exercisable - December 31, 2020 194,317 $ 32.50 1.52 $ - Granted 5,935,450 $ 8.01 - - Exercised (2,133 ) $ 12.50 - - Cancelled/Forfeited (44,650 ) $ 23.49 - - Outstanding - December 31, 2021 6,082,984 $ 8.68 2.93 $ - 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 - $ - - $ - SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 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 of 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 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 % Warrant Transactions for the Year Ended December 31, 2021 During 2021, the Company granted 277,950 137,500 3 5 8 12 Additionally, in connection with the listing of our common stock on the Nasdaq Capital Market.., 5,290,000 230,000 230,000 6 68,161 In connection with the listing of our common stock on the Nasdaq Capital Market. 433,017 74,476 The fair value of these warrants was determined using a Black-Scholes option pricing model with the following inputs: Schedule of Fair Value of Warrants Expected term (years) 3 5 Expected volatility 119 146 % Expected dividends 0 % Risk free interest rate 0.07 1.15 % |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | Note 11 – 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 the performance of its operating segments based on revenue and operating loss. All data below is prior to intercompany eliminations. Segment information for the years ended December 31, 2022 and 2021, are as follows: SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Schedule of Operating Segments 2022 2021 For the Years Ended December 31, 2022 2021 Revenues Surge Phone and Torch Wireless $ 88,351,547 $ 7,289,239 Surge Blockchain, LLC 112,911 138,106 LogicsIQ, Inc. 16,760,656 17,846,698 Surge Fintech & ECS 16,319,076 24,628,566 True Wireless - 1,157,980 Surge Pays, Inc. - - Total $ 121,544,190 $ 51,060,589 Cost of revenues Surge Phone and Torch Wireless $ 76,130,286 $ 6,082,121 Surge Blockchain, LLC 2,517 1,377 LogicsIQ, Inc. 14,975,647 14,715,499 Surge Fintech & ECS 16,966,332 23,785,551 True Wireless - 306,062 Surge Pays, Inc. - - Total $ 108,074,782 $ 44,890,610 Operating expenses Surge Phone and Torch Wireless $ 299,406 $ 46,994 Surge Blockchain, LLC 53,571 12,025 LogicsIQ, Inc. 1,460,750 2,425,975 Surge Fintech & ECS 1,327,517 1,389,680 True Wireless - 615,013 Surge Pays, Inc. 9,694,379 7,672,860 Total $ 12,835,623 $ 12,162,547 Income (loss) from operations Surge Phone and Torch Wireless $ 11,921,855 $ 1,160,124 Surge Blockchain, LLC 56,823 124,704 LogicsIQ, Inc. 324,259 705,224 Surge Fintech & ECS (1,974,773 ) (546,665 ) True Wireless - 236,905 Surge Pays, Inc. (9,694,379 ) (7,672,860 ) Total $ 633,785 $ (5,992,568 ) SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Segment information for the Company’s assets and liabilities at December 31, 2022 and 2021, are as follows: December 31, 2022 December 31, 2021 Total Assets Surge Phone and Torch Wireless $ 27,239,365 $ (161,110 ) Surge Blockchain, LLC (550,782 ) (608,188 ) LogicsIQ, Inc. 2,500,499 1,284,562 Surge Fintech & ECS 1,906,212 3,870,409 True Wireless - - Surge Pays, Inc. 2,908,212 15,114,529 Total $ 34,003,506 $ 19,500,202 Total Liabilities Surge Phone and Torch Wireless $ 15,484,392 $ 5,773 Surge Blockchain, LLC 198,197 197,614 LogicsIQ, Inc. 2,619,521 2,056,886 Surge Fintech & ECS 58,919 48,346 True Wireless - - Surge Pays, Inc. 10,524,224 13,640,262 Total $ 28,885,253 $ 15,948,881 |
Installment Sale Liability
Installment Sale Liability | 12 Months Ended |
Dec. 31, 2022 | |
Installment Sale Liability | |
Installment Sale Liability | Note 12 – 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 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Repayment Period Each installment sale contract shall be repaid over a period of nine (9) months. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Covenants At December 31, 2022, 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. Accounts Payable and Accrued Expenses At December 31, 2022 and 2021, the Company has recorded an installment sale liability of $ 13,018,184 0 During the years ended December 31, 2022 and 2021, the Company paid fees of $ 1,499,007 0 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13 – Income Taxes The Company’s tax expense differs from the “expected” tax expense for the period (computed by applying the blended corporate rate and state tax rates of 26.14 Schedule of Components of Income Tax Expense (Benefit) December 31, 2022 December 31, 2021 Federal income tax benefit - 19.64 $ (134,000 ) $ (2,657,000 ) State income tax - 6.5 (44,000 ) (880,000 ) Non-deductible items 1,000 (495,000 ) Subtotal (177,000 ) (4,032,000 ) Change in valuation allowance 177,000 4,032,000 Income tax benefit $ - $ - The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2022 and 2021, respectively, are approximately as follows: Schedule of Deferred Tax Assets December 31, 2022 December 31, 2021 Bad debt $ 22,000 $ 6,000 (Gain) loss on investment in Centercom - related party 25,000 48,000 Amortization of ROU Assets (14,000 ) - Amortization of debt discount 404,000 434,000 Share based payments/option compensation (84,000 ) (47,000 ) Change in fair value of derivative liabilities (321,000 ) (321,000 ) Other - (2,000 ) Net operating loss carryforwards (8,869,000 ) (7,824,000 ) Total deferred tax assets (8,837,000 ) (7,706,000 ) Less: valuation allowance 8,837,000 7,706,000 Net deferred tax asset recorded $ - $ - Deferred tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary differences and other tax attributes, such as net operating loss carryforwards. In assessing if the deferred tax assets will be realized, the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible temporary differences reverse. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 During the year ended December 31, 2022, the valuation allowance increased by approximately $ 1,131,000 At December 31, 2022, the Company has federal and state net operating loss carryforwards, which are available to offset future taxable income, of approximately 33,935,000 8,869,000 These carryforwards may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than fifty percentage points over a three- year period. The Company has not completed an IRC Section 382/383 analysis. If a change in ownership were to have occurred, NOL and tax credit carryforwards could be eliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate. The Company files corporate income tax returns in the United States and State of Tennessee jurisdictions. Due to the Company’s net operating loss posture, all tax years are open and subject to income tax examination by tax authorities. The Company’s policy is to recognize interest expense and penalties related to income tax matters as tax expense. At December 31, 2022 and 2021, respectively, there are no unrecognized tax benefits, and there were no significant accruals for interest related to unrecognized tax benefits or tax penalties. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14 - Subsequent Events Employment Agreements The Company is currently finalizing amendments to the terms of its executive employment agreements with its Chief Executive Officer and Chief Financial Officer. Both agreements have been approved by the Board of Directors. These agreements are expected to be completed during the second quarter of 2023. 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 Schedule 14A Information filed with the US Securities and Exchange Commission on January 19, 2023 for a complete detail of the Plan. Stock Issued For Services The Company issued 20,000 119,200 5.96 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
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. |
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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 up to a $ 100 30 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 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 At the time of acquisition, Torch had nominal revenues and losses. As a result, and given the immaterial nature of this acquisition, the Company has elected not to present any pro-forma financial information. In addition, the Company will pay the Sellers monthly residual payments for customers enrolled by the Company through December 31, 2022 of either $ 2 3 For the year ended December 31, 2022, the Company incurred expenses of $1,679,723 related to the residual payments. All expenses are included as a component of cost of goods sold. This transaction does 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 does not require the presentation of any additional historical audits. For financial reporting purposes, at December 31, 2022, Torch has been consolidated into the Company’s consolidated statements of financial position, results of operations, and cash flows. At December 31, 2022 and 2021 goodwill was $ 1,666,782 866,782 There were no impairment losses for the years ended December 31, 2022 or 2021, respectively. |
Deconsolidation of Subsidiary | Deconsolidation of Subsidiary In accordance with ASC Topic 810-10-40, a parent company must deconsolidate a subsidiary as of the date the parent ceases to have a controlling interest in that subsidiary and recognize a gain or loss in net income at that time. On May 7, 2021, the Company disposed of its subsidiary True Wireless, Inc. (“TW”), however we retained $ 1,097,659 1,077,659 20,000 20,000 In connection with the sale, the Company received an unsecured note receivable for $ 176,851 0.6% 10% 7,461 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Payments are scheduled as follows: Schedule of Receivables For the Year Ended December 31, 2022: 2023 $ 52,227 2024 89,532 2025 44,766 186,525 Less: amount representing interest (9,674 ) Total $ 176,851 As a result of the sale, we deconsolidated our entire ownership interest in TW from our consolidated financial statements on May 7, 2021, (the effective date of the sale agreement), and recognized a gain on deconsolidation of $ 1,895,871 Schedule of Deconsolidated Ownership Consideration Note receivable $ 176,851 Fair value of consideration received 176,851 Recognized amounts of identifiable assets sold and liabilities assumed by buyer: Cash 325,316 Lifeline revenue due from USAC 74,650 Inventory 107,089 Property and equipment - net 20,645 Operating lease - right of use asset - net 10,981 Total assets sold 538,681 Accounts payable and accrued expenses 1,183,850 Line of credit 912,870 Note payable - SBA government 150,000 Operating lease liability 10,981 Total liabilities assumed by buyer 2,257,701 Total net liabilities assumed by buyer 1,719,020 Gain on deconsolidation of True Wireless 1,895,871 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 |
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 11 regarding segment disclosure. The SurgePhone and Torch Wireless business segment made up approximately 73 100 96 The SurgePhone and Torch Wireless business segment made up approximately 17 100 89 Customers in the United States accounted for 100 See Note 11 regarding segment disclosure. |
Use of Estimates | Use of Estimates Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material. Significant estimates during the years ended December 31, 2022 and 2021, 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 change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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. |
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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values. The Company’s financial instruments, including cash, accounts receivable, accounts payable and accrued expenses, and accounts payable and accrued expenses – related party, are carried at historical cost. At December 31, 2022 and 2021, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. ASC 825-10 “Financial Instruments” |
Cash and Cash Equivalents and Concentration of Credit Risk | Cash and Cash Equivalents and Concentration of Credit Risk For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At December 31, 2022 and 2021, respectively, the Company did not have any cash equivalents. The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $ 250,000 |
Accounts Receivable | Accounts Receivable Accounts receivable are stated at the amount management expects to collect from outstanding customer balances. Credit is extended to customers based on an evaluation of their financial condition and other factors. Interest is not accrued on overdue accounts receivable. The Company does not require collateral. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 $ 17,525 137,218 There was a bad debt recovery of $ 59,485 There was bad debt expense of $ 24,841 Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations. |
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. During the years ended December 31, 2022 and 2021, the Company recorded a provision for inventory obsolescence of $ 51,718 0 At December 31, 2022 and 2021, the Company had inventory of $ 11,186,242 4,359,296 |
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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 years ended December 31, 2022 and 2021, respectively. |
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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 DECEMBER 31, 2022 AND 2021 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 9. |
Derivative Liabilities | Derivative Liabilities The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”), “ Distinguishing Liabilities from Equity” Derivatives and Hedging” Upon conversion of a note for shares of common stock where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company records the shares at fair value, relieves all related notes, derivatives, and debt discounts, and recognizes a net gain or loss on debt extinguishment. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. |
Debt Issue Cost | Debt Issue Cost Debt issuance cost paid to lenders, or third parties are amortized to interest expense in the consolidated statements of operations, over the life of the underlying debt instrument. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606 to align revenue recognition more closely with the delivery of the Company’s services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps: Identify the contract with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of December 31, 2022 and December 31, 2021, respectively, contained a significant financing component. Allocate the transaction price to performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 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 revenue stream 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 FCC’s Affordable Connectivity Program (ACP) to qualifying low-income customers in 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 LogicsIQ LogicsIQ is an enterprise software development company providing marketing business intelligence (“BI”), plaintiff generation and case load management solutions for law firms representing plaintiffs in Mass Tort legal cases. Revenues are earned from our lead generation and retained services offerings. Lead generation consist of sourcing leads, which requires us to drive traffic to our landing pages for a specific marketing campaign. We also achieve this in certain marketing campaigns by using third-party preferred vendors to meet the needs of our clients. Revenues are recognized at the time the lead is delivered to the client. If payment is received in advance of the delivery of services, it is included in deferred revenue, and subsequently recognized once the performance obligation has been completed. Retained service offerings consist of turning leads into a retained legal case. To provide this service to our customers, we qualify leads through verification of information collected during the lead generation process. Additionally, we further qualify these leads using a client questionnaire which assists in determining the services to be provided. The qualification process is completed using our call center operations. If payment is received in advance of the delivery of services, it is included in deferred revenue, and subsequently recognized once the performance obligation has been completed. At the time of delivery of leads and the creation of retained cases (customers are qualified at this point), our performance obligation has been completed and revenues are recognized. Arrangements with customers do not provide the customer with the right to take possession of our software or platform at any time. Once the advertising is delivered, it is non-refundable. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 True Wireless (TW) (Former Subsidiary) TW was licensed to provide wireless services to qualifying low-income customers in five states. Revenues were recognized when a lifeline application was completed and accepted. Each month we reconciled subscriber usage to ensure the service was utilized. A monthly file was submitted to the Universal Service Administrative Company for review and approval, at which time we completed our performance obligation and recognized accounts receivable and revenue. Revenues were recorded in the month when services were rendered, with payment typically received on the 15 th TW was sold in May 2021 and was deconsolidated at the disposal date. |
Contract Liabilities (Deferred Revenue | Contract Liabilities (Deferred Revenue Contract liabilities represent deposits made by customers before the satisfaction of performance obligation and recognition of revenue. Upon completion of the performance obligation(s) that the Company has with the customer based on the terms of the contract, the liability for the customer deposit is relieved and revenue is recognized. At December 31, 2022 and 2021, the Company had deferred revenue of $ 243,110 276,250 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 The following represents the Company’s disaggregation of revenues for the years ended December 31, 2022 and 2021: Schedule of Disaggregation of Revenue from Contracts with Customers For the Year Ended December 31, 2022 2021 Revenue Revenue % of Revenues Revenue % of Revenues Surge Phone and Torch Wireless $ 88,351,547 72.69 % $ 7,289,239 14.28 % Surge Blockchain, LLC 112,911 0.09 % 138,106 0.27 % LogicsIQ, Inc. 16,760,656 13.79 % 17,846,698 34.95 % Surge Fintech & ECS 16,319,076 13.43 % 24,628,566 48.23 % True Wireless - 0.00 % 1,157,980 2.27 % Total Revenues $ 121,544,190 100 % $ 51,060,589 100 % |
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, marketing services 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 December 31, 2022 and 2021, 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 years ended December 31, 2022 and 2021, respectively. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 |
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 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. At December 31, 2022 and 2021, our investment in CenterCom was $ 354,206 443,288 During the years ended December 31, 2022 and 2021, we recognized a loss of $ 89,082 28,676 During 2021, CenterCom forgave $ 429,010 |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. Advertising costs are included as a component of general and administrative expense in the consolidated statements of operations. The Company recognized $ 259,393 661,238 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options. The 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 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 |
Basic and Diluted Earnings (Loss) per Share and Reverse Stock Split | Basic and Diluted Earnings (Loss) per Share and Reverse Stock Split Pursuant to ASC 260-10-45, basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the periods presented. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares may consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. In the event of a net loss, diluted loss per share is the same as basic loss per share since the effect of the potential common stock equivalents upon conversion would be anti-dilutive. The following potentially dilutive equity securities outstanding as of December 31, 2022 and 2021 were as follows: Schedule of Diluted Net Income (Loss) Per Share December 31, 2022 December 31, 2021 Warrants 5,681,392 5,852,984 Stock options 6,801 3,401 Series A, convertible preferred stock (1) - 26,000 Total common stock equivalents 5,688,193 5,882,385 1 each share converts to 1/10 of a share of common stock Warrants and stock options included as common stock equivalents represent those that are vested and exercisable. See Note 10. Based on the potential common 500,000,000 ) to settle any potential exercises of common stock equivalents. |
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 years ended December 31, 2022 and 2021, the Company incurred expenses with related parties in the normal course of business totaling $ 20,125,153 4,157,192 Schedule of Related Party Expenses 2022 2021 For the Years Ended December 31, 2022 2021 Related party expenses 321 Communications, Inc $ 16,035,093 $ 690,398 Axia Management, LLC - 95,415 Carddawg Investments, Inc. 166,356 64,488 CenterCom USA, Inc 2,759,763 2,089,101 Galaxy - 1,217,790 National Relief Telecom 1,163,941 - Total $ 20,125,153 $ 4,157,192 Total related party expenses $ 20,125,153 $ 4,157,192 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 The Company uses certain credit cards to pay expenses, these credit cards are in the names of certain of the Company’s officers and directors. |
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. |
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) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Subsidiaries | The parent (SurgePays, Inc.) and subsidiaries are organized as follows: Schedule of Subsidiaries Company Name Incorporation Date State of Incorporation SurgePays, Inc. August 18, 2006 Tennessee KSIX Media, Inc. November 5, 2014 Nevada KSIX, LLC September 14, 2011 Nevada Surge Blockchain, LLC January 29, 2009 Nevada Injury Survey, LLC July 28, 2020 Nevada DigitizeIQ, LLC July 23, 2014 Illinois 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 True Wireless, Inc. * October 29, 2020 Oklahoma ECS Prepaid, LLC June 9, 2009 Missouri Central States Legal Services, Inc. August 1, 2003 Missouri Electronic Check Services, Inc. May 19, 1999 Missouri Torch Wireless ** January 29, 2019 Wyoming * Entity was disposed of on May 7, 2021. ** Effective January 1, 2022, the Company acquired Torch Wireless |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Receivables | Schedule of Receivables For the Year Ended December 31, 2022: 2023 $ 52,227 2024 89,532 2025 44,766 186,525 Less: amount representing interest (9,674 ) Total $ 176,851 |
Schedule of Deconsolidated Ownership | As a result of the sale, we deconsolidated our entire ownership interest in TW from our consolidated financial statements on May 7, 2021, (the effective date of the sale agreement), and recognized a gain on deconsolidation of $ 1,895,871 Schedule of Deconsolidated Ownership Consideration Note receivable $ 176,851 Fair value of consideration received 176,851 Recognized amounts of identifiable assets sold and liabilities assumed by buyer: Cash 325,316 Lifeline revenue due from USAC 74,650 Inventory 107,089 Property and equipment - net 20,645 Operating lease - right of use asset - net 10,981 Total assets sold 538,681 Accounts payable and accrued expenses 1,183,850 Line of credit 912,870 Note payable - SBA government 150,000 Operating lease liability 10,981 Total liabilities assumed by buyer 2,257,701 Total net liabilities assumed by buyer 1,719,020 Gain on deconsolidation of True Wireless 1,895,871 |
Schedule of Disaggregation of Revenue from Contracts with Customers | The following represents the Company’s disaggregation of revenues for the years ended December 31, 2022 and 2021: Schedule of Disaggregation of Revenue from Contracts with Customers For the Year Ended December 31, 2022 2021 Revenue Revenue % of Revenues Revenue % of Revenues Surge Phone and Torch Wireless $ 88,351,547 72.69 % $ 7,289,239 14.28 % Surge Blockchain, LLC 112,911 0.09 % 138,106 0.27 % LogicsIQ, Inc. 16,760,656 13.79 % 17,846,698 34.95 % Surge Fintech & ECS 16,319,076 13.43 % 24,628,566 48.23 % True Wireless - 0.00 % 1,157,980 2.27 % Total Revenues $ 121,544,190 100 % $ 51,060,589 100 % |
Schedule of Diluted Net Income (Loss) Per Share | The following potentially dilutive equity securities outstanding as of December 31, 2022 and 2021 were as follows: Schedule of Diluted Net Income (Loss) Per Share December 31, 2022 December 31, 2021 Warrants 5,681,392 5,852,984 Stock options 6,801 3,401 Series A, convertible preferred stock (1) - 26,000 Total common stock equivalents 5,688,193 5,882,385 1 each share converts to 1/10 of a share of common stock |
Schedule of Related Party Expenses | Schedule of Related Party Expenses 2022 2021 For the Years Ended December 31, 2022 2021 Related party expenses 321 Communications, Inc $ 16,035,093 $ 690,398 Axia Management, LLC - 95,415 Carddawg Investments, Inc. 166,356 64,488 CenterCom USA, Inc 2,759,763 2,089,101 Galaxy - 1,217,790 National Relief Telecom 1,163,941 - Total $ 20,125,153 $ 4,157,192 Total related party expenses $ 20,125,153 $ 4,157,192 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following: Schedule of Property and Equipment Estimated Useful Type December 31, 2022 December 31, 2021 Lives (Years) Computer equipment and software $ 1,006,286 $ 283,484 3 5 Furniture and fixtures 82,752 82,752 5 7 1,089,038 366,236 Less: accumulated depreciation/amortization (445,665 ) (165,788 ) Property and equipment - net $ 643,373 $ 200,448 |
Intangibles (Tables)
Intangibles (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangibles consisted of the following: Schedule of Intangible Assets Estimated Useful Type December 31, 2022 December 31, 2021 Lives (Years) Proprietary Software $ 4,286,402 $ 4,286,402 7 Tradenames/trademarks 617,474 617,474 15 ECS membership agreement 465,000 465,000 1 Noncompetition agreement 201,389 201,389 2 Customer Relationships 183,255 183,255 5 5,753,520 5,753,520 Less: accumulated amortization (2,973,543 ) (2,320,036 ) Intangibles - net $ 2,779,977 $ 3,433,484 |
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 653,507 2024 653,507 2025 653,507 2026 653,507 2027 165,949 Total $ 2,779,977 |
Internal Use Software Develop_2
Internal Use Software Development Costs (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Internal Use Software Development Costs | |
Schedule of Property Plant and Equipment | Internal Use Software Development Costs consisted of the following: Schedule of Property Plant and Equipment Estimated Useful Type December 31, 2022 December 31, 2021 Life (Years) Internal Use Software Development Costs $ 387,180 $ - 3 Less: accumulated amortization - - Property and equipment - net $ 387,180 $ - |
Schedule of Amortization Expenses | Schedule of Amortization Expenses 2023 129,060 2024 129,060 2025 129,060 Total $ 387,180 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, Loans Payable - Notes Payable - Note Payable Total 2023 $ 1,108,150 $ - $ 1,542,033 $ 2,650,183 2024 4,493,798 - 42,455 4,536,253 2025 - - 10,679 10,679 2026 - - - - 2027 - - - - Thereafter - 474,846 - 474,846 Total $ 5,601,948 $ 474,846 $ 1,595,167 $ 7,671,961 |
Notes Payable [Member] | |
Short-Term Debt [Line Items] | |
Schedule of Notes Payable | Notes Payable Schedule of Notes Payable 1 2 3 4 5 Terms Notes Payable Notes Payable Notes Payable Note Payable Notes Payable Note Payable Total Issuance dates of notes April/May 2022 April/June 2022 March 2022 2019 2021 2022 Maturity date October/November 2022 January/February 2023 March 2023 2020 2022 2025 Interest rate 19% 24% 19% 18% 10% 1.00% Default interest rate 26% N/A 26% 0% 0% 0% Collateral Unsecured All assets Unsecured Unsecured Unsecured Unsecured Warrants issued as debt discount/issue costs 36,000 N/A 15,000 N/A 2,406,250 N/A Balance - December 31, 2020 $ - $ - $ - $ 250,000 $ - $ - $ 250,000 Gross proceeds - - - - 1,101,000 - 1,101,000 Debt discount - - - - (672,254 ) - (672,254 ) Amortization of debt discount - - - - 698,511 - 698,511 Repayments - - - (250,000 ) (1,127,257 ) - (1,377,257 ) Balance - December 31, 2021 - - - - - - - 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 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 1 - These notes were issued with 36,000 , three ( 3 ) year warrants, which have been reflected as debt issue costs and are amortized over the life of the debt. 2 - The Company executed a $ 5,000,000 , secured, revolving promissory note with a third party. The Company may draw down on the note at 80 % of eligible accounts receivable. The note was repaid in full in November 2022. See below secured revolving debt. 3 - These notes were issued with 15,000 , three ( 3 ) year warrants, which have been reflected as debt issue costs and were amortized over the life of the debt. Additionally, in 2022, the Company issued an additional 12,000 , three ( 3 ) year warrants, which have been treated as interest expense in connection with extending the maturity date for notes totaling $ 400,000 to March 2023. In October 2022, the Company repaid $ 100,000 . In March 2023, the remaining $ 400,000 4 - In the event of default, these notes were convertible at 75 % of the market price based upon the VWAP in the preceding 10 days. Debt discount on notes totaling $ 1,101,000 in principle included original issue discounts of $ 101,000 and debt discounts associated with warrants totaling $ 229,268 . Additionally, the Company computed a beneficial conversion feature of $ 341,986 . 5 – See Notes Payable – SBA government note summary 1. |
Convertible Notes Payable [Member] | |
Short-Term Debt [Line Items] | |
Schedule of Notes Payable | Convertible Notes Payable – Net Schedule of Notes Payable Convertible Convertible Terms Notes Payable Notes Payable Total Issuance dates of notes February 2020 - December 2020 January 2021 - March 2021 Maturity date February 2021 - September 2021 May 2021 - March 2022 Interest rate 10 14 5 12 Collateral Unsecured Unsecured Conversion price - A - B Balance - December 31, 2020 $ 1,516,170 $ - $ 1,516,170 Gross proceeds - 2,550,000 2,550,000 Debt discount - (2,460,829 ) (2,460,829 ) Amortization of debt discount 517,781 2,460,829 2,978,610 Repayments - cash - (2,550,000 ) D (2,550,000 ) Conversion to equity/debt modification (2,110,898 ) - (2,110,898 ) Reclassified to receivable 76,947 C - 76,947 Balance - December 31, 2021 $ - $ - $ - A - Convertible at 65 B - Convertible at 70 75 C - During 2021, the Company overpaid a note holder by $ 76,947 D - During 2021, the Company repaid the $ 2,550,000 2,300,000 120 465,239 |
Related Party [Member] | |
Short-Term Debt [Line Items] | |
Schedule of Notes Payable | Notes Payable – Related Parties Schedule of Notes Payable 1 2 3 Loan Payable Loan Payable Loan Payable Terms Related Party Related Party Related Party Total Issuance dates of notes Various May 2020/January 2021 August 2021 Maturity date January 1, 2023/January 1, 2024 March 2021 August 2031 Interest rate 10% 15% 10% Collateral Unsecured Unsecured Unsecured Conversion price N/A N/A N/A Balance - December 31, 2020 $ 3,341,940 $ 147,500 $ - $ 3,489,440 Gross proceeds 3,825,000 63,000 467,385 4,355,385 Accrued interest included in note balance 692,458 - - 692,458 Conversion of debt into common stock (2,265,967 ) - - (2,265,967 ) Repayments - (210,500 ) - (210,500 ) Balance - December 31, 2021 5,593,431 - 467,385 6,060,816 Less: short term 1,553,799 - - 1,553,799 Long term $ 4,039,632 $ - $ 467,385 $ 4,507,017 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 |
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 Principal $ 498,082 $ 150,000 $ 486,600 $ 518,167 $ 1,652,849 Balance - December 31, 2020 $ 498,082 $ 150,000 $ 486,600 $ - $ 1,134,682 Gross proceeds - - - 518,167 518,167 Forgiveness of loan (371,664 ) - - - (371,664 ) 1 Deconsolidation of subsidiary (“TW”) - - (150,000 ) - (150,000 ) 2 Balance - December 31, 2021 126,418 150,000 336,600 518,167 1,131,185 Forgiveness of loan - - - (518,167 ) (518,167 ) 3 Repayments - (4,078 ) (7,676 ) - (11,754 ) Reclassification to note payable (126,418 ) - - - (126,418 ) Balance - December 31, 2022 $ - $ 145,922 $ 328,924 $ - $ 474,846 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Schedule of Weighted Average Assumptions | The Company used the binomial pricing model to estimate the fair value of its embedded conversion option liabilities with the following inputs: Schedule of Weighted Average Assumptions December 31, 2021 Expected term (years) 0.20 1 Expected volatility 143 291 % Expected dividends 0 % Risk free interest rate 0.03 0.09 % |
Summary of Changes in Fair Value | A reconciliation of the beginning and ending balances for the derivative liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows at December 31, 2021: Summary of Changes in Fair Value Derivative liability - December 31, 2020 $ 1,357,528 Fair value at commitment date 1,877,250 Fair value mark to market adjustment (1,806,763 ) Gain on derivative liability upon related debt settled (1,428,015 ) Derivative liability - December 31, 2021 $ - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Lease Expense | The tables below present information regarding the Company’s operating lease assets and liabilities at December 31, 2022 and 2021, respectively: Schedule of Lease Expense For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Operating Leases $ 55,316 $ 170,962 Interest on lease liabilities 22,718 38,093 Total net lease cost $ 78,034 $ 209,055 |
Schedule of Supplemental Information Related to Leases | Supplemental balance sheet information related to leases was as follows: Schedule of Supplemental Information Related to Leases December 31, 2022 December 31, 2021 Operating leases Operating lease ROU assets - net $ 431,352 $ 486,668 Operating lease liabilities - current 39,490 49,352 Operating lease liabilities - non-current 399,413 438,903 Total operating lease liabilities $ 438,903 $ 488,255 |
Schedule of Supplemental Cash Flow and Other Information Related to Leases | Supplemental cash flow and other information related to leases was as follows: Schedule of Supplemental Cash Flow and Other Information Related to Leases For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Cash paid for amounts included in measurement of lease liabilities Operating cash flows from operating leases $ 49,352 $ 145,684 ROU assets obtained in exchange for lease liabilities Operating leases $ - $ 515,848 Weighted average remaining lease term (in years) Operating leases 7.49 8.25 Weighted average discount rate Operating leases 5 % 5 % |
Schedule of Future Minimum Payments | Future minimum lease payments at December 31: Schedule of Future Minimum Payments 2023 60,294 2024 61,876 2025 63,460 Thereafter 353,485 Total lease payments 539,115 Less: amount representing interest (100,212 ) Total lease obligations $ 438,903 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Schedule of Stock Option Transactions | Stock option transactions for the years ended December 31, 2022 and 2021 are summarized as follows: Schedule of Stock Option Transactions Weighted Weighted Weighted Average Average Average Remaining Aggregate Grant Number of Exercise Contractual Intrinsic Date Stock Options Options Price Term (Years) Value Fair Value Outstanding - December 31, 2020 17,004 $ 16.00 6.16 $ - $ - Vested and Exercisable - December 31, 2020 - $ - - $ - $ - Unvested and non-exercisable - December 31, 2020 17,004 $ 16.00 6.16 $ - $ - Granted - - $ - Exercised - - Cancelled/Forfeited - - Outstanding - December 31, 2021 17,004 $ 16.00 5.16 $ - $ - Vested and Exercisable - December 31, 2021 3,401 $ 16.00 5.16 $ - $ - Unvested and non-exercisable - December 31, 2021 13,603 $ 16.00 5.16 $ - $ - Granted - - $ - Exercised - - Cancelled/Forfeited - - Outstanding - December 31, 2022 17,004 $ 16.00 1.16 $ - $ - Vested and Exercisable - December 31, 2022 6,801 $ 16.00 1.16 $ - $ - Unvested and non-exercisable - December 31, 2022 10,203 $ 16.00 1.16 $ - $ - |
Schedule of Warrants Activity | Warrant activity for the years ended December 31, 2022 and 2021 are summarized as follows: Schedule of Warrants Activity Weighted Average Weighted Remaining Aggregate Number of Average Contractual Intrinsic Warrants Warrants Exercise Price Term (Years) Value Outstanding - December 31, 2020 194,317 $ 32.50 1.52 $ - Vested and Exercisable - December 31, 2020 194,317 $ 32.50 1.52 $ - Granted 5,935,450 $ 8.01 - - Exercised (2,133 ) $ 12.50 - - Cancelled/Forfeited (44,650 ) $ 23.49 - - Outstanding - December 31, 2021 6,082,984 $ 8.68 2.93 $ - 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 - $ - - $ - |
Warrant One [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Schedule of Fair Value of Warrants | Schedule of Fair Value of Warrants Expected term (years) 3 Expected volatility 118 % Expected dividends 0 % Risk free interest rate 0.53 % |
Warrant Two [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Schedule of Fair Value of Warrants | Fair value of the warrants was determined using a Black-Scholes option pricing model with the following inputs: Schedule of Fair Value of Warrants Expected term (years) 3 Expected volatility 118 % Expected dividends 0 % Risk free interest rate 0.53 % |
Warrant Three [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Schedule of Fair Value of Warrants | The fair value of these warrants was determined using a Black-Scholes option pricing model with the following inputs: Schedule of Fair Value of Warrants Expected term (years) 3 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 % |
Warrant Six [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Schedule of Fair Value of Warrants | The fair value of these warrants was determined using a Black-Scholes option pricing model with the following inputs: Schedule of Fair Value of Warrants Expected term (years) 3 5 Expected volatility 119 146 % Expected dividends 0 % Risk free interest rate 0.07 1.15 % |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Operating Segments | Segment information for the years ended December 31, 2022 and 2021, are as follows: SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Schedule of Operating Segments 2022 2021 For the Years Ended December 31, 2022 2021 Revenues Surge Phone and Torch Wireless $ 88,351,547 $ 7,289,239 Surge Blockchain, LLC 112,911 138,106 LogicsIQ, Inc. 16,760,656 17,846,698 Surge Fintech & ECS 16,319,076 24,628,566 True Wireless - 1,157,980 Surge Pays, Inc. - - Total $ 121,544,190 $ 51,060,589 Cost of revenues Surge Phone and Torch Wireless $ 76,130,286 $ 6,082,121 Surge Blockchain, LLC 2,517 1,377 LogicsIQ, Inc. 14,975,647 14,715,499 Surge Fintech & ECS 16,966,332 23,785,551 True Wireless - 306,062 Surge Pays, Inc. - - Total $ 108,074,782 $ 44,890,610 Operating expenses Surge Phone and Torch Wireless $ 299,406 $ 46,994 Surge Blockchain, LLC 53,571 12,025 LogicsIQ, Inc. 1,460,750 2,425,975 Surge Fintech & ECS 1,327,517 1,389,680 True Wireless - 615,013 Surge Pays, Inc. 9,694,379 7,672,860 Total $ 12,835,623 $ 12,162,547 Income (loss) from operations Surge Phone and Torch Wireless $ 11,921,855 $ 1,160,124 Surge Blockchain, LLC 56,823 124,704 LogicsIQ, Inc. 324,259 705,224 Surge Fintech & ECS (1,974,773 ) (546,665 ) True Wireless - 236,905 Surge Pays, Inc. (9,694,379 ) (7,672,860 ) Total $ 633,785 $ (5,992,568 ) SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 Segment information for the Company’s assets and liabilities at December 31, 2022 and 2021, are as follows: December 31, 2022 December 31, 2021 Total Assets Surge Phone and Torch Wireless $ 27,239,365 $ (161,110 ) Surge Blockchain, LLC (550,782 ) (608,188 ) LogicsIQ, Inc. 2,500,499 1,284,562 Surge Fintech & ECS 1,906,212 3,870,409 True Wireless - - Surge Pays, Inc. 2,908,212 15,114,529 Total $ 34,003,506 $ 19,500,202 Total Liabilities Surge Phone and Torch Wireless $ 15,484,392 $ 5,773 Surge Blockchain, LLC 198,197 197,614 LogicsIQ, Inc. 2,619,521 2,056,886 Surge Fintech & ECS 58,919 48,346 True Wireless - - Surge Pays, Inc. 10,524,224 13,640,262 Total $ 28,885,253 $ 15,948,881 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The Company’s tax expense differs from the “expected” tax expense for the period (computed by applying the blended corporate rate and state tax rates of 26.14 Schedule of Components of Income Tax Expense (Benefit) December 31, 2022 December 31, 2021 Federal income tax benefit - 19.64 $ (134,000 ) $ (2,657,000 ) State income tax - 6.5 (44,000 ) (880,000 ) Non-deductible items 1,000 (495,000 ) Subtotal (177,000 ) (4,032,000 ) Change in valuation allowance 177,000 4,032,000 Income tax benefit $ - $ - |
Schedule of Deferred Tax Assets | The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2022 and 2021, respectively, are approximately as follows: Schedule of Deferred Tax Assets December 31, 2022 December 31, 2021 Bad debt $ 22,000 $ 6,000 (Gain) loss on investment in Centercom - related party 25,000 48,000 Amortization of ROU Assets (14,000 ) - Amortization of debt discount 404,000 434,000 Share based payments/option compensation (84,000 ) (47,000 ) Change in fair value of derivative liabilities (321,000 ) (321,000 ) Other - (2,000 ) Net operating loss carryforwards (8,869,000 ) (7,824,000 ) Total deferred tax assets (8,837,000 ) (7,706,000 ) Less: valuation allowance 8,837,000 7,706,000 Net deferred tax asset recorded $ - $ - |
Schedule of Subsidiaries (Detai
Schedule of Subsidiaries (Details) | 12 Months Ended | |
Dec. 31, 2022 | ||
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 | TN | |
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 | |
DigitizelIQ, 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 | |
True Wireless, Inc. [Member] | ||
Name of subsidiary | True Wireless, Inc. | |
Incorporation date | Oct. 29, 2020 | [1] |
Entity incorporation, state or country code | OK | |
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 | [2] |
Entity incorporation, state or country code | WY | |
[1]Entity was disposed of on May 7, 2021.[2]Effective January 1, 2022, the Company acquired Torch Wireless |
Organization and Nature of Op_3
Organization and Nature of Operations (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net loss | $ 680,763 | $ 13,531,144 | |
Net cash used in operations | 793,272 | (15,288,261) | |
Accumulated deficit | 35,804,106 | 35,123,343 | |
Stockholders equity | 5,118,253 | $ 3,551,321 | $ (10,725,966) |
Working capital | 4,099,723 | ||
Cash on hand | $ 7,035,654 |
Schedule of Receivables (Detail
Schedule of Receivables (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
2023 | $ 52,227 | |
2024 | 89,532 | |
2025 | 44,766 | |
Receivables, gross | 186,525 | |
Less: amount representing interest | (9,674) | |
Total | $ 176,851 | $ 176,851 |
Schedule of Deconsolidated Owne
Schedule of Deconsolidated Ownership (Details) - USD ($) | 12 Months Ended | ||
May 07, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Multiemployer Plan [Line Items] | |||
Gain on deconsolidation | $ 1,895,871 | $ 1,895,871 | |
Note receivable | 176,851 | 176,851 | |
Operating lease - right of use asset - net | 431,352 | 486,668 | |
Note payable - SBA government | 186,525 | ||
Operating lease liability | $ 438,903 | $ 488,255 | |
True Wireless, Inc. [Member] | |||
Multiemployer Plan [Line Items] | |||
Gain on deconsolidation | 1,895,871 | ||
Note receivable | 176,851 | ||
Fair value of consideration received | 176,851 | ||
Cash | 325,316 | ||
Lifeline revenue due from USAC | 74,650 | ||
Inventory | 107,089 | ||
Property and equipment - net | 20,645 | ||
Operating lease - right of use asset - net | 10,981 | ||
Total assets sold | 538,681 | ||
Accounts payable and accrued expenses | 1,183,850 | ||
Line of credit | 912,870 | ||
Note payable - SBA government | 150,000 | ||
Operating lease liability | 10,981 | ||
Total liabilities assumed by buyer | 2,257,701 | ||
Total net liabilities assumed by buyer | $ 1,719,020 |
Schedule of Disaggregation of R
Schedule of Disaggregation of Revenue from Contracts with Customers (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Total revenue | $ 121,544,190 | $ 51,060,589 |
Percentage of revenues | 100% | 100% |
Surge Phone and Torck Wireless [Member] | ||
Total revenue | $ 88,351,547 | $ 7,289,239 |
Percentage of revenues | 72.69% | 14.28% |
Surge Blockchain, LLC [Member] | ||
Total revenue | $ 112,911 | $ 138,106 |
Percentage of revenues | 0.09% | 0.27% |
LogicsIQ, Inc [Member] | ||
Total revenue | $ 16,760,656 | $ 17,846,698 |
Percentage of revenues | 13.79% | 34.95% |
Surge Fintech and ECS [Member] | ||
Total revenue | $ 16,319,076 | $ 24,628,566 |
Percentage of revenues | 13.43% | 48.23% |
True Wireless, Inc. [Member] | ||
Total revenue | $ 1,157,980 | |
Percentage of revenues | 0% | 2.27% |
Schedule of Diluted Net Income
Schedule of Diluted Net Income (Loss) Per Share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents | 5,688,193 | 5,882,385 | |
Common Stock Warrants [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents | 5,681,392 | 5,852,984 | |
Share-Based Payment Arrangement, Option [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents | 6,801 | 3,401 | |
Series A Preferred Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents | [1] | 26,000 | |
[1]each share converts to 1/10 of a share of common stock |
Schedule of Related Party Expen
Schedule of Related Party Expenses (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Total related party expenses | $ 20,125,153 | $ 4,157,192 |
Three Two One Communications Inc [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total related party expenses | 16,035,093 | 690,398 |
Axia Management L L C [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total related party expenses | 95,415 | |
Carddawg Investments Inc [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total related party expenses | 166,356 | 64,488 |
Center Com U S A Inc [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total related party expenses | 2,759,763 | 2,089,101 |
Galaxy [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total related party expenses | 1,217,790 | |
National Relief Telecom [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total related party expenses | $ 1,163,941 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | May 07, 2021 | 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 | 866,782 | ||
Retained liabilities | 28,885,253 | 15,948,881 | ||
Forgiven amount | 524,143 | 377,743 | ||
Unsecured note receivable | 176,851 | 176,851 | ||
Insured by FDIC | 250,000 | |||
Allowance for doubtful accounts | 17,525 | 137,218 | ||
Bad debt expense | 59,485 | (24,841) | ||
Bad debt expense | (59,485) | 24,841 | ||
Inventory write-down | 51,718 | |||
Inventory, net | 11,186,242 | 4,359,296 | ||
Impairment loss | 0 | 0 | ||
Deferred revenue | 243,110 | 276,250 | ||
Investments | 354,206 | 443,288 | ||
Gain on investment | (89,082) | 28,676 | ||
Accounts payable | 429,010 | |||
Advertising expenses | $ 259,393 | $ 661,238 | ||
Authorized shares | 500,000,000 | 500,000,000 | ||
Expenses with related parties | $ 20,125,153 | $ 4,157,192 | ||
Customer Concentration Risk [Member] | Surge Phone and Torck Wireless [Member] | Revenue Benchmark [Member] | ||||
Product Information [Line Items] | ||||
Concentrations risk percentage | 73% | 17% | ||
Customer Concentration Risk [Member] | Federal Communications Commission [Member] | Revenue Benchmark [Member] | ||||
Product Information [Line Items] | ||||
Concentrations risk percentage | 100% | 100% | ||
Customer Concentration Risk [Member] | Federal Communications Commission [Member] | Accounts Receivable [Member] | ||||
Product Information [Line Items] | ||||
Concentrations risk percentage | 96% | 89% | ||
True Wireless, Inc. [Member] | ||||
Product Information [Line Items] | ||||
Retained liabilities | $ 1,097,659 | |||
Accounts payable and accrued expenses | 1,077,659 | |||
Related party loans | $ 20,000 | |||
Forgiven amount | $ 20,000 | |||
Unsecured note receivable | $ 176,851 | |||
Interest rate | 0.60% | |||
Default interest rate | 10% | |||
Repayment of principal and interest | $ 7,461 | |||
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 | |||
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% |
Schedule of Property and Equipm
Schedule of Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Computer Equipment and Software | $ 1,006,286 | $ 283,484 |
Furniture and Fixtures | 82,752 | 82,752 |
Property and equipment, gross | 1,089,038 | 366,236 |
Less: Accumulated Depreciation | (445,665) | (165,788) |
Property and equipment, net | $ 643,373 | $ 200,448 |
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 ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Software acquire fair value | $ 711,400 | |
Payments for software | $ 300,000 | |
Purchase of assets, shares | 85,000 | |
Purchase of assets, value | $ 411,400 | |
Price per share | $ 4.84 | |
Depreciation expense | $ 279,877 | $ 67,125 |
True Wireless, Inc. [Member] | ||
Depreciation expense | $ 5,019 |
Schedule of Intangible Assets (
Schedule of Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets gross | $ 5,753,520 | $ 5,753,520 |
Less: Accumulated depreciation | (2,973,543) | (2,320,036) |
Intangible assets | 2,779,977 | 3,433,484 |
Computer Software, Intangible Asset [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets gross | $ 4,286,402 | 4,286,402 |
Weighted average remaining useful lives | 7 years | |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets gross | $ 617,474 | 617,474 |
Weighted average remaining useful lives | 15 years | |
ECS Membership Agreement [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets gross | $ 465,000 | 465,000 |
Weighted average remaining useful lives | 1 year | |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets gross | $ 201,389 | 201,389 |
Weighted average remaining useful lives | 2 years | |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets gross | $ 183,255 | $ 183,255 |
Weighted average remaining useful lives | 5 years |
Schedule of Estimated Amortizat
Schedule of Estimated Amortization Expenses (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 | $ 653,507 | |
2024 | 653,507 | |
2025 | 653,507 | |
2026 | 653,507 | |
2027 | 165,949 | |
Total | $ 2,779,977 | $ 3,433,484 |
Intangibles (Details Narrative)
Intangibles (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 653,507 | $ 692,258 |
Schedule of Property Plant and
Schedule of Property Plant and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Internal Use Software Development Costs | $ 1,089,038 | $ 366,236 |
Less: accumulated amortization | ||
Property and equipment, net | 387,180 | |
Software and Software Development Costs [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Internal Use Software Development Costs | $ 387,180 | |
Estimated Useful Life (Years) | 3 years |
Schedule of Amortization Expens
Schedule of Amortization Expenses (Details) | Dec. 31, 2022 USD ($) |
Internal Use Software Development Costs | |
2023 | $ 129,060 |
2024 | 129,060 |
2025 | 129,060 |
Total | $ 387,180 |
Internal Use Software Develop_3
Internal Use Software Development Costs (Details Narrative) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Software and Software Development Costs [Member] | |
Property, Plant and Equipment [Line Items] | |
Amortization expenses | $ 387,180 |
Schedule of Notes Payable (Deta
Schedule of Notes Payable (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | ||||
Short-Term Debt [Line Items] | |||||
Principal balance | $ 1,652,849 | ||||
Balance - December 31, 2021 | 1,131,185 | $ 1,134,682 | |||
Gross proceeds | 518,167 | ||||
Forgiveness of loan | (518,167) | [1] | (371,664) | [2] | |
Deconsolidation of subsidiary | [3] | (150,000) | |||
Repayments - cash | (11,754) | ||||
Reclassified to receivable | (126,418) | ||||
Balance December 31, 2022 | 474,846 | 1,131,185 | |||
Long term | $ 7,671,961 | ||||
Warrants issued as discount/issue costs | 12,000 | ||||
Amortization of debt discount | $ 115,404 | 3,677,121 | |||
Debt issue costs | $ (115,404) | ||||
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 | |||
Gross proceeds | [4] | $ 1,200,000 | |||
Repayments - cash | [4] | $ (100,000) | |||
Default interest rate | [4] | 26% | |||
Warrants issued as discount/issue costs | [4] | 36,000 | |||
Balance - December 31, 2021 | [4] | ||||
Debt discount | [4] | ||||
Amortization of debt discount | [4] | ||||
Reclassification from SBA - PPP note payable | [4] | ||||
Debt issue costs | [4] | (76,451) | |||
Amortization of debt issue costs | [4] | 76,451 | |||
Balance - December 31, 2022 | [4] | $ 1,100,000 | |||
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 | |||
Gross proceeds | [5] | $ 5,000,000 | |||
Repayments - cash | [6] | (100,000) | |||
Balance - December 31, 2021 | [5] | ||||
Debt discount | [5] | ||||
Amortization of debt discount | [5] | ||||
Reclassification from SBA - PPP note payable | [5] | ||||
Debt issue costs | [5] | ||||
Amortization of debt issue costs | [5] | ||||
Balance - December 31, 2022 | [5] | ||||
Notes Payable Three [Member] | |||||
Short-Term Debt [Line Items] | |||||
Issuance dates of notes | [6] | March 2022 | |||
Maturity date | [6] | March 2023 | |||
Interest rate | [6] | 19% | |||
Collateral | [6] | Unsecured | |||
Gross proceeds | [6] | $ 500,000 | |||
Repayments - cash | [5] | $ (5,000,000) | |||
Default interest rate | [6] | 26% | |||
Warrants issued as discount/issue costs | [6] | 15,000 | |||
Balance - December 31, 2021 | [6] | ||||
Debt discount | [6] | ||||
Amortization of debt discount | [6] | ||||
Reclassification from SBA - PPP note payable | [6] | ||||
Debt issue costs | [6] | (38,953) | |||
Amortization of debt issue costs | [6] | 38,953 | |||
Balance - December 31, 2022 | [6] | $ 400,000 | |||
Notes Payable [Member] | |||||
Short-Term Debt [Line Items] | |||||
Issuance dates of notes | 2019 | ||||
Maturity date | 2020 | ||||
Interest rate | 18% | ||||
Collateral | [6] | Unsecured | |||
Gross proceeds | |||||
Repayments - cash | (250,000) | ||||
Long term | $ 1,595,167 | ||||
Default interest rate | 0% | ||||
Balance - December 31, 2021 | 250,000 | ||||
Debt discount | |||||
Amortization of debt discount | |||||
Reclassification from SBA - PPP note payable | |||||
Debt issue costs | |||||
Amortization of debt issue costs | |||||
Balance - December 31, 2022 | |||||
Notes Payable Four [Member] | |||||
Short-Term Debt [Line Items] | |||||
Issuance dates of notes | [7] | 2021 | |||
Maturity date | [7] | 2022 | |||
Interest rate | [7] | 10% | |||
Gross proceeds | [7] | 1,101,000 | |||
Repayments - cash | [7] | (1,127,257) | |||
Default interest rate | [7] | 0% | |||
Warrants issued as discount/issue costs | [7] | 2,406,250 | |||
Balance - December 31, 2021 | [7] | ||||
Debt discount | [7] | (672,254) | |||
Amortization of debt discount | [7] | 698,511 | |||
Reclassification from SBA - PPP note payable | [7] | ||||
Debt issue costs | [7] | ||||
Amortization of debt issue costs | [7] | ||||
Balance - December 31, 2022 | [7] | ||||
Notes Payable Five [Member] | |||||
Short-Term Debt [Line Items] | |||||
Issuance dates of notes | [8] | 2022 | |||
Maturity date | [8] | 2025 | |||
Interest rate | [8] | 1% | |||
Collateral | [8] | Unsecured | |||
Gross proceeds | [8] | ||||
Repayments - cash | [8] | $ (31,251) | |||
Default interest rate | [8] | 0% | |||
Balance - December 31, 2021 | [8] | ||||
Debt discount | [8] | ||||
Amortization of debt discount | [8] | ||||
Reclassification from SBA - PPP note payable | [8] | 126,418 | |||
Debt issue costs | [8] | ||||
Amortization of debt issue costs | [8] | ||||
Balance - December 31, 2022 | [8] | 95,167 | |||
Total Notes Payable [Member] | |||||
Short-Term Debt [Line Items] | |||||
Gross proceeds | 6,700,000 | 1,101,000 | |||
Repayments - cash | [5] | (1,377,257) | |||
Balance - December 31, 2021 | 250,000 | ||||
Debt discount | (672,254) | ||||
Amortization of debt discount | 698,511 | ||||
Reclassification from SBA - PPP note payable | 126,418 | ||||
Debt issue costs | (5,231,251) | ||||
Amortization of debt issue costs | [6] | 115,404 | |||
Balance - December 31, 2022 | $ 1,595,167 | ||||
Convertible Notes Payable Two [Member] | |||||
Short-Term Debt [Line Items] | |||||
Issuance dates of notes | February 2020 - December 2020 | ||||
Maturity date | February 2021 - September 2021 | ||||
Collateral | Unsecured | ||||
Gross proceeds | |||||
Repayments - cash | |||||
Reclassified to receivable | [9] | 76,947 | |||
Debt discount | |||||
Amortization of debt discount | 517,781 | ||||
Conversion price | |||||
Beginning balance | 1,516,170 | ||||
Conversion to equity/debt modification | (2,110,898) | ||||
Ending balance | |||||
Convertible Notes Payable Two [Member] | Minimum [Member] | |||||
Short-Term Debt [Line Items] | |||||
Interest rate | 10% | ||||
Convertible Notes Payable Two [Member] | Maximum [Member] | |||||
Short-Term Debt [Line Items] | |||||
Interest rate | 14% | ||||
Convertible Notes Payable Three [Member] | |||||
Short-Term Debt [Line Items] | |||||
Issuance dates of notes | January 2021 - March 2021 | ||||
Maturity date | May 2021 - March 2022 | ||||
Collateral | Unsecured | ||||
Gross proceeds | 2,550,000 | ||||
Repayments - cash | [10] | (2,550,000) | |||
Reclassified to receivable | |||||
Debt discount | (2,460,829) | ||||
Amortization of debt discount | 2,460,829 | ||||
Conversion price | |||||
Beginning balance | |||||
Conversion to equity/debt modification | |||||
Ending balance | |||||
Convertible Notes Payable Three [Member] | Minimum [Member] | |||||
Short-Term Debt [Line Items] | |||||
Interest rate | 5% | ||||
Convertible Notes Payable Three [Member] | Maximum [Member] | |||||
Short-Term Debt [Line Items] | |||||
Interest rate | 12% | ||||
Convertible Notes Payable [Member] | |||||
Short-Term Debt [Line Items] | |||||
Gross proceeds | 2,550,000 | ||||
Repayments - cash | (2,550,000) | ||||
Reclassified to receivable | 76,947 | ||||
Debt discount | (2,460,829) | ||||
Amortization of debt discount | 2,978,610 | ||||
Beginning balance | 1,516,170 | ||||
Conversion to equity/debt modification | (2,110,898) | ||||
Ending balance | |||||
Notes Payable to Related Parties [Member] | |||||
Short-Term Debt [Line Items] | |||||
Balance - December 31, 2021 | 6,060,816 | 3,489,440 | |||
Gross proceeds | 4,355,385 | ||||
Repayments - cash | (210,500) | ||||
Balance December 31, 2022 | 5,601,948 | 6,060,816 | |||
Accrued interest included in note balance | 692,458 | ||||
Conversion of debt into common stock | (1,086,413) | (2,265,967) | |||
Less short term | 1,108,150 | 1,553,799 | |||
Long term | 4,493,798 | 4,507,017 | |||
Reclass of accrued interest to note payable | $ 627,545 | ||||
Chief Executive Officer [Member] | Notes Payable to Related Parties [Member] | |||||
Short-Term Debt [Line Items] | |||||
Issuance dates of notes | [11] | Various | |||
Maturity date | [11] | January 1, 2023/January 1, 2024 | |||
Interest rate | [11] | 10% | |||
Collateral | [11] | Unsecured | |||
Balance - December 31, 2021 | [11] | $ 5,593,431 | 3,341,940 | ||
Gross proceeds | 3,825,000 | ||||
Repayments - cash | |||||
Balance December 31, 2022 | [11] | 5,134,563 | 5,593,431 | ||
Accrued interest included in note balance | [11] | 692,458 | |||
Conversion of debt into common stock | [11] | (1,086,413) | (2,265,967) | ||
Less short term | 1,108,150 | 1,553,799 | |||
Long term | 4,026,413 | 4,039,632 | |||
Reclass of accrued interest to note payable | [11] | $ 627,545 | |||
President Chief Operating Officer and Board Director [Member] | Notes Payable to Related Parties [Member] | |||||
Short-Term Debt [Line Items] | |||||
Issuance dates of notes | [12] | May 2020/January 2021 | |||
Maturity date | [12] | March 2021 | |||
Interest rate | [12] | 15% | |||
Collateral | [12] | Unsecured | |||
Balance - December 31, 2021 | [12] | 147,500 | |||
Gross proceeds | 63,000 | ||||
Repayments - cash | (210,500) | ||||
Balance December 31, 2022 | [12] | ||||
Accrued interest included in note balance | [12] | ||||
Conversion of debt into common stock | [12] | ||||
Less short term | |||||
Long term | |||||
Reclass of accrued interest to note payable | [12] | ||||
Board Member [Member] | Notes Payable to Related Parties [Member] | |||||
Short-Term Debt [Line Items] | |||||
Issuance dates of notes | [13] | August 2021 | |||
Maturity date | [13] | August 2031 | |||
Interest rate | [13] | 10% | |||
Collateral | [13] | Unsecured | |||
Balance - December 31, 2021 | [13] | $ 467,385 | |||
Gross proceeds | 467,385 | ||||
Repayments - cash | |||||
Balance December 31, 2022 | [13] | 467,385 | 467,385 | ||
Accrued interest included in note balance | [13] | ||||
Conversion of debt into common stock | [13] | ||||
Less short term | |||||
Long term | 467,385 | 467,385 | |||
Reclass of accrued interest to note payable | [13] | ||||
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 | ||||
Principal balance | $ 498,082 | ||||
Balance - December 31, 2021 | 126,418 | 498,082 | |||
Gross proceeds | |||||
Forgiveness of loan | (371,664) | ||||
Deconsolidation of subsidiary | |||||
Repayments - cash | |||||
Reclassified to receivable | (126,418) | ||||
Balance December 31, 2022 | 126,418 | ||||
Economic Injury Disaster Loan [Member] | |||||
Short-Term Debt [Line Items] | |||||
Issuance dates of notes | May 2020 | ||||
Term | 30 years | ||||
Maturity date | May 2050 | ||||
Interest rate | 3.75% | ||||
Collateral | Unsecured | ||||
Principal balance | $ 150,000 | ||||
Balance - December 31, 2021 | 150,000 | 150,000 | |||
Gross proceeds | |||||
Forgiveness of loan | |||||
Deconsolidation of subsidiary | |||||
Repayments - cash | (4,078) | ||||
Reclassified to receivable | |||||
Balance December 31, 2022 | $ 145,922 | 150,000 | |||
Economic Injury Disaster Loan One [Member] | |||||
Short-Term Debt [Line Items] | |||||
Issuance dates of notes | July 2020 | ||||
Term | 30 years | ||||
Maturity date | July 2050 | ||||
Interest rate | 3.75% | ||||
Collateral | Unsecured | ||||
Principal balance | $ 486,600 | ||||
Balance - December 31, 2021 | 336,600 | 486,600 | |||
Gross proceeds | |||||
Forgiveness of loan | |||||
Deconsolidation of subsidiary | (150,000) | ||||
Repayments - cash | (7,676) | ||||
Reclassified to receivable | |||||
Balance December 31, 2022 | $ 328,924 | 336,600 | |||
Paycheck Protection Program One [Member] | |||||
Short-Term Debt [Line Items] | |||||
Issuance dates of notes | March 2021 | ||||
Term | 5 years | ||||
Maturity date | March 2026 | ||||
Interest rate | 1% | ||||
Collateral | Unsecured | ||||
Principal balance | $ 518,167 | ||||
Balance - December 31, 2021 | 518,167 | ||||
Gross proceeds | 518,167 | ||||
Forgiveness of loan | (518,167) | ||||
Deconsolidation of subsidiary | |||||
Repayments - cash | |||||
Reclassified to receivable | |||||
Balance December 31, 2022 | $ 518,167 | ||||
[1]During 2022, the Company received a forgiveness on a PPP loan totaling $ 524,143 , of which $ 518,167 was for principal and $ 5,976 377,743 , of which $ 371,664 was for principal and $ 6,079 Monthly payments are $3,566/month 150,000 36,000 , three ( 3 ) year warrants, which have been reflected as debt issue costs and are amortized over the life of the debt. 5,000,000 , secured, revolving promissory note with a third party. The Company may draw down on the note at 80 % of eligible accounts receivable. The note was repaid in full in November 2022. See below secured revolving debt. 15,000 , three ( 3 ) year warrants, which have been reflected as debt issue costs and were amortized over the life of the debt. Additionally, in 2022, the Company issued an additional 12,000 , three ( 3 ) year warrants, which have been treated as interest expense in connection with extending the maturity date for notes totaling $ 400,000 to March 2023. In October 2022, the Company repaid $ 100,000 75 % of the market price based upon the VWAP in the preceding 10 days. Debt discount on notes totaling $ 1,101,000 in principle included original issue discounts of $ 101,000 and debt discounts associated with warrants totaling $ 229,268 . Additionally, the Company computed a beneficial conversion feature of $ 341,986 . 76,947 2,550,000 2,300,000 120 465,239 6 % - 15 %. On September 30, 2021, all notes and related accrued interest were combined into two (2) new notes. The new notes had due dates of June 30, 2022 or January 1, 2023. In April 2022, the notes were extended to January 1, 2023 and January 1, 2024, respectively. All notes bear interest at 10%. 467,385 63,258 530,643 |
Schedule of Notes Payable (De_2
Schedule of Notes Payable (Details) (Parenthetical) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2023 | Jan. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Oct. 31, 2022 | Sep. 30, 2021 | Dec. 31, 2020 | ||
Short-Term Debt [Line Items] | ||||||||
Debt instrument, decrease, forgiveness | $ 524,143 | $ 377,743 | ||||||
Debt instrument, frequency of periodic payment | Monthly payments are $3,566/month | |||||||
Proceeds from notes payable | $ 6,700,000 | $ 1,101,000 | ||||||
Stock issued during period, shares, conversion of convertible securities | 270,745 | 561,758 | ||||||
Shares issued, price per share | $ 4.84 | |||||||
[custom:GrossProceedsFromNotesPayable] | $ 518,167 | |||||||
Long-Term Debt, Gross | $ 474,846 | 1,131,185 | $ 1,134,682 | |||||
Warrants issued, shares | 12,000 | |||||||
Warrant term | 3 years | |||||||
Interest expense | $ 400,000 | |||||||
Notes payable | $ 100,000 | |||||||
Debt discount | 1,101,000 | |||||||
Original issue discount | 101,000 | |||||||
Beneficial conversion feature | $ 341,986 | |||||||
Repayments of convertible note | 2,550,000 | |||||||
Convertible Notes Payable [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Amount due | 120% | |||||||
Principal amount | $ 2,300,000 | |||||||
Interest and debt expense | $ 465,239 | |||||||
Warrant [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Warrants issued, shares | 498,750 | |||||||
Warrant term | 3 years | |||||||
Debt discount | $ 229,268 | |||||||
Notes Payable One [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Amount due | [1] | 19% | ||||||
[custom:GrossProceedsFromNotesPayable] | [1] | $ 1,200,000 | ||||||
Warrants issued, shares | [1] | 36,000 | ||||||
Warrant term | 3 years | |||||||
Notes payable | [1] | $ 1,100,000 | ||||||
Notes Payable Two [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Amount due | [2] | 24% | ||||||
[custom:GrossProceedsFromNotesPayable] | [2] | $ 5,000,000 | ||||||
Secured, revolving promissory note | $ 5,000,000 | |||||||
Accounts receivable eligible percentage | 80% | |||||||
Notes payable | [2] | |||||||
Notes Payable Three [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Amount due | [3] | 19% | ||||||
[custom:GrossProceedsFromNotesPayable] | [3] | $ 500,000 | ||||||
Warrants issued, shares | [3] | 15,000 | ||||||
Warrant term | 3 years | |||||||
Notes payable | [3] | $ 400,000 | ||||||
Notes Payable Four [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Amount due | [4] | 10% | ||||||
[custom:GrossProceedsFromNotesPayable] | [4] | 1,101,000 | ||||||
Warrants issued, shares | [4] | 2,406,250 | ||||||
Notes payable | [4] | |||||||
Conversion percentage | 75% | |||||||
Convertible Note Payable One [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Debt instrument convertible conversion | 0.65 | |||||||
Debt instrument settlement of outstanding | 76,947 | |||||||
Subsequent Event [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Interest expense | $ 400,000 | |||||||
Minimum [Member] | Convertible Note Payable Two [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Debt instrument convertible conversion | 0.70 | |||||||
Maximum [Member] | Convertible Note Payable Two [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Debt instrument convertible conversion | 0.75 | |||||||
Kevin Brian Cox [Member] | Chief Executive Officer And Board Director [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Accrued interest | $ 627,545 | $ 692,458 | ||||||
Shares issued, price per share | $ 4.01 | $ 4.30 | ||||||
Debt amount | $ 1,086,413 | $ 2,415,560 | ||||||
Principal amount | 2,265,967 | |||||||
Accrued interest | 149,593 | |||||||
Adjustment to additional paid-in capital, convertible debt instrument issued at substantial premium | 1,086,413 | 2,415,560 | ||||||
Kevin Brian Cox [Member] | Minimum [Member] | Chief Executive Officer And Board Director [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Amount due | 6% | |||||||
Kevin Brian Cox [Member] | Maximum [Member] | Chief Executive Officer And Board Director [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Amount due | 15% | |||||||
David May [Member] | Board [Member] | Subsequent Event [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Accrued interest | $ 63,258 | |||||||
[custom:GrossProceedsFromNotesPayable] | 467,385 | |||||||
Long-Term Debt, Gross | $ 530,643 | |||||||
Paycheck Protection Program And Economic Injury Disaster Loan [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Proceeds from notes payable | 150,000 | |||||||
Principal Amount [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Debt instrument, decrease, forgiveness | 518,167 | 371,664 | ||||||
Accrued Interest [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Debt instrument, decrease, forgiveness | $ 5,976 | $ 6,079 | ||||||
[1]These notes were issued with 36,000 , three ( 3 ) year warrants, which have been reflected as debt issue costs and are amortized over the life of the debt. 5,000,000 , secured, revolving promissory note with a third party. The Company may draw down on the note at 80 % of eligible accounts receivable. The note was repaid in full in November 2022. See below secured revolving debt. 15,000 , three ( 3 ) year warrants, which have been reflected as debt issue costs and were amortized over the life of the debt. Additionally, in 2022, the Company issued an additional 12,000 , three ( 3 ) year warrants, which have been treated as interest expense in connection with extending the maturity date for notes totaling $ 400,000 to March 2023. In October 2022, the Company repaid $ 100,000 75 % of the market price based upon the VWAP in the preceding 10 days. Debt discount on notes totaling $ 1,101,000 in principle included original issue discounts of $ 101,000 and debt discounts associated with warrants totaling $ 229,268 . Additionally, the Company computed a beneficial conversion feature of $ 341,986 . |
Schedule of Debt Maturities (De
Schedule of Debt Maturities (Details) | Dec. 31, 2022 USD ($) |
Debt Instrument [Line Items] | |
2023 | $ 2,650,183 |
2024 | 4,536,253 |
2025 | 10,679 |
2026 | |
2027 | |
Thereafter | 474,846 |
Total | 7,671,961 |
Loans Payable Related Parties [Member] | |
Debt Instrument [Line Items] | |
2023 | 1,108,150 |
2024 | 4,493,798 |
2025 | |
2026 | |
2027 | |
Thereafter | |
Total | 5,601,948 |
Notes Payable SBA Government [Member] | |
Debt Instrument [Line Items] | |
2023 | |
2024 | |
2025 | |
2026 | |
2027 | |
Thereafter | 474,846 |
Total | 474,846 |
Notes Payable [Member] | |
Debt Instrument [Line Items] | |
2023 | 1,542,033 |
2024 | 42,455 |
2025 | 10,679 |
2026 | |
2027 | |
Thereafter | |
Total | $ 1,595,167 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Apr. 30, 2022 | Apr. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||||
Line of credit, increased value | $ 1,000,000 | ||||
Line of credit, outstanding | $ 0 | ||||
Line of credit, interest rate | 6% | ||||
Secured Revolving Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 3,000,000 | ||||
Line of credit, increased value | $ 5,000,000 | ||||
Interest rate | 2% | ||||
Annual interest rate | 24% | ||||
Accounts receivable eligible percentage | 80% | ||||
Line of credit, outstanding | $ 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 Weighted Average As
Schedule of Weighted Average Assumptions (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Measurement Input, Expected Dividend Rate [Member] | |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |
Fair value assumptions, measurement input, percentages | 0% |
Minimum [Member] | Measurement Input, Expected Term [Member] | |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |
Expected term (years) | 2 months 12 days |
Minimum [Member] | Measurement Input, Price Volatility [Member] | |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |
Fair value assumptions, measurement input, percentages | 143% |
Minimum [Member] | Measurement Input, Risk Free Interest Rate [Member] | |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |
Fair value assumptions, measurement input, percentages | 0.03% |
Maximum [Member] | Measurement Input, Expected Term [Member] | |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |
Expected term (years) | 1 year |
Maximum [Member] | Measurement Input, Price Volatility [Member] | |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |
Fair value assumptions, measurement input, percentages | 291% |
Maximum [Member] | Measurement Input, Risk Free Interest Rate [Member] | |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |
Fair value assumptions, measurement input, percentages | 0.09% |
Summary of Changes in Fair Valu
Summary of Changes in Fair Value (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Gain on derivative liability upon related debt settled | $ 0 | $ 1,469,641 |
Fair Value, Inputs, Level 3 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Derivative liability, beginning balance | 1,357,528 | |
Fair value at commitment date | 1,877,250 | |
Fair value mark to market adjustment | (1,806,763) | |
Gain on derivative liability upon related debt settled | (1,428,015) | |
Derivative liability, ending balance |
Derivative Liabilities (Details
Derivative Liabilities (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Gain on change in fair value of derivative liability | $ 1,806,763 | |
Derivative expense | 1,775,057 | |
Gain on settlement of convertible debt | 0 | 136,487 |
Gain | $ 0 | $ 1,469,641 |
Schedule of Lease Expense (Deta
Schedule of Lease Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating Leases | $ 55,316 | $ 170,962 |
Interest on lease liabilities | 22,718 | 38,093 |
Total net lease cost | $ 78,034 | $ 209,055 |
Schedule of Supplemental Inform
Schedule of Supplemental Information Related to Leases (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease ROU assets - net | $ 431,352 | $ 486,668 |
Operating lease liabilities - current | 39,490 | 49,352 |
Operating lease liabilities - non-current | 399,413 | 438,903 |
Total operating lease liabilities | $ 438,903 | $ 488,255 |
Schedule of Supplemental Cash F
Schedule of Supplemental Cash Flow and Other Information Related to Leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating cash flows from operating leases | $ 49,352 | $ 145,684 |
Operating leases | $ 515,848 | |
Weighted average remaining lease term (in years) Operating leases | 7 years 5 months 26 days | 8 years 3 months |
Weighted average discount rate Operating leases | 5% | 5% |
Schedule of Future Minimum Paym
Schedule of Future Minimum Payments (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Commitments and Contingencies Disclosure [Abstract] | ||
2023 | $ 60,294 | |
2024 | 61,876 | |
2025 | 63,460 | |
Thereafter | 353,485 | |
Total lease payments | 539,115 | |
Less: amount representing interest | (100,212) | |
Total lease obligations | $ 438,903 | $ 488,255 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 17, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | May 31, 2021 | |
Operating lease, right use of asset | $ 431,352 | $ 486,668 | ||
Plaintiff amount | $ 73,000 | |||
Estimate amount of potential loss | $ 100,000 | |||
ECS Business [Member] | ||||
Operating lease, right use of asset | $ 228,752 |
Schedule of Fair Value of Warra
Schedule of Fair Value of Warrants (Details) | Dec. 31, 2022 | Dec. 31, 2021 | Nov. 04, 2021 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Expected term (years) | 3 years | ||
Warrant One [Member] | Measurement Input, Expected Term [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Expected term (years) | 3 years | ||
Warrant One [Member] | Measurement Input, Price Volatility [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 118 | ||
Warrant One [Member] | Measurement Input, Expected Dividend Rate [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 0 | ||
Warrant One [Member] | Measurement Input, Risk Free Interest Rate [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 0.53 | ||
Warrant Two [Member] | Measurement Input, Expected Term [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Expected term (years) | 3 years | ||
Warrant Two [Member] | Measurement Input, Price Volatility [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 118 | ||
Warrant Two [Member] | Measurement Input, Expected Dividend Rate [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 0 | ||
Warrant Two [Member] | Measurement Input, Risk Free Interest Rate [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 0.53 | ||
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 | 119 | ||
Warrant Three [Member] | Measurement Input, Price Volatility [Member] | Maximum [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 120 | ||
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 | 2.45 | ||
Warrant Three [Member] | Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 2.80 | ||
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 | 116 | ||
Warrant Five [Member] | Measurement Input, Price Volatility [Member] | Maximum [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 119 | ||
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 | 4.13 | ||
Warrant Five [Member] | Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 4.25 | ||
Warrant Six [Member] | Measurement Input, Expected Term [Member] | Minimum [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Expected term (years) | 3 years | ||
Warrant Six [Member] | Measurement Input, Expected Term [Member] | Maximum [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Expected term (years) | 5 years | ||
Warrant Six [Member] | Measurement Input, Price Volatility [Member] | Minimum [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 119 | ||
Warrant Six [Member] | Measurement Input, Price Volatility [Member] | Maximum [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 146 | ||
Warrant Six [Member] | Measurement Input, Expected Dividend Rate [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 0 | ||
Warrant Six [Member] | Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 0.07 | ||
Warrant Six [Member] | Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants measurement input | 1.15 |
Schedule of Stock Option Transa
Schedule of Stock Option Transactions (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Equity [Abstract] | |||
Number of options, outstanding beginning | 17,004 | 17,004 | |
Weighted average exercise price, outstanding beginning | $ 16 | $ 16 | |
Weighted average remaining contractual term (Years), outstanding | 1 year 1 month 28 days | 5 years 1 month 28 days | 6 years 1 month 28 days |
Aggregate intrinsic value, outstanding ending | |||
Weighted average grant-date fair value, outstanding ending | |||
Number of options, vested and exercisable, beginning | 3,401 | ||
Weighted average exercise price, vested and exercisable, beginning | $ 16 | ||
Number of options, unvested and non-exercisable, beginning | 13,603 | 17,004 | |
Weighted average exercise price, unvested and non-exercisable, beginning | $ 16 | $ 16 | |
Weighted average remaining contractual term (Years) unvested and non-exercisable | 1 year 1 month 28 days | 5 years 1 month 28 days | 6 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 | |||
Weighted average remaining contractual term (Years) vested and exercisable | 1 year 1 month 28 days | 5 years 1 month 28 days | |
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 | 6,801 | 3,401 | |
Weighted average exercise price, vested and exercisable | $ 16 | $ 16 | |
Number of options, unvested and non-exercisable, ending | 10,203 | 13,603 | 17,004 |
Weighted average exercise price, unvested and non-exercisable, ending | $ 16 | $ 16 | $ 16 |
Schedule of Warrants Activity (
Schedule of Warrants Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Equity [Abstract] | |||
Number of warrants outstanding, Ending balance | 6,082,984 | 194,317 | |
Weighted Average Exercise Price Exercisable, Ending balance | $ 8.68 | $ 32.50 | |
Weighted Average Remaining Contractual Life (in years), Outstanding | 1 year 10 months 6 days | 2 years 11 months 4 days | 1 year 6 months 7 days |
Warrants Aggregate Intrinsic Value, Beginning balance | |||
Number of warrants outstanding, Vested and Exercisable, Beginning balance | 5,852,984 | 194,317 | |
Weighted Average Remaining Contractual Life (in years), Vetsed and Exercisable | $ 8.70 | $ 32.50 | |
Weighted Average Remaining Contractual Life (in years), Vetsed and Exercisable | 1 year 10 months 6 days | 2 years 10 months 6 days | 1 year 6 months 7 days |
Warrants Aggregate Intrinsic Value, Vested and Exercisable, Beginning balance | |||
Number of warrants outstanding, Granted | 189,000 | 5,935,450 | |
Weighted Average Exercise Price, Granted | $ 4.73 | $ 8.01 | |
Number of warrants outstanding, Exercised | (498,850) | (2,133) | |
Weighted Average Exercise Price, Exercised | $ 6.49 | $ 12.50 | |
Number of warrants outstanding, Cancelled/Forfeited | (91,743) | (44,650) | |
Weighted Average Exercise Price, Cancelled/Forfeited | $ 40.02 | $ 23.49 | |
Warrants, Unvested, balance | 230,000 | ||
Weighted Average Exercise Price, Unvested, balance | $ 8 | ||
Weighted Average Remaining Contractual Life (in years), Unvested and Non-exercisable | 4 years 10 months 6 days | ||
Warrants Aggregate Intrinsic Value, Unvested, Beginning balance | |||
Number of warrants outstanding, Ending balance | 5,681,392 | 6,082,984 | 194,317 |
Weighted Average Exercise Price Exercisable, Ending balance | $ 5.05 | $ 8.68 | $ 32.50 |
Warrants Aggregate Intrinsic Value, Ending balance | $ 10,026,387 | ||
Number of warrants outstanding, Vested and Exercisable, Ending balance | 5,681,392 | 5,852,984 | 194,317 |
Weighted Average Exercise Price, Vested and Exercisable, Ending balance | $ 5.05 | $ 8.70 | $ 32.50 |
Warrants Aggregate Intrinsic Value, Vested and Exercisable, Ending balance | $ 10,026,387 | ||
Warrants, Unvested, balance | 230,000 | ||
Weighted Average Exercise Price, Unvested, balance | $ 8 | ||
Weighted Average Remaining Contractual Life (in years), Unvested and Non-exercisable | |||
Warrants Aggregate Intrinsic Value, Unvested Ending balance |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||
Nov. 04, 2021 | Nov. 02, 2021 | Jan. 30, 2020 | Jul. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Oct. 31, 2022 | |
Class of Stock [Line Items] | ||||||||
Stockholders equity reverse stock split | 1 for 50 reverse stock split of all classes of its stock | |||||||
Common stock, shares authorized | 500,000,000 | 500,000,000 | ||||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||||
Common stock, voting rights | Voting at 1 vote per share | |||||||
Fair value of software | $ 711,400 | |||||||
Payment for software | $ 300,000 | |||||||
Number of stock issued for purchasing asset | 85,000 | |||||||
Fair value of shares issued for purchasing asset | $ 411,400 | |||||||
Shares issued price per share | $ 4.84 | |||||||
Cashless exercise of warrants common stock | 12,000 | |||||||
Net effect on stockholders' deficit | $ 4,990,718 | 3,551,321 | ||||||
Shares of common stock, value | ||||||||
Common stock for services, value | $ 103,500 | |||||||
Warrants term | 3 years | |||||||
Stock and warrants issued with debt and derivative liability | 3,562,829 | |||||||
Stock and warrants issued with debt recorded as a debt discount | 2,645,890 | |||||||
Discount on derivative liability | 102,194 | |||||||
Fair value of derivative liabilities | 2,748,084 | |||||||
Gain on settlement of debt | 1,469,641 | |||||||
Number of common stock issued in acquisition, value | 411,400 | |||||||
Compensation expense | 37,176 | $ 37,176 | ||||||
Compensation cost related to unvested options not yet recognized | $ 43,370 | |||||||
Weighted average period cost not yet recognized, period for recognition | 1 year 1 month 28 days | |||||||
Notes issued | $ 1,700,000 | |||||||
Number of warrants outstanding, exercise | 51,000 | |||||||
Debt and warrants fair value | $ 115,404 | |||||||
Notes payable, total | $ 100,000 | |||||||
Warrants granted | 189,000 | 5,935,450 | ||||||
Number of warrants sold for cash | 5,290,000 | |||||||
Number of warrants repriced | 433,017 | |||||||
Warrant modification expense | $ 74,476 | |||||||
Warrant [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Warrants term | 6 months | |||||||
Interest Expense [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of warrants outstanding, exercise | 90,000 | |||||||
Debt and warrants fair value | $ 212,608 | |||||||
Chief Financial Officer [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Stock options vested | 3,400 | 3,400 | ||||||
Stock options vested, total | 6,801 | 6,801 | ||||||
Convertible Note Holders [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Warrants granted | 277,950 | |||||||
Warrants Holders [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Warrants granted | 137,500 | |||||||
Underwriters [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Cashless exercise of warrants common stock | 68,161 | |||||||
Number of warrants issued | 230,000 | |||||||
Make Whole Arrangement [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of common stock, shares | 15,147 | |||||||
Shares of common stock, value | $ 90,401 | |||||||
Debt Arrangements [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of common stock, shares | 13,916 | |||||||
Shares of common stock, value | $ 108,931 | |||||||
Membership Interest Purchase Agreement and Stock Purchase Sgreement [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of common stock issued in acquisition, shares | 10,000 | |||||||
Number of common stock called | 500 | |||||||
Convertible Debt [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Stock issued for conversion of debt, shares | 709,674 | |||||||
Stock issued for conversion of debt, value | $ 3,363,561 | |||||||
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 | |||||||
Over-Allotment Option [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of warrants issued | 230,000 | |||||||
Exercise price | $ 4.73 | |||||||
Warrants term | 5 years | |||||||
Fair value of warrants | $ 647,897 | |||||||
Minimum [Member] | Warrant [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Exercise price | $ 8 | |||||||
Warrants term | 3 years | |||||||
Minimum [Member] | Make Whole Arrangement [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 5.60 | |||||||
Minimum [Member] | Debt Arrangements [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | 5.60 | |||||||
Minimum [Member] | Convertible Debt [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Conversion of debt price per share | 0.05 | |||||||
Maximum [Member] | Warrant [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Exercise price | $ 12 | |||||||
Warrants term | 5 years | |||||||
Maximum [Member] | Make Whole Arrangement [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 6 | |||||||
Maximum [Member] | Debt Arrangements [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | 8 | |||||||
Maximum [Member] | Convertible Debt [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Conversion of debt price per share | $ 10.38 | |||||||
Common Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 4.30 | |||||||
Shares of common stock, shares | 4,600,000 | 200,000 | ||||||
Shares of common stock, value | $ 200 | |||||||
Number of common stock for services | 50,000 | |||||||
Common stock for services, value | $ 50 | |||||||
Proceeds from common stock | $ 19,780,000 | |||||||
Stock issued as debt discount | 18,000 | |||||||
Stock and warrants issued with debt recorded as a debt discount | $ 18 | |||||||
Number of common stock issued in acquisition, shares | 85,000 | |||||||
Number of common stock issued in acquisition, value | $ 85 | |||||||
Common Stock [Member] | Minimum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 5 | |||||||
Conversion of debt price per share | 0.05 | |||||||
Common Stock [Member] | Maximum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | 14.05 | |||||||
Conversion of debt price per share | $ 10.38 | |||||||
Warrant [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Cashless exercise of warrants | 147,153 | 2,133 | ||||||
Cashless exercise of warrants common stock | 498,750 | |||||||
Net effect on stockholders' deficit | $ 0 | $ 0 | $ 0 | |||||
Number of warrants issued | 230,000 | 100 | 137,500 | |||||
Shares of common stock, shares | 68,161 | 100 | ||||||
Exercise price | $ 4.73 | $ 8 | ||||||
Shares of common stock, value | $ 473 | |||||||
Warrants term | 3 years | |||||||
Common Stocks [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of common stock, shares | 4,600,000 | |||||||
Number of common stock for services | 13,411 | |||||||
Common stock for services, value | $ 99,436 | |||||||
Stock and Warrants [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 4.30 | |||||||
Shares of common stock, shares | 4,862,247 | |||||||
Shares of common stock, value | $ 21,294,800 | |||||||
Deferred Offering Costs | 2,222,952 | |||||||
Proceeds from common stock | 19,076,710 | |||||||
Stock and warrants shares, description | one share of common stock and one warrant | |||||||
Proceeds from stock and warrants issued for cash | $ 19,786,900 | |||||||
Net proceeds from direct offering costs | $ 19,076,710 | |||||||
Stock and Warrants [Member] | Minimum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 4.30 | |||||||
Stock and Warrants [Member] | Maximum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 8 | |||||||
Over Allotment Warrants [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 0.01 | |||||||
Shares of common stock, shares | 690,000 | 690,000 | ||||||
Exercise price | $ 4.73 | |||||||
Proceeds from warrants issued | $ 6,900 | |||||||
Warrants term | 3 years | |||||||
Computer Software, Intangible Asset [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of stock issued for purchasing asset | 85,000 | |||||||
Computer Software, Intangible Asset [Member] | Common Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Fair value of shares issued for purchasing asset | $ 411,400 | |||||||
Shares issued price per share | $ 4.84 | |||||||
Series A Convertible Preferred Stocks [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares authorized | 13,000,000 | |||||||
Preferred stock, shares outstanding | 0 | |||||||
Preferred stock, shares issued | 0 | |||||||
Preferred stock, par value | $ 0.001 | |||||||
Preferred stock, voting rights | Voting at 10 votes per share | |||||||
Debt instrument description | Conversion into 1/10 of a share of common stock for each share held | |||||||
Series A Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares outstanding | 260,000 | |||||||
Preferred stock, shares issued | 260,000 | |||||||
Common stock converted shares | 1,300,000 | |||||||
Net effect on stockholders' deficit | $ 0 | |||||||
Series C Convertible Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | ||||||
Preferred stock, shares outstanding | 0 | 0 | ||||||
Preferred stock, shares issued | 0 | 0 | ||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||||
Preferred stock, voting rights | Voting at 250 votes per share | |||||||
Debt instrument description | Conversion into 250 shares of common stock for each share held | |||||||
Series C Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares outstanding | 721,598 | |||||||
Preferred stock, shares issued | 721,598 | |||||||
Common stock converted shares | 3,607,980 | |||||||
Net effect on stockholders' deficit | $ 0 | |||||||
Stock Issued For Settlement Liabilities [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of common stock, shares | 276,702 | |||||||
Shares of common stock, value | $ 1,997,977 | |||||||
Gain on settlement of debt | $ 1,469,641 | |||||||
Stock Issued For Settlement Liabilities [Member] | Minimum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 4.50 | |||||||
Stock Issued For Settlement Liabilities [Member] | Maximum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 15.99 | |||||||
Common Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of common stock issued in acquisition, shares | 5,500 | |||||||
Common Stock [Member] | Settlement of Agreements [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of common stock issued in acquisition, shares | 2,000 | |||||||
Number of common stock issued in acquisition, value | $ 17,900 | |||||||
Stock Issued For Acquisition [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 8.95 |
Schedule of Operating Segments
Schedule of Operating Segments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | May 07, 2021 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 121,544,190 | $ 51,060,589 | |
Cost of revenues | 108,074,782 | 44,890,610 | |
Operating expenses | 12,835,623 | 12,162,547 | |
Income (loss) from operations | 633,785 | (5,992,568) | |
Total assets | 34,003,506 | 19,500,202 | |
Total liabilities | 28,885,253 | 15,948,881 | |
Surge Phone and Torch Wireless [Member] | |||
Segment Reporting Information [Line Items] | |||
Total assets | 27,239,365 | (161,110) | |
Total liabilities | 15,484,392 | 5,773 | |
Surge Blockchain, LLC [Member] | |||
Segment Reporting Information [Line Items] | |||
Total assets | (550,782) | (608,188) | |
Total liabilities | 198,197 | 197,614 | |
LogicsIQ, Inc [Member] | |||
Segment Reporting Information [Line Items] | |||
Total assets | 2,500,499 | 1,284,562 | |
Total liabilities | 2,619,521 | 2,056,886 | |
Surge Fintech ECS [Member] | |||
Segment Reporting Information [Line Items] | |||
Total assets | 1,906,212 | 3,870,409 | |
Total liabilities | 58,919 | 48,346 | |
True Wireless, Inc. [Member] | |||
Segment Reporting Information [Line Items] | |||
Total assets | |||
Total liabilities | |||
Surge Pays, Inc. [Member] | |||
Segment Reporting Information [Line Items] | |||
Total assets | 2,908,212 | 15,114,529 | |
Total liabilities | 10,524,224 | 13,640,262 | |
Surge Phone and Torch Wireless [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 88,351,547 | 7,289,239 | |
Cost of revenues | 76,130,286 | 6,082,121 | |
Operating expenses | 299,406 | 46,994 | |
Income (loss) from operations | 11,921,855 | 1,160,124 | |
Surge Blockchain, LLC [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 112,911 | 138,106 | |
Cost of revenues | 2,517 | 1,377 | |
Operating expenses | 53,571 | 12,025 | |
Income (loss) from operations | 56,823 | 124,704 | |
LogicsIQ, Inc [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 16,760,656 | 17,846,698 | |
Cost of revenues | 14,975,647 | 14,715,499 | |
Operating expenses | 1,460,750 | 2,425,975 | |
Income (loss) from operations | 324,259 | 705,224 | |
Surge Fintech ECS [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 16,319,076 | 24,628,566 | |
Cost of revenues | 16,966,332 | 23,785,551 | |
Operating expenses | 1,327,517 | 1,389,680 | |
Income (loss) from operations | (1,974,773) | (546,665) | |
True Wireless, Inc. [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 1,157,980 | ||
Cost of revenues | 306,062 | ||
Operating expenses | 615,013 | ||
Income (loss) from operations | 236,905 | ||
Total liabilities | $ 1,097,659 | ||
Surge Pays, Inc. [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | |||
Cost of revenues | |||
Operating expenses | 9,694,379 | 7,672,860 | |
Income (loss) from operations | $ (9,694,379) | $ (7,672,860) |
Installment Sale Liability (Det
Installment Sale Liability (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
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% | |
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 | $ 13,018,184 | |
Paid fees | $ 1,499,007 | $ 0 |
Schedule of Components of Incom
Schedule of Components of Income Tax Expense (Benefit) (Details) (Parenthetical) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income tax rate | 26.14% |
Federal statutory tax rate | 19.64% |
State and local tax rate | 6.50% |
Schedule of Components of Inc_2
Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Federal income tax benefit - 19.64% | $ (134,000) | $ (2,657,000) |
State income tax - 6.5% | (44,000) | (880,000) |
Non-deductible items | 1,000 | (495,000) |
Subtotal | (177,000) | (4,032,000) |
Change in valuation allowance | 177,000 | 4,032,000 |
Income tax benefit |
Schedule of Deferred Tax Assets
Schedule of Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Bad debt | $ 22,000 | $ 6,000 |
(Gain) loss on investment in Centercom - related party | 25,000 | 48,000 |
Amortization of ROU Assets | (14,000) | |
Amortization of debt discount | 404,000 | 434,000 |
Share based payments/option compensation | (84,000) | (47,000) |
Change in fair value of derivative liabilities | (321,000) | (321,000) |
Other | (2,000) | |
Net operating loss carryforwards | (8,869,000) | (7,824,000) |
Total deferred tax assets | (8,837,000) | (7,706,000) |
Less: valuation allowance | 8,837,000 | 7,706,000 |
Net deferred tax asset recorded |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Income Tax Disclosure [Abstract] | |
Valuation allowance increase (decrease) | $ 1,131,000 |
Operating loss carryforwards | 33,935,000 |
Blended tax rate | $ 8,869,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Jan. 31, 2023 | Dec. 31, 2022 | |
Subsequent Event [Line Items] | |||
Stock issued for services | $ 103,500 | ||
Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Stock issued for services, shares | 50,000 | ||
Stock issued for services | $ 50 | ||
Common Stock [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Stock issued for employee stock purchase plans ,shares | 3,500,000 | ||
Common stock outstanding percentage | 10% | ||
Stock issued for services, shares | 20,000 | ||
Stock issued for services | $ 119,200 | ||
Share price | $ 5.96 |