SurgePays, Inc. (SURG) - 10-K Filing Summary
Business Context and Reporting Period
Company: SurgePays, Inc.
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2025
Business Overview: SurgePays is a wireless and point-of-sale (POS) technology company serving underserved consumers. It operates three primary segments: Mobile Virtual Network Operators (MVNO) providing subsidized (Lifeline) and prepaid wireless services; MVNE Enablement Platform (HERO) providing wholesale services; and Comprehensive Platform Services (POS and fintech transactions). The company utilizes a network of over 9,000 retail locations and digital channels for distribution.
Key Financial Metrics (Year Ended Dec 31, 2025)
| Metric | 2025 | 2024 |
|---|---|---|
| Total Revenue | $56,962,920 | $60,881,173 |
| Cost of Revenue | $67,551,811 | $75,205,372 |
| Gross Profit (Loss) | $(10,588,891) | $(14,324,199) |
| Operating Loss | $(34,136,863) | $(43,464,000) |
| Net Loss | $(36,068,870) | $(45,729,224) |
| Cash from Operating Activities | $(21,293,152) | $(21,310,603) |
| Cash and Equivalents (End of Period) | $1,731,400 | $11,790,389 |
| Total Debt (Net) | $13,262,876 | $8,714,392 (Gross Liab) |
| Working Capital | $(11,210,470) | $11,210,470 (Surplus) |
Note: The filing text indicates a working capital deficit of $(16,171,009) in the MD&A section, but the balance sheet data (Current Assets $6.98M vs Current Liabilities $18.19M) calculates to a deficit of approximately $(11.21M). The table above reflects the balance sheet calculation.
Material Changes vs. Prior Period
- Revenue Shift: Total revenue decreased 6.4% to $57.0M. This was driven by a 69.0% decline in MVNO revenue ($13.5M vs $43.5M) due to the cessation of the Affordable Connectivity Program (ACP) in mid-2024. Conversely, Point-of-Sale and Prepaid Services revenue surged 150% to $43.5M.
- Impairment Charges: The company recorded a $3.3M goodwill impairment charge in 2025 (related to ClearLine and Torch Wireless) and a $176,851 impairment on a note receivable. In 2024, impairment charges totaled approximately $1.7M.
- Liquidity Deterioration: Cash and cash equivalents dropped by $10.8M to $1.73M. The company moved from a working capital surplus in 2024 to a significant deficit in 2025.
- Debt Expansion: Total liabilities increased by $15.2M to $23.9M, primarily due to the issuance of convertible notes and notes payable to fund operations following the ACP wind-down.
Guidance, Outlook, Risks, and Unusual Items
- Going Concern: The independent auditor has issued a "Going Concern" opinion. The company has an accumulated deficit of $97M and negative cash flows, raising substantial doubt about its ability to continue operations for the next 12 months without additional financing.
- Nasdaq Compliance: In March 2026, the company received notices of non-compliance with Nasdaq's Minimum Market Value of Listed Securities ($35M) and Minimum Bid Price ($1.00) requirements. It has 180 days to regain compliance or face delisting.
- Strategic Outlook: Management is pivoting to replace ACP revenue by expanding the Lifeline program, growing the prepaid "LinkUp Mobile" brand, and monetizing the ClearLine POS platform. The company is actively pursuing equity and debt financing.
- Legal Contingencies: The company is involved in ongoing litigation regarding the sale of True Wireless (Blue Skies Connections) and a settled legal fee dispute with Ellenoff Grossman & Schole LLP ($234k settlement).
- Unusual Items: Significant non-cash stock-based compensation was recognized for executive officers. The company also issued stock to settle accounts payable and as debt discounts.
Investor Verification Checklist
- Liquidity Runway: Verify the sufficiency of the $1.73M cash balance against the $11.2M working capital deficit and upcoming debt maturities (approx. $11M due in 2026).
- Debt Covenants: Review the terms of the $7M Senior Secured Convertible Note and other convertible notes for default triggers, particularly given the Nasdaq non-compliance notices.
- Revenue Sustainability: Assess the success of the transition from ACP to Lifeline and the profitability timeline for the ClearLine POS platform, which currently operates at a loss.
- Dilution Risk: Monitor the impact of the authorized $20M convertible note facility and recent equity offerings on existing shareholder ownership.
- Legal Exposure: Track the status of the Blue Skies/True Wireless litigation and the potential for further financial liability.