SurgePays(US:SURG)2025-11-12 21:31Revenue Performance - SurgePays reported a revenue increase of $13,910,620, or 291.6%, from $4,769,697 in Q3 2024 to $18,680,317 in Q3 2025[438] - The Mobile Virtual Network Operator (MVNO) segment generated $5,561,124 in revenue, a significant increase of $5,537,516, or 23456.1%, primarily due to the expansion of the Lifeline program in California[438] - Point-of-Sale and Prepaid Services revenues rose by $8,373,105, or 176.4%, attributed to an expanded sales force and renewed focus on this segment[440] - Total revenue decreased by $10,508,618 (20.5%) from $51,284,531 in the nine months ended September 30, 2024 to $40,775,913 in the nine months ended September 30, 2025[454] - Mobile Virtual Network Operator revenue decreased by $31,299,052 (75.6%) from $41,419,705 in 2024 to $10,120,653 in 2025 due to the lack of additional funding from Congress[454] - Point-of-Sale and Prepaid Services revenue increased by $20,801,763, attributed to an expanded sales force and renewed focus on this segment[456] - Total revenues for the nine months ended September 30, 2025 were $40,775,913, a decrease of $10,508,618 from $51,284,531 in 2024, attributed to the elimination of the ACP during the first half of 2024[477] - Mobile Virtual Network Operators revenue for the nine months ended September 30, 2025 decreased by $31,299,052 compared to the same period in 2024[475] - Point-of-Sale and Prepaid Services revenue increased by $20,801,763 or 211.1% for the nine months ended September 30, 2025, reaching $30,655,260 compared to $9,853,497 in 2024[476] Cost and Profitability - The cost of revenue for Q3 2025 was $21,276,771, compared to $12,602,057 in Q3 2024, reflecting increased operational scale[446] - Gross profit for Q3 2025 was a loss of $2,596,454, an improvement from a loss of $7,832,360 in Q3 2024[446] - Gross profit margin for the Mobile Virtual Network Operator segment was -75.5% in 2025 compared to -8.2% in 2024, indicating a significant decline[460] - The Company expects to achieve positive gross margins in the Point-of-Sale and Prepaid Services segment by the end of 2025[460] Expenses and Financial Management - Selling, general and administrative expenses decreased by $2,003,058 (32.5%) from $6,166,335 in 2024 to $4,163,277 in 2025[448] - Compensation expenses decreased by $1,458,461 (44.0%) from $3,313,320 in 2024 to $1,854,859 in 2025, primarily due to changes in stock compensation[449] - General and administrative expenses for the nine months ended September 30, 2025 totaled $13,147,086, down from $20,312,185 in 2024[461] - Selling, general and administrative expenses (S, G & A) decreased by $6,973,781 or 35.9% from $19,451,184 in 2024 to $12,477,403 in 2025[462] - Compensation expenses decreased by $5,522,894 or 50.6% from $10,922,462 in 2024 to $5,399,568 in 2025, primarily due to a change in one-time non-cash stock compensation for the CEO and CFO[462] Subscriber and Service Expansion - SurgePays launched the HERO platform in late 2024, designed to support independent MVNOs and enhance revenue channels with minimal incremental costs[424] - The company transitioned over 80,000 subscribers to the Lifeline program during 2024, leveraging a Master Services Agreement with TerraCom, Inc.[439] - The company plans to scale Lifeline enrollments and expand prepaid retail distribution across rural and multicultural markets as part of its growth strategy[432] - The Company signed a Master Services Agreement with TerraCom, Inc. to offer Lifeline services to its existing ACP subscriber base, transitioning over 80,000 subscribers[455] Financing and Capital Management - The Company repurchased 333,333 shares of its common stock for $999,999 at $3 per share, increasing the principal balance of the related convertible note by the same amount[469] - The Company entered into a one-year Note Purchase Agreement with LGH Investments for $770,000, accruing interest at 8% per annum[465] - The company issued a Senior Secured Convertible Note for $6,999,999, resulting in net cash proceeds of $6,000,000 and the repurchase of 333,333 shares at $3/share[481] - The company plans to utilize the At the Market Offering Agreement to fund ongoing working capital needs, with an aggregate offering price of up to $15,000,000[481] - The company issued a six-month Note for $1,000,000, with warrants for 30,000 shares at an exercise price of $2.50/share[483] Asset and Liability Management - Total assets decreased by $9,481,104 from $23,976,005 at December 31, 2024 to $14,494,901 at September 30, 2025[479] - Current assets decreased from $17,870,323 at December 31, 2024 to $9,227,180 at September 30, 2025, resulting in a working capital deficit of $1,751,392[478] - As of September 30, 2025, total liabilities increased to $20,919,381 from $8,714,392 at December 31, 2024, marking a $12,204,873 increase[480] - Total stockholders' deficit was $6,424,480 compared to total stockholders' equity of $15,261,613 at December 31, 2024[482] Cash Flow and Financial Position - Net cash used in operating activities for the nine months ended September 30, 2025, was $(17,728,805), compared to $(13,412,714) in 2024, primarily due to a net loss of $22,207,395[490] - The company reported a net cash decrease of $10,050,580 in 2025, contrasting with a cash increase of $23,812,520 in 2024 driven by capital raises and warrant exercises[492] Strategic Initiatives - The company launched its Growth Marketing and Data Partnerships Division to monetize its consumer data ecosystem and enhance customer acquisition efficiency[442] - The company has initiated the launch of LinkUp Mobile SIM cards and a phone in a box program, with thousands of phones purchased by convenience stores[497] - The company is exploring strategic opportunities for acquisitions but has no current commitments or known timing for such transactions[498] Accounting and Risk Management - The company evaluates new accounting pronouncements to assess their potential impact on Consolidated Financial Statements[518] - There are no applicable quantitative and qualitative disclosures about market risk[519] - Warrants issued for compensation are measured using the Black-Scholes option pricing model, while those meeting the definition of a derivative liability use a binomial pricing model for fair value determination[515] - Warrants issued with common stock are recorded at fair value as a reduction in additional paid-in capital[517] - All other service-related warrants are recorded at fair value and expensed over the requisite service period or at the date of issuance if no service period exists[517]