SurgePays(SURG) - 2022 Q4 - Annual Report

Revenue Growth - Revenue increased by $70,483,601 (138%) from $51,060,589 in 2021 to $121,544,190 in 2022, driven primarily by Surge Phone and Torch Wireless, which saw an increase of $81,062,308 in revenue due to subscriber growth [106]. - The subscriber base grew to over 200,000 by the end of 2022 from 30,000 at the end of 2021, significantly contributing to revenue growth from the Emergency Broadband Benefit and Affordable Connectivity programs [106]. - The company expects revenue growth across all segments, particularly in subscriber base and active store count in future periods [107]. - The gross margin for the period from October 1, 2022, to December 31, 2022, was approximately 18%, with expectations for revenue streams to increase quarter over quarter in 2023 [132]. Operational Performance - Income from operations improved by $6,626,353, resulting in a profit of $633,785 in 2022 compared to a loss of $5,992,568 in 2021, mainly due to increased operating profit in Surge Phone and Torch Wireless [108]. - Net cash provided by operating activities was $793,272 in 2022, a significant recovery from a cash used of $15,288,261 in 2021 [134]. Expenses and Liabilities - General and administrative expenses increased by $673,076 (5.5%) from $12,162,547 in 2021 to $12,835,623 in 2022, with notable increases in insurance and other administrative expenses [113][115]. - Interest expense decreased to $1,843,396 in 2022 from $3,840,616 in 2021, primarily due to the payoff of various debt instruments [115]. - Total liabilities increased by $12,936,372 to $28,885,253, primarily due to a $13,018,184 rise in installment sales liability related to inventory purchases [130]. Assets and Investments - Current assets increased to $27,563,785 in 2022 from $13,892,681 in 2021, resulting in a working capital surplus of $4,099,723 [128]. - Total assets rose by $14,503,304 to $34,003,506 in 2022, driven by a $6,826,946 increase in inventory and a $5,980,476 increase in accounts receivable due to the Affordable Connectivity Program [129]. - The equity investment in Centercom decreased by $89,082 in 2022, compared to an increase of $28,676 in 2021 [120]. Stockholder Information - Stockholders' surplus grew to $5,118,253 in 2022 from $3,551,321 in 2021, with an operating income of $3,322,294 expected to remain positive throughout 2023 [132]. - The company issued 4,862,247 shares of common stock for $21,294,800 in 2021, with net proceeds of $19,076,710 after direct offering costs [127]. Future Plans - The company plans to acquire other businesses with similar operations, although economic uncertainties may complicate funding for this expansion [140]. - The company acquired software valued at $711,400, paying $300,000 in cash and issuing 85,000 shares of common stock valued at $411,400 [123]. Challenges - Surge Fintech revenues decreased by $8,309,490 due to the impact of Covid-19 and a shift of customers to the ACP from wireless prepaid services [106].