SurgePays, Inc.
For the period ended Mar 31, 2026. Filed May 20, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 20, 2026
SURG$0.17+2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-12.
0001493152-25-021950
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-20.
0001493152-26-024591
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 156 previous paragraphs and 93 current paragraphs.
37 unchanged; 18 reworded; 37 added; 87 removed; 14 previous and 1 current paragraphs rearranged.
Tables are not compared: 26 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (37)
Current report
Business Overview
Current report
We were incorporated in Nevada on August 18, 2006, as a pioneering financial technology and telecommunications company with one clear mission: to enhance connectivity and financial access in the places people live, shop, and work.
Current report
Our Mobile Virtual Network Operators consisting of SurgePhone Wireless and Torch Wireless provide mobile broadband (internet connectivity) to consumers nationwide. Our Comprehensive Platform Services provides ACH banking relationships and a fintech transactions platform that processes thousands of transactions a day with independently owned convenience stores.
Current report
Please see the description in Item 1 of this Annual Report for a description of our Mobile Virtual Network Operators and Comprehensive Platform Services.
Current report
Mobile Virtual Network Operators consisting of SurgePhone Wireless and Torch Wireless revenues (as detailed in Notes 2 and 10 of the financial statements) decreased by $482,311 or (21.1%). In fourth quarter of 2025, due to an audit delay, our Eligible Telecommunications Carrier paused the intake of new users, leading to a temporary dip in Lifeline revenues in early 2026.
Current report
Point-of-Sale and Prepaid Services revenues increased by $5,888,865 from March 31, 2025 to March 31, 2026, as a result of continued efforts to scale this segment by the VP of Sales, and the continued increasing of our sales force.
Current report
● Contractors and consultants expense decreased by $460,481 or 54.5% from $845,094 in 2025 to $384,613 in 2026. The Company decreased these expenses during the three months ended March 31, 2026, due to the reduction in advisory services specifically in the area of investment relations and the internalization of marketing efforts.
Current report
● Professional services remained fairly steady, decreasing by 5,649 or 3.4% in 2026.
Current report
● Compensation increased slightly from $1,730,440 in 2025 to $1,801,049 in 2026.
Current report
● Computer and internet costs decreased slightly to $253,053 in 2026 from $259,085 in 2025.
Current report
● Advertising and marketing costs increased to $29,922 in 2026 from $23,480 in 2025 primarily due to additional marketing of the Clearline platform.
Current report
● Insurance expense decreased to $258,616 in 2026 from $283,202 in 2025 primarily as a result of improved premium rates for the renewal of coverage.
Current report
● Other costs decreased to $424,209 in 2026 from $1,244,321in 2025 primarily due to the resolution of various taxes associated with the ACP and other company-wide cost-cutting measures.
Current report
Interest expense increased to $881,908 in 2026 from $119,434 in 2025 primarily due to additional notes entered into during the latter three quarters of 2025 and first quarter of 2026.
Current report
In connection with the issuance of convertible promissory notes (Notes #7 and #8), in March 2026, the Company issued 375,000 common stock purchase warrants. These warrants contain certain cash settlement features triggered upon events of default or change of control and therefore do not qualify for equity classification. Accordingly, the warrants are accounted for as derivative liabilities. For the three months ended March 31, 2026 and 2025, the Company recorded a loss (gain) on the change in fair value of derivative liabilities of $30,241 and $0, respectively.
Current report
The Company invested excess cash in various instruments during 2025, resulting in interest, dividends, and gains resulting in an aggregate increase of $56,903 compared to $0 in 2026.
Current report
Stock Issued for Cash
Current report
Underwritten Public Offering
Current report
On January 20, 2026, the Company entered into an underwriting agreement with R.F. Lafferty & Co., Inc. for an underwritten public offering of 2,000,000 shares of common stock at a public offering price of $1.25 per share, for gross proceeds of approximately $2,500,000. The offering closed on January 22, 2026. The underwriter was granted a 45-day option to purchase up to an additional 300,000 shares at the public offering price to cover over-allotments. The Company intends to use the net proceeds for expansion of its Lifeline business and for working capital and general corporate purposes.
Current report
In connection with the offering, the Company issued warrants to the underwriter to purchase a number of shares equal to 3.0% of the total shares sold (60,000 warrants – see table below), at an exercise price equal to 110% of the public offering price ($1.38/share). The warrants are exercisable commencing six months after the closing date and expire five years after the commencement of sales, and were issued without registration under the Securities Act of 1933 in reliance on the exemption provided by Section 4(a)(2).
Current report
The offering was made pursuant to the Company’s effective registration statement on Form S-3 (File No. 333-273110).
Current report
The Company issued 7,323 shares of common stock for net proceeds of $14,375 ($1.98 - $2.03/share).
Current report
The Company issued 200,000 shares of common stock for services rendered, having a fair value of $334,000 ($1.67/share), based upon the quoted closing trading price.
Current report
Recognition of Stock Based Compensation - Restricted Stock Awards – Employees
Current report
The Company recognized $7,787 in compensation expense, related to the vesting of these awards.
Current report
Debt Discount – Convertible Notes Payable – Common Stock
Current report
During the year ended December 31, 2025, the Company issued 31,525 shares of common stock with an aggregate grant-date fair value of $54,828 to lenders as additional consideration in connection with the issuance of convertible notes payable. The fair value of the shares was recorded as a debt discount and is being amortized to interest expense over the term of the related notes using the effective interest method. See Note 5.
Current report
Conversion of Debt to Common Stock – Related Party
Current report
On March 23, 2026, the Company issued 800,000 shares of common stock to its Chief Executive Officer at a fair value of $707,200 ($0.884 per share) in partial settlement of a related party note payable. The Chief Executive Officer also forgave $292,800 of principal, which was accounted for as a capital contribution from a principal shareholder and credited to additional paid-in capital. The aggregate $1,000,000 was applied as a reduction of the related party note payable, and no gain on extinguishment was recognized. See Note 5.
Current report
At March 31, 2026, and December 31, 2025, our current assets were $8,208,310 and $6,979,766, respectively, and our current liabilities were $30,042,829 and $18,190,236, respectively, which resulted in a working capital deficit of $(21,834,519) and $(11,210,470), respectively. The increase in current assets is primarily a result of increased accounts receivable, and the increase in current liabilities is primarily a result of increased accounts payable and notes payable.
Current report
At March 31, 2026, our total liabilities were $33,369,426 compared to total liabilities of $23,918,665 at December 31, 2025. This $9,450,761 increase was related to an increase in accounts payable and notes payable.
Current report
At March 31, 2026, our total stockholders’ deficit was $(23,867,968) as compared to $(15,402,819) at December 31, 2025. The $(9,450,761) decrease was primarily due to the net loss for the year, as well as the above discussed increase in liabilities.
Current report
Known trends and uncertainties– The Company may pursue strategic opportunities, including acquisitions or partnerships, that align with its core business and support long-term growth. There are no definitive agreements in place at this time.
Current report
● Level 1 - Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;
Current report
● 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
Current report
● Level 3 - Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.
Current report
Impairment of Long-lived Assets including Internal Use Capitalized Software Costs
Removed paragraphs (87)
Previous report
About SurgePays, Inc.
Previous report
SurgePays, Inc (“SurgePays,” “we” the “Company”) was incorporated in Nevada on August 18, 2006 is a financial technology and telecom company focused on providing these essential services to the underbanked community. We were previously known as North American Energy Resources, Inc. and KNINE Media Holdings, Inc. Prior to April 27, 2015, we operated solely as an independent oil and natural gas company engaged in the acquisition, exploration and development of oil and natural gas properties and the production of oil and natural gas through its wholly owned subsidiary, NAER. On April 27, 2015, NAER entered into a Share Exchange Agreement with KNINE Media whereby KNINE Media became a wholly owned subsidiary of NAER and which resulted in the shareholders of KNINE Media owning approximately 90% of the voting stock of the surviving entity. While we continued the oil and gas operations of NAER following this transaction, on August 4, 2015, we changed its name to KNINE Media Holdings, Inc. On December 21, 2017, we changed its name to Surge Holdings, Inc. to better reflect the diversity of its business operations. We changed our name to SurgePays, Inc. on October 29, 2020.
Previous report
As described in more detail below, we currently operate in two different business segments through the following subsidiaries: (i) SurgePhone Wireless, LLC, a Nevada limited liability company; (ii) SurgePays Fintech, Inc., a Nevada limited liability company; (iii) ECS Prepaid, LLC, a Missouri limited liability company and (iv) Torch Wireless a Wyoming limited liability company.
Previous report
Our Business Segments
Previous report
SurgePays operates through two primary business segments, each strategically designed to meet the diverse needs of our customers. These segments are driven by independent technology platforms that also function synergistically to foster mutual growth:
Previous report
SurgePays continues to advance our initiative to provide direct access for our customers to nationwide 4G LTE and 5G wireless network services. Our robust infrastructure and capabilities, enable SurgePays to operate not only as a Mobile Virtual Network Operator (MVNO), but also as a Mobile Virtual Network Enabler (MVNE). As an MVNE, the Company offers wireless services, including SIM provisioning, billing, and airtime, to other wireless providers that do not have a direct carrier relationship. By continuing to enhance the capabilities of the internal processes as an MVNO, SurgePays is consistently expanding the MVNE revenue channel with minimal incremental cost to the Company.
Previous report
The Company previously also operated a Lead Generation segment; however, this business segment was discontinued in 2024.
Previous report
MVNO Wireless Services
Previous report
SurgePays’ Mobile Virtual Network Operator (MVNO) business delivers high-speed, reliable, and affordable wireless services by leveraging agreements with national telecom leaders. Generating $43,450,244 of year ended December 31, 2024 operating revenue, we believe this segment will be central to our growth, offering subsidized and prepaid options to meet diverse financial needs.
Previous report
Mobile Wireless Services:
Previous report
● LinkUp Mobile: A prepaid wireless offering targeting customers seeking affordable, no-contract plans with nationwide coverage, including U.S., Mexico, and Canada roaming. SurgePays sells low-cost SIM kits and devices through a retail distribution network of over 9,000 convenience stores and online channels.
Previous report
● Torch Wireless: A subsidized Lifeline brand serving low-income consumers across eligible states. SurgePays offers federally supported wireless service under the Lifeline program, which provides a monthly reimbursement per qualifying subscriber. In California, the combined federal and state support results in one of the most attractive reimbursement rates nationally ($28.25/subscriber).
Previous report
SurgePays’ MVNO subscriber acquisition strategy includes both in-store and online enrollments, often facilitated through third-party enrollment partners and supported by in-house systems to streamline customer onboarding and device activation.
Previous report
MVNE Platform – HERO
Previous report
In late 2024, SurgePays launched its HERO platform, a full-stack mobile virtual network enabler (MVNE) system designed to support the launch and management of independent MVNOs. Through a strategic agreement with AT&T, the Company gained direct access to 4G LTE and 5G networks, enabling HERO to provide:
Previous report
● SIM provisioning and activation
Previous report
● Billing, CRM, and subscriber management tools
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● Bilingual customer service
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● White-labeled infrastructure for third-party brands
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● Option fulfillment, logistics, and device procurement
Previous report
HERO operates on a scalable per-click revenue model and supports both traditional and subsidized wireless offerings. MVNO clients benefit from HERO’s turnkey, infrastructure-free deployment and rapid go-to-market capabilities. With multiple MVNOs launched and additional partners onboarding in 2025, SurgePays is consistently expanding the MVNE revenue channel with minimal incremental cost to the Company and anticipates this component of the business will become a major contributor to the growing robust channel offering.
Previous report
SurgePays’ retail-facing segment includes prepaid top-ups, POS transaction software, and in-store marketing technology:
Previous report
● Prepaid Wireless Top-Ups: SurgePays provides convenience store clerks with the ability to process top-ups across major wireless brands, handle debit/gift card activations, and facilitate bill payments. These high-frequency transactions generate recurring revenue and support customer cross-selling opportunities, such as upselling LinkUp wireless.
Previous report
● ClearLine POS Technology: ClearLine is a patent-pending SaaS application that transforms existing POS terminals and screens into interactive marketing and loyalty tools. It displays QR codes, digital promotions, real-time couponing, and captures analytics to enhance merchant engagement. ClearLine integrates with major terminal providers including Clover, PAX, and Landi.
Previous report
By embedding fintech services into local store ecosystems, SurgePays creates a powerful customer acquisition and data feedback loop. The Company’s retail software is compatible with thousands of independent merchant locations, positioning it to grow with minimal hardware friction.
Previous report
Growth Strategies
Previous report
At SurgePays, our growth strategy is simple yet powerful: leverage our strengths across business segments to drive for sustainable, scalable growth. Each business unit and service is aligned with our mission to create lasting value, enabling us to be strategically positioned for our goal of long-term profitability.
Previous report
Our current growth initiatives include:
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● Scaling Lifeline enrollments including high-subsidy states
Previous report
● Expanding prepaid retail distribution across rural and multicultural markets
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● Enabling wireless service launches for non-telecom brands through HERO
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● Increasing ClearLine deployments and upselling POS features to merchants
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Synergy Across Business Units
Previous report
Our integrated approach means all units work in unison, creating efficiency and value that is hard to replicate. By aligning technology, data, and market expansion strategies, we are building a cohesive platform with a unique value proposition:
Previous report
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the consolidated results of operations, stockholders’ deficit, or cash flows.
Previous report
Revenues during the three months ended years ended September 30, 2025 and 2024 consisted of the following:
Previous report
Mobile Virtual Network Operators consisting of Torch Wireless revenues (as detailed in Notes 2 and 10 of the financial statements) increased by $5,537,516 (23456.1%). The revenue increase is a direct result of the expansion of the Lifeline program in California.
Previous report
The Company signed a Master Services Agreement (MSA) with TerraCom, Inc. (“TerraCom”), a wireless service provider and licensed Lifeline provider, effective October 3, 2024, in order to execute the strategy of offering Lifeline to our existing ACP subscriber base. This agreement allowed us to offer a government-subsidized program to our previous 250,000 ACP wireless subscribers. We transitioned over 80,000 subscribers to the Lifeline program during 2024. Equally important, this allows us to reignite our sales channels to acquire new Lifeline subscribers who lost their ACP service when their carrier chose to shut them off.
Previous report
Point-of-Sale and Prepaid Services (Prepaid) revenues increased by $8,373,105 or 176.4% as a result of increasing our sales force and hiring of a new Director of Sales and renewed focus on this segment of the business. The Company expects this segment to continue to grow for the remainder of 2025.
Previous report
Effective December 31, 2024, the Company’s management elected to abandon its lead generation segment operations as part of a strategic reassessment of its business lines. This decision followed a review by the Chief Operating Decision Maker (“CODM”, which is our Chief Executive Officer), who had been regularly evaluating the segment’s financial performance and determined that its continued operation was no longer aligned with the Company’s long-term strategic objectives. The revenue was $0 and $0 respectively in the year ended December 31, 2024 and in the nine months ended September 30, 2025 Comparison numbers for the lead generation segment are shown in the respective Other Corporate Overhead lines.
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Reworded paragraphs (18)
Previous wording
This statement contains forward-looking statements within the meaning of the Securities Act of 1933, as amended (the ‘Securities Act’). Discussions containing such forward-looking statements may be found throughout this statement. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including the matters set forth in this statement. The accompanying consolidated financial statements as of September 30, 2025 and 2024 and for the three and nine months then ended includes the accounts of SurgePays, Inc. and its wholly owned subsidiaries during the period owned by SurgePays, Inc.
Current wording
This statement contains forward-looking statements within the meaning of the Securities Act of 1933, as amended (the ‘Securities Act’). Discussions containing such forward-looking statements may be found throughout this statement. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including the matters set forth in this statement. The accompanying consolidated financial statements as of March 31, 2026 and 2025 and for the three months then ended includes the accounts of SurgePays, Inc. and its wholly owned subsidiaries during the period owned by SurgePays, Inc.
Previous wording
The segment amounts included in MD&A are presented on a basis consistent with our internal management reporting. Additional information on our reportable segments is contained in Note 10 – Segment Information and Geographic Data of the Notes to Financial Statements.
Current wording
The segment amounts included in MD&A are presented on a basis consistent with our internal management reporting. Additional information on our reportable segments is contained in Note 10 – Segment Information of the Notes to Financial Statements.
Previous wording
Revenue increased overall by $13,910,620 (291.6%) from the three months ended September 30, 2024 to the three months ended September 30, 2025. The breakout was as follows:
Current wording
Revenue increased overall by $5,406,554 (51.1%) from the three months ended March 31, 2025, to the three months ended March 31, 2026. Segment revenues were as follows:
Previous wording
For the three months ended September 30, 2025, cost of revenue for services primarily consists of data plan expenses ($1,753,538), prepaid retail expenses ($13,089,497), devices ($102,000), marketing ($3,129,483), advertising ($335,168) and other expenses such as royalties and call-center expenses ($2,867,085). For the three months ended September 30, 2024, cost of revenue for services primarily consists of data plan expenses ($3,567,303), devices ($175,170), marketing ($3,719,197), advertising ($116,771) and other expenses such as royalties and call-center expenses ($467,197).
Current wording
For the three months ended March 31, 2026, cost of revenue for services primarily consisted of data plan expenses ($622,176), prepaid retail expenses ($22,629,899), marketing ($63,029), advertising ($27,779), and other expenses such as royalties and call-center expenses ($338,549). For the three months ended March 31, 2025, cost of revenue for services primarily consists of data plan expenses ($2,859,283), prepaid retail expenses ($8,330,157), devices ($391,539), marketing ($124,721), advertising ($516,778) and other expenses such as royalties and call-center expenses ($1,297,297).
Previous wording
Gross profit margin is calculated as revenue less cost of revenue. Gross profit margin is gross profit expressed as a percentage of revenue. Our gross profit in future periods will depend on a variety of factors, including market conditions that may impact our pricing, sales mix among devices, sales mix changes among consumables, excess and obsolete inventories, and the cost of our products from manufacturers. Our gross profit in future periods will vary based upon our revenue stream mix and may increase based upon our distribution channels
Current wording
Gross profit margin is calculated as revenue less cost of revenue. Gross profit margin is gross profit expressed as a percentage of revenue. Our gross profit in future periods will depend on a variety of factors, including market conditions that may impact our pricing, sales mix among devices, sales mix changes among consumables, excess and obsolete inventories, and the cost of our products from manufacturers. Our gross profit (loss) in future periods will vary based upon our revenue stream mix and may increase or decrease based upon our distribution channels.
Previous wording
The Company expects to continue the improvement of gross margin in the Point-of-Sale and Prepaid Services segment during 2025. Most of the cost to get Clearline ready for launch has occurred and we expect the gross margin to be positive by the end of 2025 for this revenue channel. As we continue to expand both subsidized (Lifeline) and non-subsidized products (LinkUp Mobile) of the MNVO segment in 2025, we also anticipate gross margins in the MVNO segment will increase with an aim to return to positive results.
Current wording
The Company expects to focus on the improvement of gross margin in the Point-of-Sale and Prepaid Services segment during the remainder of 2026. In fourth quarter of 2025, the Company pivoted its focus for the Clearline platform, significantly reducing expenses within Clearline as the Company continues to focus on future revenue growth. As we continue to expand both subsidized (Lifeline) and non-subsidized products (LinkUp Mobile) in the MNVO segment in 2026, we also anticipate gross margins in the MVNO segment will increase with an aim to return to positive results in late 2026.
Previous wording
Selling, general and administrative costs (S, G & A) decreased by $2,003,058 (32.5%). The changes are discussed below:
Current wording
Selling, general and administrative costs (S, G & A) decreased by $1,239,807, or (27.2%). The changes are discussed below:
Previous wording
In connection with the issuance of the $6,999,999 convertible promissory note, the Company issued warrants to purchase 700,000 shares of common stock. The Company allocated a portion of the proceeds to the warrants based on their relative fair value, determined using the Black-Scholes option pricing model. The fair value of the warrants was estimated to be $207,640, which was recorded as a component of the total debt discount and is being amortized to interest expense over the term of the note.
Current wording
In connection with the issuance of a $6,999,999 convertible promissory note, the Company issued warrants to purchase 700,000 shares of common stock. The Company allocated a portion of the proceeds to the warrants based on their relative fair value, determined using the Black-Scholes option pricing model. The fair value of the warrants was estimated to be $207,640, which was recorded as a component of the total debt discount and is being amortized to interest expense over the term of the note.
Previous wording
Equity Transactions for the Nine Months Ended September 30, 2025
Current wording
Equity Transactions for the Three Months Ended March 31, 2026
Previous wording
Total assets at September 30, 2025 and December 31, 2024 amounted to $14,494,901 and $23,976,005, respectively. Total assets decreased by $9,481,104 from December 31, 2024 to September 30, 2025. At September 30, 2025, assets consisted of current assets of $9,227,180, net property and equipment of $430,352, net intangible assets of $982,606, goodwill of $3,300,000, note receivable of $176,851 and operating lease right of use asset of $377,912, compared to at December 31, 2024, current assets of $17,870,323, net property and equipment of $591,088, net intangible assets of $1,472,962, goodwill of $3,300,000, note receivable of $176,851, and operating lease right of use asset of $564,781.
Current wording
Total assets at March 31, 2026 and December 31, 2025, amounted to $9,501,458 and $8,515,846, respectively, an increase of $985,612 from 2025 to 2026. The increase in total assets is a result of a slight increase in available cash and an increase in accounts receivable. At March 31, 2026, assets consisted of current assets of $8,208,310, net intangible assets of $655,776, and operating lease right of use asset of $260,694, and at December 31, 2025, assets consisted of current assets of $6,979,766, net intangible assets of $819,153, and operating lease right of use asset of $313,410.
Previous wording
The following table sets forth the major sources and uses of cash for the nine months ended September 30, 2025 and 2024.
Current wording
The following table sets forth the major sources and uses of cash for three months ended March 31, 2026 and 2025.
Previous wording
Net cash used in operating activities for the nine months ended September 30, 2025, was primarily due to the net loss for the period of $22,207,395.
Current wording
Net cash used in operating activities for the three months ended March 31, 20256 and 2025, was primarily due to the net loss for the period.
Previous wording
Net cash used in investing activities for the nine months ending September 30, 2025 was primarily due to payment for leases.
Current wording
There was no net cash used in investing activities in the three months ended March 31, 2026, and the net cash used in investing activities for the three months ending March 31, 2025 was primarily due to payment for leases.
Previous wording
Net cash used for financing activities for the nine months ended September 30, 2025 is primarily due to proceeds from various convertible notes.
Current wording
Net cash received for financing activities for the three months ended March 31, 2026 is primarily due to proceeds from the issuance of notes payable and convertible notes, as well as proceeds from stock issued for cash, offset by the repayment of debt. Net cash used for financing activities for the three months ended March 31, 2025 is primarily due to the repayment of debt.
Previous wording
In order to fund the expected growth and on-going expenses, we plan to selectively use the ATM agreement previously disclosed. In addition, we have suspended the monthly payment on the related party note (see Note 6) until further notice. We are currently exploring various strategic opportunities; however, we have no commitments at this time and no known timing as to when any transaction may occur. We will only pursue options that we believe are in the best interest of, and on the best terms for, the Company.
Current wording
Cash requirements and capital expenditures– Due to reduction in total revenues and margins and increase in operating expenses as we scale, we may not have sufficient resources to continue to fund operations for the next twelve months without additional funding. We are currently exploring various strategic opportunities; however, we have no commitments at this time and no known timing as to when any transaction may occur. We will only pursue options that we believe are in the best interest of, and on the best terms for, the Company.
Previous wording
The Company kicked off several initiatives in April of 2025. We have begun the launch of LinkUp Mobile SIM (subscriber identity module) cards into the national retail market. LinkUp Mobile has also launched its phone in a box program. Thousands of phones have already been purchased by convenience stores, which we believe is a positive sign for our future capabilities. Torch Wireless, supported by the Lifeline program, is now actively expanding its subscriber base in the state of California. This development is noteworthy for the growth of the Torch offering, as California provides an additional revenue incentive for its subscribers and has a large potential subscriber base. The wholesale MVNE (Mobile Virtual Network Enabler) leveraging technology and industry expertise has allowed us to expand services as a Mobile Network Enabler. Leveraging our direct carrier relationship, we offer billing, provisioning, SIM cards, and services to wireless companies lacking direct carrier access. Two such companies have already embraced this offering, and we anticipate more to join in the near future. We believe the MVNE solution will continue to uniquely position us for additional rapid growth into the subscriber activation channel by enabling other wireless companies who lack a direct carrier relationship. Clear-line has launched a comprehensive code management campaign, providing services to over 1,600 convenience stores. In addition to this new business venture, Shortcode, the ability to dynamic content and features into posts, pages and widgets, has been provisioned with all carriers in preparation for a national campaign scheduled to launch in July.
Current wording
The Company kicked off several initiatives in April of 2025 that are continuing to scale through 2026. We have begun the launch of LinkUp Mobile SIM (subscriber identity module) cards into the national retail market. LinkUp Mobile has also launched its phone in a box program. Thousands of phones have already been purchased by convenience stores, which we believe is a positive sign for our future capabilities. Torch Wireless, supported by the Lifeline program, is now actively expanding its subscriber base in the state of California. This development is noteworthy for the growth of the Torch offering, as California provides an additional revenue incentive for its subscribers and has a large potential subscriber base. The wholesale MVNE (Mobile Virtual Network Enabler) leveraging technology and industry expertise has allowed us to expand services as a Mobile Network Enabler. Leveraging our direct carrier relationship, we offer billing, provisioning, SIM cards, and services to wireless companies lacking direct carrier access. Two such companies have already embraced this offering, and we anticipate more to join in the near future. We believe the MVNE solution will continue to uniquely position us for additional rapid growth into the subscriber activation channel by enabling other wireless companies who lack a direct carrier relationship. Clear-line has launched a comprehensive code management campaign, providing services to over 1,600 convenience stores. In addition to this new business venture, Shortcode, the ability to dynamic content and features into posts, pages and widgets, has been provisioned with all carriers in preparation for a national campaign scheduled to launch in July.
Previous wording
Significant estimates during the nine months ended September 30, 2025 and 2024, 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.
Current wording
Significant estimates during the three months ended March 31, 2026 and 2025, respectively, include, allowance for doubtful accounts and other receivables, inventory reserves and classifications, valuation of loss contingencies, 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.
Previous wording
In the normal course of business, we evaluate all new accounting pronouncements issued by the Financial Accounting Standards Board, SEC, or other authoritative accounting bodies to determine the potential impact they may have on our Consolidated Financial Statements. Refer to Note 2 -Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements.
Current wording
In the normal course of business, we evaluate all new accounting pronouncements issued by the Financial Accounting Standards Board, SEC, or other authoritative accounting bodies to determine the potential impact they may have on our Consolidated Financial Statements. Refer to Note 2 -Summary of Significant Accounting Policiesof the Notes to Consolidated Financial Statements.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Revenues and expenses during the three months ended March 31, 2026 and 2025, consisted of the following:
Rearranged previous paragraphs (14)
Previous report — wording carried elsewhere
We measure our performance on a consolidated basis as well as the performance of each segment.
Previous report — wording carried elsewhere
We report our financial performance based on the following segments: Mobile Virtual Network Operators (MVNO), and Point-of-Sale and Prepaid Services (Top-up). The MVNO segment is further broken down into subsidized (Lifeline) and non-subsidized components (LinkUp Mobile). The subsidized component or Lifeline is the result of the mobile broadband (phone and internet) services provided by Torch Wireless to eligible consumers. The Point-of-Sale and Prepaid Services segment is comprised of Surge Fintech and ECS as previously shown.
Previous report — wording carried elsewhere
The segment amounts included in MD&A are presented on a basis consistent with our internal management reporting. Additional information on our reportable segments is contained in Note 10 – Segment Information and Geographic Data of the Notes to Financial Statements.
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Cost of Revenue, Gross Profit and Gross Margin
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For the nine months ended September 30, 2025, cost of revenue for services primarily consists of data plan expenses ($6,544,406), prepaid retail expenses ($31,208,949), devices ($975,276), marketing ($3,622,850), advertising ($1,182,946) and other expenses such as royalties and call-center expenses ($5,434,951). For the nine months ended September 30, 2024, cost of revenue for services primarily consists of data plan expenses ($16,921,923), prepaid expense retail ($9,014,955), devices ($5,001,192), marketing ($15,281,613), advertising ($4,432.173) and other expenses such as royalties and call-center expenses ($3,725,444).
Previous report — wording carried elsewhere
We expect that our cost of revenue will increase or decrease to the extent that our revenue increases and decreases.
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Gross profit margin is calculated as revenue less cost of revenue. Gross profit margin is gross profit expressed as a percentage of revenue. Our gross profit in future periods will depend on a variety of factors, including market conditions that may impact our pricing, sales mix among devices, sales mix changes among consumables, excess and obsolete inventories, and the cost of our products from manufacturers. Our gross profit in future periods will vary based upon our revenue stream mix and may increase based upon our distribution channels
Previous report — wording carried elsewhere
The Company expects to continue the improvement of gross margin in the Point-of-Sale and Prepaid Services segment during 2025. Most of the cost to get Clearline ready for launch has occurred and we expect the gross margin to be positive by the end of 2025 for this revenue channel. As we continue to expand both subsidized (Lifeline) and non-subsidized products (LinkUp Mobile) of the MNVO segment in 2025, we also anticipate gross margins in the MVNO segment will increase with an aim to return to positive results.
Previous report — wording carried elsewhere
General and administrative during the nine months ended September 30, 2025 and 2024 consisted of the following:
Previous report — wording carried elsewhere
Selling, general and administrative expenses during the nine months ended September 30, 2025 and 2024 consisted of the following:
Previous report — wording carried elsewhere
Selling, general and administrative costs (S, G & A) decreased by $6,973,781 (35.9%). The changes are discussed below:
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Other (expense) income during the nine months ended September 30, 2025 and 2024 consisted of the following:
Previous report — wording carried elsewhere
Cash requirements and capital expenditures– As we transition from the end of the ACP program in 2024 and the reduction in total revenues and margins, we may not have sufficient resources to continue to fund operations for the next twelve months without additional funding. We expect to use additional funding and any profitability to satisfy any cash needs going forward.
Previous report — wording carried elsewhere
Known trends and uncertainties– The Company continues to explore potential strategic opportunities to acquire other businesses with similar business operations, or businesses we believe could be potentially symbiotic. While we are currently exploring various strategic opportunities, we have no commitments at this time and no known timing as to when any opportunities may arise. We will only pursue opportunities that we believe are in the best interest of, and on the best terms for, the Company.