SurgePays, Inc.
For the period ended Dec 31, 2024. Filed Mar 25, 2025.
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FY2024 · Filed Mar 25, 2025
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
SurgePays, Inc. & Subsidiaries
Bartlett, Tennessee
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of SurgePays, Inc. & Subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2024 and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the results of its consolidated operations and its consolidated cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Sufficiency of audit evidence over revenue
| 1) | The Company generates revenues from the delivery of processing, service and product solutions. Revenue is measured based on consideration specified in contracts, and the Company recognizes revenue when it satisfies a performance obligation by processing the transaction, which is at a point in time. The Company’s revenue consists of a significant volume of transactions sourced from systems and applications. The processing of such transactions and recording of the majority of revenue is system-driven and based on contractual terms. Revenue is recognized when the services and products are delivered to the customers and control is transferred, which is at a point in time. These revenues are recognized on the gross basis as the company is considered a principal in the transaction. |
| 2) | The Company also has significant revenue from providing services and products under the Affordable Connectivity Program and Lifeline program. Revenue is recognized after services and products have been delivered to an eligible customer. |
How the Critical Audit Matters Were Addressed in the Audit
Our audit procedures related to revenue recognition and disclosure included the following, among others:
We obtained and understanding and evaluated management’s significant accounting policies around revenue recognition for each significant line of revenue, including management’s assessment of when control of goods and services are transferred to customers.
For a sample of revenue transactions, we tested selected transactions by agreeing the amounts of revenue recognized to source documents and testing the mathematical accuracy of the recorded revenue. We also evaluated the source documents to determine whether terms that may impact revenue recognition were identified and properly considered by management.
Goodwill impairment assessment
| 3) | As discussed in note 2 to the consolidate financial statements of the Company, the Company closed an asset purchase agreement and is reporting goodwill of $2,500,000 as of December 31, 2024. Management reviewed the goodwill for impartment as of December 31 ,2024. The review of impairment for goodwill allows management to first asses qualitative factors to determine whether it is necessary to perform the more detailed quantitative goodwill impairment test. Management performed the qualitative analysis and determined that goodwill was not impaired and was not required to perform the more detailed quantitative goodwill impairment test. Management assessment included significant judgment and is subject to various risks and uncertainties. |
How the Critical Audit Matters Were Addressed in the Audit
We evaluated management significant judgment and assumptions that were used in the impairment analysis. The matter required auditor judgment, subjectivity, and effort in performing procedures.
/s/Rodefer Moss & Co, PLLC
We have served as the Company’s auditor since 2017
Johnson City, Tennessee
March 25, 2025
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