GlobeNewswire Inc | Nov 17, 2020 08:00AM EST

November 17, 2020

Revenue for the nine months ending September 30, 2020 increased $30.8 million or 251%

SurgePays, Inc. is currently trading as Surge Holdings, Inc. (SURG). Its name change to "SurgePays, Inc." is expected to take effect soon.

BARTLETT, Tenn., Nov. 17, 2020 (GLOBE NEWSWIRE) -- SurgePays (OTCQB: SURG) (Surge or the Company), a fintech company meeting the needs of the underserved and underbanked, announces financial results from the third quarter ending September 30, 2020 and provides a financial update.

Corporate highlights and recent developments include:

-- Announced rebranding to SurgePays to better reflect the Companys orientation around its fintech platform -- Launched proprietary 4SIM wireless activation technology -- Retained CORE IR to assist the Company with investor relations, public relations, advisory and shareholder communications

The third quarter of 2020 continued to exceed expectations with regard to revenue, product diversification, and penetration, as the Company continued its strong growth. Concurrently, we are sharpening our focus to ensure that the Company operates efficiently and ensure that both our customers and our stockholders have a clear understanding of our business and of our path forward. We are very excited for the future of SurgePays and believe that the next few quarters will continue to demonstrate dynamic growth and progress, stated Brian Cox, SurgePays Chief Executive Officer.

We believe SurgePays as a brand is better representative of our focus on our fintech software platform that processes third-party prepaid wireless activations and top-ups, gift card activation and loads, and wireless SIM activation, providing a more precise direction as a public company as we implement our growth strategies and continue to work towards a listing on a major exchange. The SurgePays system drives value and growth by enabling retailers to instantly add credit to any prepaid wireless customers account for any carrier, providing the merchant commissioned transactions, increased foot traffic, and customer loyalty. Moreover, our platform offers an innovative supply-chain marketplace for convenience store, bodega and tienda owners to order many top selling products for their stores at a deeper wholesale discount than traditional distribution due to utilizing the Direct Store Delivery (DSD) model, Mr. Cox concluded.

Financial Results for Third Quarter 2020

Revenue for the quarter ending September 30, 2020 was approximately $12.8 million compared to $4.9 million for the quarter ending September 30, 2019, an increase of $7.9 million or 161%. Revenue for the nine months ending September 30, 2020 was approximately $43.1 million compared to $12.3 million for the same period in 2019, an increase of $30.8 million or 251%.

Cost and expenses for the quarter ending September 30, 2020 were approximately $3,200,000 compared to approximately $3,016,000 for the same period in 2019. Cost and expenses for the nine months ending September 30, 2020 were approximately $12,014,000 compared to $9,260,000 for the nine months ending September 30, 2019.

Net loss for the quarter ending September 30, 2020 was approximately $2,500,000, or ($0.02) per common share, compared to approximately $1,150,000, or ($0.01) per common share, for the same period in 2019. Net loss for the nine months ending September 30, 2020 was approximately $7,984,000, or ($0.07) per share, compared to a net loss of approximately $5,270,000, or ($0.06) per share, for the nine months ending September 30, 2019.

Cash and cash equivalents as of September 30, 2020 totaled $421,315 compared to $143,903 as of September 30, 2019.

About SurgePays, Inc.

SurgePays, Inc. is meeting the needs of underserved markets in financial technology, telecommunications, and digital media. It offers prepaid wireless and underbanked financial products and services, along with popular consumer goods, to retail merchants (such as operators of convenience stores, bodegas, and gas stations) that address the needs of many store customers nationwide.

Company Contact:Tony EversCPA, CIAChief Financial OfficerChief Operating OfficerPhone: (847) 648-7542 ext. 104tevers@surgeholdings.com

Media Relations:Jules AbrahamDirector of Public RelationsCORE IR917-885-7378julesa@coreir.com

Investor RelationsCORE IRJoseph Delahoussaye IIIV.P. of Investor Relations516-222-2560invest@surgeholdings.com

SURGEPAYS, INC. AND SUBSIDIARIESCondensed Consolidated Balance Sheets

September 30, December 31, 2020 2019 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 421,315 $ 346,040 Accounts receivable, less allowance fordoubtful accounts of $0 and $774,841, 337,017 3,056,213 respectivelyNote receivable ? 14,959 Lifeline revenue due from USAC 222,833 60,790 Inventory 177,184 ? Prepaid expenses 38,772 96,883 Total current assets 1,197,121 3,574,885 Property and Equipment, less accumulateddepreciation of $89,965 and $38,656, 249,871 294,616 respectivelyIntangible assets less accumulatedamortization of $1,347,024 and $519,404, 4,406,497 4,769,117 respectivelyGoodwill 866,782 866,782 Investment in Centercom 456,685 203,700 Operating lease right of use asset, net 419,372 210,816 Other long-term assets 61,458 66,457 Total assets $ 7,657,786 $ 9,986,373 LIABILITIES AND STOCKHOLDERS? DEFICIT Current liabilities: Accounts payable and accrued expenses - $ 5,479,508 $ 3,637,577 othersAccounts payable and accrued expenses - 1,699,914 998,517 related partyCredit card liability 378,260 449,158 Loss contingency ? 38,040 Deferred revenue ? ? Derivative liability 1,415,238 190,846 Operating lease liability 50,151 90,944 Line of credit 912,870 912,870 Convertible notes payable and current 1,324,629 ? portion of long-term debt, netDebt ? related party 463,000 ? Notes payable and current portion of 247,094 736,172 long-term debt, netTotal current liabilities 11,970,664 7,054,124 Long-term debt less current portion ? 2,225,440 2,205,440 related partyOperating lease liability ? net 365,723 119,872 Trade payables - long term 869,868 869,868 Notes payable and long term portion of debt 1,134,582 ? - netConvertible promissory notes payable - net ? 4,436,684 Total liabilities 16,566,277 14,685,988 Commitments and contingencies Stockholders? deficit: Series A preferred stock: $0.001 par value;100,000,000 shares authorized; 13,000,000and 13,000,000 shares issued and 13,000 13,000 outstanding at September 30, 2020 andDecember 31, 2019, respectivelySeries C convertible preferred stock;$0.001 par value; 1,000,000 sharesauthorized; 721,598 and 721,598 shares 722 722 issued and outstanding at September 30,2020 and December 31, 2019, respectivelyCommon stock: $0.001 par value; 500,000,000shares authorized; 116,236,031 shares and102,193,579 shares issued and outstanding 116,235 102,193 at September 30, 2020 and December 31,2019, respectivelyAdditional paid in capital 9,816,841 6,055,042 Accumulated deficit (18,855,289 ) (10,870,572 )Total stockholders? deficit (8,908,491 ) (4,699,615 )Total liabilities and stockholders? deficit $ 7,657,786 $ 9,986,373

SURGE HOLDINGS, INC. AND SUBSIDIARIESCondensed Consolidated Statements of Operations(Unaudited)

For the Three Months For the Nine Months Ended Ended September 30, September 30, 2020 2019 2020 2019 Revenue $ 12,802,172 $ 4,901,864 $ 43,104,767 $ 12,295,058 Cost of 11,216,186 3,023,292 39,422,776 7,814,614 revenue Gross profit 1,585,986 1,878,572 3,681,991 4,480,444 Cost and expensesDepreciationand 306,341 17,926 876,152 39,050 amortizationSelling,general and 2,904,569 2,998,359 11,138,464 9,222,923 administrativeTotal costs 3,210,910 3,016,285 12,014,616 9,261,973 and expenses Operating (1,624,924 ) (1,137,713 ) (8,332,625 ) (4,781,529 )profit (loss) Other income (expense):Interest (1,164,409 ) (20,767 ) (2,348,175 ) (93,157 )expenseDerivative (33,239 ) ? (529,294 ) ? expenseChange in fairvalue of 212,851 ? 405,413 ? derivativeliabilityGain oninvestment in 107,649 6,134 252,985 70,909 CentercomGain/(loss) onsettlement of ? ? 2,556,979 (466,187 )liabilitiesOther income ? ? 10,000 ? Total other ) )income (877,148 (14,633 347,908 (488,435 )(expense) Net lossbefore (2,502,072 ) (1,152,346 ) (7,984,717 ) (5,269,964 )provision forincome taxes Provision for ? ? ? ? income taxes Net loss $ (2,502,072 ) $ (1,152,346 ) $ (7,984,717 ) $ (5,269,964 ) Net loss percommon share, $ (0.02 ) $ (0.01 ) $ (0.07 ) $ (0.06 )basic anddiluted Weightedaverage commonshares 114,683,442 98,452,560 108,246,505 94,225,836 outstanding ?basic anddiluted

SURGE HOLDINGS, INC. AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows(Unaudited)

Nine Months Ended September 30, 2020 2019 Operating activities Net loss $ (7,984,717 ) $ (5,269,964 )Adjustments to reconcile net incomeloss to net cash used in operating activities:Depreciation and amortization 876,512 39,051 Amortization of right of use assets 146,647 35,015 Amortization of debt discount 1,417,524 - Stock-based compensation 127,992 307,873 Change in fair value of derivative (405,413 ) - liabilityDerivative expense 529,294 - (Gain) loss on settlement of (2,681,586 ) 474,953 liabilitiesGain on equity investment in Centercom (252,985 ) (70,909 )Changes in operating assets and liabilities:Accounts receivable 2,719,196 (5,163,347 )Lifeline revenue due from USAC (162,043 ) 619,162 Customer phone supply - 1,355,201 Inventory (177,184 ) - Prepaid expenses 58,111 (100,600 )Other assets 4,999 - Credit card liability (70,898 ) 165,914 Deferred revenue - (50,000 ) Loss contingency (38,040 ) (30,000 )Current portion of operating lease (150,145 ) (35,015 )liabilityAccounts payable and accrued expenses 2,665,117 2,767,632 Net cash used in operating activities (3,377,619 ) (4,955,034 ) Investing activities Repayments of notes receivable 14,959 - Purchase of equipment (4,147 ) (222,000 ) Net cash provided by (used) in 10,812 (222,000 )investing activities Financing activities Issuance of Common Stock and warrants 705,000 3,190,500 Repurchase of Common Stock (500,000 ) - Note payable, related party - 723,196 - borrowingsNote payable, related party - (240,196 ) - repaymentsNote payable - borrowings 1,134,582 - Note payable - repayments (27,500 ) (70,000 )Convertible promissory notes - 2,182,000 233,000 borrowingsConvertible promissory notes - (373,000 ) - repaymentsCash paid for debt issuance costs (162,000 ) - Line of credit - advances - 1,130,000 Line of credit - repayments - (217,130 )Loan proceeds under related party - 1,316,000 financing arrangementLoan repayments under related party - (674,000 )financing arrangementNet cash provided by financing 3,442,082 4,908,370 activities Net change in cash and cash 75,275 (300,709 )equivalents Cash and cash equivalents, beginning 346,040 444,612 of period Cash and cash equivalents, end of $ 421,315 $ 143,903 period Supplemental cash flow information Cash paid for interest and income taxes:Interest $ 98,113 $ 65,600 Income taxes $ - $ - Non-cash investing and financing activities:Exchange of related party advances for $ - $ 389,502 Series C Preferred StockExchange of investment in CenterCom $ - $ 178,508 for Series C Preferred StockCommon Stock issued for an acquisition $ 210,794 $ 1,000,000 Debt acquired in acquisition $ - $ 4,000,000 Common Stock and warrants issued with $ 906,098 $ - debt recorded as debt discountDerivative liability on convertible $ 1,366,636 $ - notes recorded as debt discountOperating lease liability $ 355,203 $ 230,812 Make whole Common Stock issued $ 196,341 $ - pursuant to SPAIssuance of Common Stock for $ 49,890 $ - modification of debt