SurgePays, Inc. (SurgePays) operates as a financial technology and telecom company. The company focuses on providing these essential services to the underbanked community.
The company operates in three different business segments through the following subsidiaries: Surge Blockchain, LLC; LogicsIQ, Inc., a Nevada corporation; SurgePhone Wireless, LLC; SurgePays Fintech, Inc.; ECS Prepaid, LLC; and Torch Wireless, LLC.
Business Segments
Mobile Virtual Network Operators
This segment provides mo...
SurgePays, Inc. (SurgePays) operates as a financial technology and telecom company. The company focuses on providing these essential services to the underbanked community.
The company operates in three different business segments through the following subsidiaries: Surge Blockchain, LLC; LogicsIQ, Inc., a Nevada corporation; SurgePhone Wireless, LLC; SurgePays Fintech, Inc.; ECS Prepaid, LLC; and Torch Wireless, LLC.
Business Segments
Mobile Virtual Network Operators
This segment provides mobile broadband (internet connectivity), voice and SMS text messaging to both subsidized and direct retail prepaid customers through SurgePhone Wireless, LLC and Torch Wireless, LLC, wholly owned subsidiaries of SurgePays. The company considers this the Mobile Virtual Network Operators (MVNO) segment of its business. Further, the company provides two types of MVNO’s, subsidized and non-subsidized. The company’s subsidized MVNO’s are licensed by the Federal Communications Commission (the FCC) to provide subsidized access to the internet through mobile broadband services to consumers qualifying under the federal guidelines of the Affordable Connectivity Program (the ACP). The company provides these services by supplying consumers eligible for the ACP with tablet devices with mobile broadband capabilities for use in their homes. For providing mobile broadband on tablets to these eligible customers, the ACP (the successor program, as of March 1, 2022, to the Emergency Broadband Benefit program) reimburses the company up to a $100 for the cost of each tablet device it distributes and a $30 per customer, per month subsidy for mobile broadband (internet connectivity) services. SurgePhone and Torch combined are licensed to offer subsidized mobile broadband to all fifty states. Revenue from this portion of the company’s business accounts for 86% of its total revenue.
Through its subsidiary LinkUp Mobile, the company plans to roll-out in the second quarter of 2024 a non-subsidized portion of its MVNO business to leverage the volume of buying power it has with its subsidized subscriber base to build plans using SIM kits in convenience stores transacting on the SurgePays network. The company’s market will be to penetrate rural America where there is less competition and higher consumer pricing and offers incentivized family plans to the rapidly growing base of subsidized customer households.
Comprehensive Platform Services
This segment provides financial technology and a wireless top-up platform to independently owned convenience stores throughout the country via its subsidiaries SurgePays Fintech, ECS Prepaid, LLC, Electronic Check Services, Inc. and Central States Legal Services, Inc. The company considers these services the Comprehensive Platform Services segment of its business.
Specifically, the company’s Comprehensive Platform Services provides ACH banking relationships and a fintech transactions platform that processes thousands of transactions a day at independently owned convenience stores. The Comprehensive Platform Service also provides wireless top-up transactions and wireless product aggregation for the company’s nationwide network of convenience stores. By linking together the customer, the carrier plan and the convenience store to allow all parties to have one location to get what they need.
The company’s revenue is derived from the transaction that takes place when an individual using a prepaid cellular carrier plan needs to add more minutes to their cellular phone. The company expects this segment to be the biggest percent of year-over-year revenue growth opportunity for 2024 and plans to hire a new head of sales for the company’s Comprehensive Platform Service segment to tap into such growth opportunity.
Lead Generation
The company refers to LogicsIQ, Inc. as the Lead Generation segment of its business. LogicsIQ is a lead generation and case management solutions company primarily serving law firms in the mass tort industry. Revenues from this segment of the company’s business are earned from its lead generation retained services offerings and call center activities through CenterCom. Lead generation consist of sourcing leads, which requires the company to drive traffic to its landing pages for a specific marketing campaign. The company also achieves this in certain marketing campaigns by using third-party preferred vendors to meet the needs of its clients. Revenues are recognized at the time the lead is delivered to the client. To provide this service to its customers, the company qualifies leads through verification of information collected during the lead generation process. Additionally, the company further qualifies these leads using a client questionnaire which assists in determining the services to be provided. The qualification process is completed using the company’s call center operations.
In 2023, the company decided to focus less on this segment of its business and the company is in the process of determining how best this service fits into the overall plans of SurgePays. The company still derived revenue from this segment of its business in 2023, however, it plans to make a final decision on whether to maintain or discontinue the Lead Generation segment of its business in the second quarter of fiscal year ended 2024.
Growth Strategies
The company’s strategy for increasing revenues is based on developing, maintaining, and expanding its nationwide network of retail stores. The company has different strategies for each of its current business segments:
Mobile Virtual Network Operators
Assuming the ACP is extended, the company plans to do the following for the federally subsidized portion of its MVNO business: prioritize sales channels; continue to integrate Shockwave CRM and Clearline Mobile into its Comprehensive Platform Service software to enable ACP enrollments initiated from convenience stores; integrate Shockwave CRM into existing ATM machines and point of sale registers to initiate ACP enrollments; partner with existing regional distribution companies already provide consumable goods to convenient stores; analyze attrition/retention data to continually monitor and improve customer experience with the goal of industry best retention; and increase the national sales team nationally.
The company also plans to do the following for the non-subsidized MVNO portion of its MVNO business: leverage the volume of buying power for wholesale carrier minutes/texts/data to build market low plans to offer customers using SIM kits in convenience stores transacting on the SurgePays network; penetrate rural America where there is less competition and higher consumer pricing; and offer incentivized family plans to the rapidly growing base of subsidized customer households.
Comprehensive Platform Services
The company plans to do the following for its Comprehensive Platform Services business: build a national sales team of in-house salespeople, Independent Sales Organizations, Chain Retail Stores, and Distributors, all incentivized to add store locations and drive increased sales per store; strategically acquire other companies that offer prepaid products and other complimentary fintech products. Integrating these acquisitions to an existing base of convenience stores allows it to deploy its comprehensive fintech suite to maximize the value of the existing relationships; continue to add value driven products such as payment processing and consumer retail hard goods via its marketplace to differentiate its competitive advantage over single product companies and diversify its revenue streams; and create and offer its own MVNO products to all new and existing distribution channels adding further branding and revenue streams for SurgePays.
Lead Generation
The company is making a final decision on whether to maintain or discontinue the Lead Generation segment of its business in the second quarter of fiscal year ended 2024.
Marketing and Sales
The company utilizes different marketing methods for each segment of business that it operates. For the federally subsidized portion of its MVNO business, the company utilizes third parties to help identify potential customers for ACP and additional convenience stores where it can sell its ACP products. Additionally, the company has a campaign where it utilizes social media platforms to help identify potential customers for ACP and provide knowledge to individuals who are not aware that they are eligible for ACP so they can utilize its ACP services. The company plans to move forward by marketing its business to families of those who are ACP eligible. For its Comprehensive Platform Services, the company plans to hire a new head of sales to market its platform to their existing convenience store connections and create a national strategy to market its platform in rural areas.
Seasonality
The company experiences some seasonality whereby the peak tax season months show a higher level of sales and consumption. However, the structure of its business and range of products in the company’s portfolio mitigate any major fluctuations. The company’s revenue during the peak tax season months in the spring have historically been approximately 5% greater than the peak other months, and as its product portfolio continues to expand, the level of seasonal peaks it expects to diminish.
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