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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 (Mark
One)

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2023

 or

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 Commission
File Number 001-40992

INC.

 (Exact
Name of Registrant as Specified in Its Charter)

 98-0550352

 (State
 or Other Jurisdiction of

 Incorporation
 or Organization)

 (I.R.S.
 Employer

 Identification
 No.)

 3124
 Brother Blvd, Suite 104, Bartlett, TN

 38133

 (Address of Principal Executive
 Offices)

 (Zip Code)

 901 - 302-9587

 (Registrant's
telephone number, including area code)

 Not
applicable

 (Former
name, former address, and former fiscal year, if changed since last report)

 Securities
registered pursuant to Section 12(b) of the Act:

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 Common Stock

 SURG

 The
 Nasdaq Stock Market LLC

 (Nasdaq
 Capital Market)

 Common Stock Purchase Warrants

 SURGW

 The
 Nasdaq Stock Market LLC

 (Nasdaq
 Capital Market)

 Securities
registered under Section 12(g) of the Exchange Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

 Yes
 No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).

 Yes
 No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act.

 If securities are registered pursuant to Section 12(b) of the Act, indicate
by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously
issued financial statements.

 Indicate by check mark whether any of those error corrections are restatements
that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during
the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).

 Yes
 No

 The
number of shares of the registrant's common stock outstanding as of March 8, 2024 was 19,290,799 shares.

 As
of June 30, 2023, the aggregate market value of the shares of common stock, par value $0.001 per share held by non-affiliates of the
registrant was approximately $ 62,587,072 based on the $7.31 closing price of the registrant's common stock, par value $0.001 per
share, on that date.

 TABLE
OF CONTENTS

 Page
 No.

 PART
 I

 Item
 1.

 Description
 of the Business

 Item
 1A.

 Risk
 Factors

 Item
 1B.

 Unresolved
 Staff Comments

 Item
 1C.

 Cybersecurity

 Item
 2.

 Properties

 Item
 3.

 Legal
 Proceedings

 Item
 4.

 Mine
 Safety Disclosures

 PART
 II

 Item
 5.

 Market
 for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item

 Selected
 Financial Data

 Item
 7.

 Management's
 Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A.

 Quantitative
 and Qualitative Disclosures About Market Risk

 Item
 8.

 Financial
 Statements and Supplementary Data

 Item
 9.

 Changes
 in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item
 9A.

 Controls
 and Procedures

 Item
 9B.

 Other
 Information

 PART
 III

 Item
 10.

 Directors,
 Executive Officers and Corporate Governance

 Item
 11.

 Executive
 Compensation

 Item
 12.

 Security
 Ownership of Certain Beneficial Owners, Management and Related Stockholder Matters

 Item
 13.

 Certain
 Relationships, Related Transactions and Director Independence

 Item
 14.

 Principal
 Accounting Fees and Services

 PART
 IV

 Item
 15.

 Exhibits,
 Financial Statement Schedules

 Exhibit

 Item

 Form
 10-K Summary

 Signatures

 i

 SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS

 This
Annual Report on Form 10-K ("Annual Report") contains forward-looking statements within the meaning of the federal securities
laws. All statements contained in this Annual Report, other than statements of historical fact, including statements regarding our future
operating results and financial position, our business strategy and plans, potential growth or growth prospects, future research and
development, sales and marketing and general and administrative expenses, and our objectives for future operations, are forward-looking
statements. Words such as "believes," "may," "will," "estimates," "potential,"
"continues," "anticipates," "intends," "expects," "could," "would,"
"projects," "plans," "targets," and variations of such words and similar expressions are intended
to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections
about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term
and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks,
uncertainties and assumptions, including those described in the "Risk Factors" in this Annual Report. Readers are urged to
carefully review and consider the various disclosures made in this Annual Report and in other documents we file from time to time with
the Securities and Exchange Commission (the "SEC") that disclose risks and uncertainties that may affect our business. Moreover,
we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict
all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks,
uncertainties, and assumptions, the future events and circumstances discussed in this Annual Report may not occur and actual results
could differ materially and adversely from those anticipated or implied in the forward-looking statements.

 You
should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking
statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable,
we cannot guarantee future results, performance, or achievements. In addition, the forward-looking statements in this Annual Report are
made as of the date of this filing, and we do not undertake, and expressly disclaim any duty, to update such statements for any reason
after the date of this Annual Report or to conform statements to actual results or revised expectations, except as required by law.

 You
should read this Annual Report and the documents that we reference herein and have filed with the SEC as exhibits to this Annual Report
with the understanding that our actual future results, performance, and events and circumstances may be materially different from what
we expect.

 This
Annual Report also contains or may contain estimates, projections and other information concerning our industry, our business and the
markets for our products, including data regarding the estimated size of those markets and their projected growth rates. Information
that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties and actual events
or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated,
we obtained these industry, business, market and other data from reports, research surveys, studies and similar data prepared by third
parties, industry and general publications, government data and similar sources. In some cases, we do not expressly refer to the sources
from which these data are derived.

 ii

 PART
I

 ITEM
1. BUSINESS

 Company
Overview and History

 About
SurgePays, Inc.

 SurgePays, Inc. ("SurgePays",
"we", the "Company") 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 KSIX 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 KSIX Media whereby KSIX Media became a wholly owned subsidiary of NAER and which resulted
in the shareholders of KSIX 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 KSIX 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.

 As described in
more detail below, we currently operate in three different business segments through the following subsidiaries: (i) Surge
Blockchain, LLC, formerly Blvd. Media Group, LLC, a Nevada limited liability company; (ii) LogicsIQ, Inc., a Nevada corporation;
(iii) SurgePhone Wireless, LLC, a Nevada limited liability company; (iv) SurgePays Fintech, Inc., a Nevada limited liability
company; (v) ECS Prepaid, LLC, a Missouri limited liability company and (vi) Torch Wireless, LLC a Wyoming limited liability
company.

 Our Business Segments

Virtual Network Operators

 We
provide 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. We consider this the Mobile Virtual
Network Operators (MVNO) segment of our business. Further, we provide two types of MVNO's, subsidized and non-subsidized. Our 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").
We provide 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 us up to a $100 for the cost of each tablet device we distribute
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 our business currently accounts for 86% of our
total revenue. However, according to the FCC website, on February 7, 2024, the ACP stopped accepting new applications and enrollments
and the ACP will cease to be funded after April 2024. The Company hopes that the program will be funded by Congress, however, at this
time, we cannot predict any outcome.

 Through our
subsidiary Link Up Mobile, we plan to roll-out in the second quarter of 2024 a non-subsidized portion of our MVNO business to
leverage the volume of buying power we have with our subsidized subscriber base to build low-cost plans using SIM kits in
convenience stores transacting on the SurgePays network. Our market will be to 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. The revenue will be generated by subscribers paying a monthly fee for talk, text and data carrier services on a prepaid
basis. If the ACP is not funded, we plan to competitively market our non-subsidized MVNO business to our current ACP customers
and hope to be able to retain them as customers in this segment.

 We
provide f inancial technology and a wireless top-up platform to independently owned convenience stores
throughout the country via our subsidiaries SurgePays Fintech, ECS Prepaid, LLC, Electronic Check Services, Inc. and Central
States Legal Services, Inc. We consider these services the "Comprehensive Platform Services" segment of our
business.

 Specifically, our
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 our 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.

 Our 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. These services are vital to convenience store operations
and we believe we can utilize our relationships with convenience stores from our ACP services to expand the network for our Comprehensive
Platform Services. 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 our Comprehensive Platform Service segment to tap into such growth opportunity.

 Lead

 We refer to LogicsIQ, Inc. as the Lead
Generation segment of our 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 our business are earned from our lead generation retained services
offerings and call center activities through CenterCom. Lead generation consist of sourcing leads, which requires us to drive
traffic to our landing pages for a specific marketing campaign. We also achieve this in certain marketing campaigns by using
third-party preferred vendors to meet the needs of our clients. Revenues are recognized at the time the lead is delivered to the
client. If payment is received in advance of the delivery of services, it is included in deferred revenue, and subsequently
recognized once the performance obligation has been completed. Retained service offerings consist of turning leads into a retained
legal case. To provide this service to our customers, we qualify leads through verification of information collected during the lead
generation process. Additionally, we further qualify these leads using a client questionnaire which assists in determining the
services to be provided. The qualification process is completed using our call center operations.

 In 2023, we decided to focus less on this segment of our 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 our business in 2023, however, we plan 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

 We
have different strategies for each of our current business segments:

Virtual Network Operators

 Assuming
the ACP is extended, we plan to do the following for the federally subsidized portion of our MVNO business:

 Prioritize
sales channels with lower cost per subscriber acquisition.

 Continue
 to integrate Shockwave CRM and Clearline Mobile into our 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.

 Increase the national sales
 team nationally.

 We also plan to do the following for
the non-subsidized MVNO portion of our 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.

 Offer incentivized family
 plans to the rapidly growing base of subsidized customer households.

 We plan to do the following for our 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 us to deploy our 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 our marketplace to differentiate our competitive advantage
 over single product companies and diversify our revenue streams.

 Create and offer our own
 MVNO products to all new and existing distribution channels adding further branding and revenue streams for SurgePays.

 If the ACP is not funded, we will take the resources
dedicated to the subsidized MVNMO business and move into the non-subsidized MVNO quicker than currently planned. We believe there is an
opportunity to accomplish both goals, expand subscribers and add stores simultaneously. We also believe there is an opportunity to convert
the subsidized subscribers into a non-subsidized plan. Those individuals currently utilizing the ACP may be looking for an alternative.

 We currently have no set plans on how to grow our Lead Generation business
as we are 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.

 Market
Opportunity

Virtual Network Operators

 Subsidized

 As
currently implemented, individuals are eligible for ACP if they are eligible for the following other government subsidized programs:
(i) the Supplemental Nutrition Assistance Program (SNAP) in the United States, (ii) Medicaid, (iii) Supplemental Security Income
(SSI), (iv) Federal Public Housing Assistance, (v) Women, Infants and Children Assistance and (vi) the Lifeline program.
Accordingly, as of February 2024, the government estimated that 51.7 million households were eligible for the ACP. As of this same
time, the government estimates that only 23.3 million households have enrolled in ACP to date. If ACP is funded, we believe that we
can tap into the estimated 28.4 million households eligible for ACP that are not currently enrolled in the program.

 Non-subsidized

 If
the ACP is not funded, we expect the subsidized market opportunity listed above could become the market opportunity for our non-subsidized
prepaid phone and internet services we believe these households will look to continue with an MVNO. In addition to those individuals,
as of December 12, 2023, there were approximately 330.8 million cell phone users in the United States. As of the end of 2021, approximately
36% of these cell phone users were using prepaid cell phones. Once we launch our non-subsidized MVNO's, we hope to be able to entice
some of these prepaid cell phone users to our products.

 Our
market opportunity for our Comprehensive Platform Services continues to be smaller convenience stores, bodegas, mercados and tiendas.
As of December 31, 2023, there were 152,396 convenience stores operating across the United States. This represents a 1.5% increase from
the store count in the previous year, reversing a four-year decline. We continue to expand our product portfolio to capitalize on market
trends, changes in technology and new product releases. Based on available data for our served markets, we estimate that our market share
of the convenience store sales business at this time is substantially less than 1% and we plan to utilize a new sales force to expand
our customers in this market.

 Marketing and Sales

 We utilize different marketing methods for each
segment of business that we operate. For the federally subsidized portion of our MVNO business, we utilize third parties to help
identify potential customers for ACP and additional convenience stores where we can sell our ACP products. Additionally, we have a
campaign where we utilize 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 our ACP services. We currently do not market for the
non-subsidized portion of our MVNO business but we plan to move forward by marketing our business to families of those who are ACP
eligible. Also, in the event that the ACP is not extended, we plan to utilize a marketing effort to get our current ACP clients to
utilize our non-subsidized MVNO's. For our Comprehensive Platform Services, we plan to hire a new head of sales to market our
platform to their existing convenience store connections and create a national strategy to market our platform in rural areas that
may not currently have the capabilities our platform can provide. In the past, we have utilized social media platforms to market to
specific segment of the population to identify potential plaintiffs for our Lead Generation segment. However, we have stopped these
campaigns as we decide the future of our Lead Generation business.

 Competition

 There
are many competitors in the prepaid wireless and mobile broadband industry. We feel what makes SurgePhone different is we are a grassroots
company with our products placed in convenience stores where the underbanked shop. We can offer prepaid wireless and financial services,
through these stores, at a lower price to customers since we own the transaction software processing the activations and top-ups.

 Many
of our current and potential competitors are well established and have longer operating histories, significantly greater financial
and operational resources, and name recognition than we have. Most traditional convenience store distributors are companies that
have been in business for over 50 years and utilize the historical "manufacturing plant to truck to warehouse to truck to
store" logistics model. However, we believe that with our diverse product line and better efficiencies, we have the ability to obtain a large market share and continue to generate sales growth and compete
in the industry. We believe, in some cases, we will be able to partner with our competition through integration and compensate them
for helping us grow due to the uniqueness of the suite of products we offer and the additional revenue stores can unlock. The
principal competitive factors in all our product markets are technical features, quality, availability, price, customer support, and
distribution coverage. The relative importance of each of these factors varies depending on the region. We believe using our direct
store distribution model nationwide will open significant opportunities for growth.

 The
markets in which we operate can be generally categorized as highly competitive. In order to maximize our competitive advantages, we continue
to expand our product portfolio to capitalize on market trends, changes in technology and new product releases. Based on available data
for our served markets, we estimate that our market share of the convenience store sales business at this time is substantially less than 1%. A substantial
acquisition would be necessary to meaningfully and rapidly change our market share percentage.

 Distributors
generally do not have a broad set of product and service offerings or capabilities, and no single distributor currently provides all
the top selling consumables while offering products and services to enhance the lifestyle of the underbanked such as prepaid wireless,
gift cards, bill payment and reloadable debit cards. We believe this creates a significant opportunity for a dynamic paradigm shift to
a nationwide wholesale e-commerce platform.

 Competitive
Edge

 Our
competitive edge is simple: we have the ability through our software platform, along with our relationships, capacity, efficiency, economies
of scale and experience necessary to bring our financial services and prepaid products to the underbanked market in an effective and
efficient manner to ensure success. Our sales protocols have been tested and proven transferable from one product offering to another
while ultimately improving our target stores with better pricing and more product selection.

 Our
strategy for increasing revenues is based on developing, maintaining, and expanding our nationwide network of retail stores. Our relationship-driven
approach to selling along with providing many of the top selling c-store products at a wholesale discount greater than traditional distributors
gives management confidence of continued growth into the foreseeable future.

 We
have established relationships with distribution companies delivering significant sales per day for our subsidized mobile broadband product.

 Additionally, our management team consists of four executives with over
20 years in the wireless, underbanked and convenience store distribution industry while presiding over companies with substantial revenue.
Our finance team is led by a CFO with a background in private equity backed and publicly traded companies ranging with substantial revenue.

 Research
and Development Activities

 We
conduct research and development on an ongoing basis, including new and existing products to offer and software product development to
ensure we are delivering the most efficient, secure, and fast transactions at convenience stores. The SurgePays software platform is
housed on the Amazon Web Service Cloud for redundancy, stability, and reliability. Traditionally, convenience stores are high volume
and fast paced stores where space at the register is at a premium, thus leaving no room for a computer so wireless top-ups or cell phone
activations are done over a Verifone terminal traditionally used for processing credit cards. We believe that our future success will
depend in part upon our ability to continue the enhancement of our software platform through integrating with POS terminals, or more
commonly referred to as "cash registers" while developing new products that meet or anticipate such changes in our served
markets. Many of the stores we serve are now connected to the internet. This has allowed us to innovate our software to be more adaptive
to equipment that is more compatible with the space constraints of the register area in a store. We are also closely watching the
development of AI tools to see how they could help in support of our merchants and customers.

 Seasonality

 We
experience some seasonality whereby the peak tax season months show a higher level of sales and consumption. However, the structure of
our business and range of products in our portfolio mitigate any major fluctuations. Our revenue during the peak tax season months in
the spring have historically been approximately 5% greater than the peak other months, and as our product portfolio continues to expand,
the level of seasonal peaks we expect to diminish.

 Employees,
Affiliates and Exclusive Partners

 As
of March 10, 2024, our human capital resources consist of approximately twenty-two (22) SurgePays employees, providing accounting, finance, human resources, programming, sales and
back office departments, a dedicated team of over forty
(40) logistics, activation, and fulfilment personnel, and over two hundred (200) sales, customer service and back-office personnel located in El Salvador with
our third-party relationship with CenterCom.

 We
believe that our future success will depend in part on our continued ability to attract, hire and retain qualified personnel and work
strategically utilizing exclusive partners and affiliates to maximize cash flow. Our human capital resources objectives include, as applicable,
identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants. The principal
purposes of our equity and cash incentive plans are to attract, retain and reward personnel through the granting of stock-based and cash-based
compensation awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform
to the best of their abilities and achieve our objectives.

 Corporate
Information

 Our
executive offices are located at 3124 Brother Blvd, Suite 410, Bartlett, TN 38133, and our telephone number is (800) 760-9689. Our website
is www.surgepays.com. Our website and the information contained in, or accessible through, our website will not be deemed to be incorporated
by reference into this Annual Report and does not constitute part of this Annual Report.

 ITEM
1A. RISK FACTORS

 Investing
in our securities involves a great deal of risk. Careful consideration should be made of the following factors as well as other information
included in this Annual Report before deciding to purchase our securities. There are many risks that affect our business and results
of operations, some of which are beyond our control. Our business, financial condition or operating results could be materially harmed
by any of these risks. This could cause the trading price of our securities to decline, and you may lose all or part of your investment.
Additional risks that we do not yet know of or that we currently think are immaterial may also affect our business and the results of operations.

 Risks
Related to Government Regulation and Legal Proceedings

 The United
States Government's dissolution or reduction of the Affordable Connectivity Program ("ACP") could have a
substantial adverse effect on our current and planned business operations.

 Since the introduction of the ACP, we have derived over 70% of our revenue from reimbursement payments from the federal government under the ACP. According
to the Federal Communications Commission (the "FCC") website, the government entity that oversees the ACP, the ACP is winding
down and they have stopped accepting new applications and enrollments as of February 7, 2024. The FCC has also indicated that the last
fully funded month of the ACP is April 2024 due to lack of additional funding from Congress. If the ACP is allowed to expire, as indicated
that it will on the FCC website, the governmental agencies will reduce or cease reimbursement payments, which will have a substantial
adverse effect on our business, financial condition, and operating results.

 Furthermore, the percentage of revenue from our ACP
business has been growing year over year while revenue from other business segments has been decreasing. If the ACP is not funded and
we need to shift our focus to other business segments, there is no guarantee that we will be able to successfully do so, which will have
a substantial adverse effect on our business, financial condition, and operating results.

 Additionally, some of our growth plans for the
non-ACP business segments of the Company are dependent on the growth of the ACP customers. Therefore, if the ACP business is not
funded, we may lose the opportunity to expand our other business segments, which will have a substantial adverse effect on our
business, financial condition, and operating results.

 Changes
in the regulatory framework under which we operate could adversely affect our business prospects or results of operations.

 Our
operations are subject to regulation by the FCC and other federal, state and local agencies. These regulatory regimes frequently restrict
or impose conditions on our ability to operate in designated areas and provide specified products or services. We are frequently required
to maintain licenses for our operations and conduct our operations in accordance with prescribed standards. We are often involved in
regulatory and other governmental proceedings or inquiries related to the application of these requirements. It is impossible to predict
with any certainty the outcome of pending federal and state regulatory proceedings relating to our operations, or the reviews by federal
or state courts of regulatory rulings. Without relief, existing laws and regulations may inhibit our ability to expand our business and
introduce new products and services. Similarly, we cannot guarantee that we will be successful in obtaining the licenses needed to carry
out our business plan or in maintaining our existing licenses. For example, the FCC grants wireless licenses for terms generally lasting
ten (10) years, subject to renewal. The loss of, or a material limitation on, certain of our licenses could have a material adverse effect
on our business, results of operations and financial condition.

 New
laws or regulations or changes to the existing regulatory framework at the federal, state and local level, such as those described below,
could restrict the ways in which we manage our wireline and wireless networks and operate our business, impose additional costs, impair
revenue opportunities and potentially impede our ability to provide services in a manner that would be attractive to us and our customers.

 Privacy and data protection
 - we are subject to federal, state and international laws related to privacy and data protection.

 Regulation of broadband
 Internet access services - On June 11, 2018, the repeal of the FCC's "net neutrality" rules took effect and
 returned to a "light-touch" regulatory framework. The prior rules were designed to ensure that all online content is
 treated the same by internet service providers and other companies that provide broadband services. Additionally, California and
 a number of other states are considering or have enacted legislation or executive actions that would regulate the conduct of broadband
 providers. We cannot predict whether the FCC order or state initiatives will be modified, overturned, or vacated by legal action
 of the court, federal legislation, or the FCC. With the repeal of net neutrality rules in effect, we could incur greater operating
 expenses, which could harm our results of operations.

 "Open Access"
 - we hold certain wireless licenses that require us to comply with so-called "open access" FCC regulations, which
 generally require licensees of a particular spectrum to allow customers to use devices and applications of their choice. Moreover,
 certain services could be subject to conflicting regulation by the FCC and/or various state and local authorities, which could significantly
 increase the cost of implementing and introducing new services.

 The
further regulation of broadband, wireless and our other activities and any related court decisions could restrict our ability to compete
in the marketplace and limit the return we can expect to achieve on past and future investments in our networks.

 We
could be impacted by unfavorable results of legal proceedings, and may, from time to time, be involved in future litigation in which
substantial monetary damages are sought.

 We
are currently subject to a number of litigations as described under the heading "Legal Proceedings." In connection with certain
of these litigations, we may be required to pay significant monetary damages. Defending against the current litigations is or can be
time-consuming, expensive and cause diversion of our management's attention.

 In
addition, we may from time to time be involved in future litigation in which substantial monetary damages are sought. Litigation claims
may relate to intellectual property, contracts, employment, securities and other matters arising out of the conduct of our current and
past business activities. Any claims, whether with or without merit, could be time-consuming, expensive to defend and could divert management's
attention and resources. We may maintain insurance against some, but not all, of these potential claims, and the levels of insurance
we do maintain may not be adequate to fully cover any and all losses.

 With
respect to any litigation, our insurance may not reimburse us, or may not be sufficient to reimburse us, for the expenses or losses we
may suffer in contesting and concluding such lawsuit. The results of any future litigation or claims are inherently unpredictable and
substantial litigation costs, including the substantial self-insured retention that we are required to satisfy before any insurance applies
to a claim, unreimbursed legal fees or an adverse result in any litigation may have a material adverse effect on our results of operations,
cash from operating activities or financial condition.

 Risks
Related to Our Business, Industry and Operations

 If
we are not able to adapt to changes and disruptions in technology and address changing consumer demand on a timely basis, we may experience
a decline in the demand for our services, be unable to implement our business strategy and experience reduced profits.

 Our
industries are rapidly changing as new technologies are developed that offer consumers an array of choices for their communications needs
and allow new entrants into the markets we serve. In order to grow and remain competitive, we will need to adapt to future changes in
technology, enhance our existing offerings and introduce new offerings to address our customers' changing demands. If we are unable
to meet future challenges from competing technologies on a timely basis or at an acceptable cost, we could lose customers to our competitors.
We may not be able to accurately predict technological trends or the success of new services in the market. In addition, there could
be legal or regulatory restraints on our introduction of new services. If our services fail to gain acceptance in the marketplace, or
if costs associated with the implementation and introduction of these services materially increase, our ability to retain and attract
customers could be adversely affected. Additionally, we must phase out outdated and unprofitable technologies and services. If we are
unable to do so on a cost-effective basis, we could experience reduced profits. In addition, there could be legal or regulatory restraints
on our ability to phase out current services.

 We
may expand through investments in, acquisitions of, or the development of new products with assistance from, other companies, any of
which may not be successful and may divert our management's attention.

 In
the past, we completed several strategic acquisitions. We also may evaluate and enter into discussions regarding an array of potential
strategic transactions, including acquiring complementary products, technologies or businesses. An acquisition, investment or business
relationship may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties integrating
the businesses, technologies, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired
company choose not to be employed by us, and we may have difficulty retaining the customers of any acquired business due to changes in
management and ownership. Acquisitions may also disrupt our ongoing business, divert our resources and require significant management
attention that would otherwise be available for ongoing development of our business. Moreover, we cannot assure you that the anticipated
benefits of any acquisition, investment or business relationship would be realized timely, if at all, or that we would not be exposed
to unknown liabilities. In connection with any such transaction, we may:

 encounter difficulties
 retaining key employees of the acquired company or integrating diverse business cultures;

 incur large charges or
 substantial liabilities, including without limitation, liabilities associated with products or technologies accused or found to infringe
 on third-party intellectual property rights or violate existing or future privacy regulations;

 issue shares of our capital
 stock as part of the consideration, which may be dilutive to existing stockholders;

 become subject to adverse
 tax consequences, legal disputes, substantial depreciation or deferred compensation charges;

 use cash that we may otherwise
 need for ongoing or future operation of our business;

 enter new geographic markets
 that subject us to different laws and regulations that may have an adverse impact on our business;

 experience difficulties
 effectively utilizing acquired assets;

 encounter difficulties
 integrating the information and financial reporting systems of acquired businesses, particularly those that operated under accounting
 principles other than those generally accepted in the U.S. prior to the acquisition by us; and

 incur debt, which may be
 on terms unfavorable to us or that we are unable to repay.

 We
have undertaken in the past, and may in the future undertake, strategic acquisitions. Failure to integrate acquisitions could adversely
affect our value.

 One
of the ways we have grown our business in the past is through strategic acquisitions of other businesses, products, and technologies.
We may, from time to time, evaluate additional acquisition opportunities, and may, in the future, strategically make further acquisitions
of, and investments in, businesses, products and technologies when we believe the opportunity is advantageous to our prospects, such
as the acquisition of Clearline Mobile, Inc ("Clearline"). There can be no assurance that in the future we will be able to
find appropriate acquisitions or investments. In connection with these acquisitions or investments, we may:

 issue
 stock that would dilute our shareholders' percentage of ownership;

 be
 obligated to make milestone or other contingent or non-contingent payments;

 incur
 debt and assume liabilities; and/ or

 incur
 amortization expenses related to intangible assets or incur large and immediate write-offs.

 We
also may be unable to find suitable acquisition candidates and may not be able to complete acquisitions on favorable terms, if at all,
or obtain adequate financing for such acquisitions. If we do complete an acquisition, such as with Clearline, we may not be able to successfully
integrate the acquired business into our preexisting business, and we may not ultimately strengthen our competitive position or ensure
that we will not be viewed negatively by customers, financial markets or investors. Further, acquisitions could also pose numerous additional
risks to our operations, including:

 problems
 integrating the purchased business, products or technologies without substantial costs, delays or other problems;

 increases
 to our expenses;

 the
 failure to have discovered undisclosed liabilities of the acquired asset or company for which we may not be adequately indemnified;

 diversion
 of management's attention from their day-to-day responsibilities and our core business;

 inability
 to enforce indemnification and non-compete agreements;

 the
 failure to successfully incorporate acquired products or technologies into our business;

 the
 failure of the acquired business, products or technologies to perform as well as anticipated;

 the
 failure to realize expected synergies and cost savings;

 harm
 to our operating results or financial condition, particularly during the first several reporting periods after the acquisition is
 completed;

 entrance
 into markets in which we have limited or no prior experience; and

 potential
 loss of key employees or customers, particularly those of the acquired entity.

 Our
business could be adversely affected if we fail to implement and maintain effective disclosure controls and procedures and internal control
over financial reporting.

 If
we are unable to maintain effective disclosure controls and procedures, or if there are identified significant deficiencies or material
weaknesses in the future, our ability to produce accurate and timely financial statements and public reports could be impaired, which
could adversely affect our business and financial condition. In addition, investors may lose confidence in our reported information and
the market price of our Common Stock may decline.

 Our
success is substantially dependent on the continued service of our senior management.

 Our
success is substantially dependent on the continued service of our Chief Executive Officer ("CEO"), Kevin Brian Cox and our Chief
Financial Officer ("CFO"), Anthony Evers. We do not carry key person life insurance on any of its management, which would
leave us uncompensated for the loss of any of its management. The loss of the services of any of our senior management could make it
more difficult to successfully operate our business and achieve our business goals. In addition, competition in our industry for senior
management and other key personnel is intense. If we are unable to retain our existing personnel, or attract and train additional qualified
personnel, either because of competition in our industry for such personnel or because of insufficient financial resources, our product
development capabilities and customer and employee relationships growth may be harmed and overall growth may be limited.

 We
offer competitive compensation packages in order to retain the services of our senior management, and we could be required to pay significant
compensation payments in the case we are unable to retain our senior management.

 As
the continued employment of our executive officers is critical to the Company's success, we have entered into competitive employment
agreements in order to retain the services of our existing officers. In addition to guaranteed base compensation, we have offered our
CEO incentive compensation upon the Company's completion of milestones including achieving certain annual revenue, annual EBITDA,
and market capitalization goals, that could require the Company to pay large equity grants for the achievement of each milestone completed.

 In
the case our CEO were to terminate their employment agreement due to breach of contract, a substantial downturn in the Company's
business or personnel, a reduction in officer's role, responsibilities, or compensation, or significant change in the Company's
location of business and operations, the Company would be required to pay a severance package that, in combination with the compensation
that would need to be paid to a replacement executive, could have a severe strain on the Company's finances.

 We
may not have sufficient resources to effectively introduce and market our services and products, which could materially harm our operating
results.

 Continuation
of market acceptance for our existing services and products require substantial marketing efforts and will require our sales account
executives and contract partners to make significant expenditures of time and money. In some instances, we will be significantly or totally
reliant on the marketing efforts and expenditures of our contract partners, outside sales agents and distributors.

 Because
we currently have very limited marketing resources and sales capabilities, commercialization of our products, some of which require regulatory
clearance prior to market entrance, we must either expand our own marketing and sales capabilities or consider collaborating with additional
third parties to perform these functions. We may, in some instances, rely significantly on sales, marketing and distribution arrangements
with collaborative partners and other third parties. In these instances, our future revenue will be materially dependent upon the success
of the efforts of these third parties.

 Should
we determine that expanding our own marketing and sales capabilities is required, we may not be able to attract and retain qualified
personnel to serve in our sales and marketing organization, to develop an effective distribution network or to otherwise effectively
support our commercialization activities. The cost of establishing and maintaining a more comprehensive sales and marketing organization
may exceed its cost effectiveness. If we fail to further develop our sales and marketing capabilities, if sales efforts are not effective
or if costs of increasing sales and marketing capabilities exceed their cost effectiveness, our business, results of operations and financial
condition would be materially adversely affected.

 We
operate in a highly competitive industry.

 We
may encounter competition from local, regional or national entities, some of which have superior resources or other competitive advantages
in the larger wireless services space. Intense competition may adversely affect our business, financial condition or results of operations.
These competitors may be larger and more highly capitalized, with greater name recognition. We will compete with such companies on brand
name, quality of services, level of expertise, advertising, product and service innovation and differentiation of product and services.
As a result, our ability to secure significant market share may be impeded.

 Risks
Related to Our Securities

 Our
CEO and Chair, Kevin Brian Cox, has significant control over shareholder matters and the minority shareholders will have little or
no control over our affairs.

 Mr.
Cox currently owns approximately 28.5% of our outstanding voting equity. Subject to any fiduciary duties owed to our other stockholders
under Nevada law, Mr. Cox is able to exercise significant influence over matters requiring stockholder approval, including the election
of directors and approval of significant corporate transactions, and will have some control over our management and policies. Mr. Cox
may have interests that are different from yours. For example, Mr. Cox may support proposals and actions with which you may disagree.
The concentration of ownership could delay or prevent a change in control of our Company or otherwise discourage a potential acquirer
from attempting to obtain control of our Company, which in turn could reduce the price of our stock. In addition, Mr. Cox could use his
voting influence to maintain our existing management and directors in office, delay or prevent changes in control of our Company, or
support or reject other management and proposals of the Board of Directors (the "Board") that are subject to stockholder
approval, such as amendments to our employee stock plans and approvals of significant financing transactions.

 Sales
of a significant number of shares of our Common Stock in the public market or the perception of such possible sales, could depress the
market price of our Common Stock.

 Sales
of a substantial number of shares of our Common Stock in the public markets, which include an offering of our preferred stock or Common
Stock could depress the market price of our Common Stock and impair our ability to raise capital through the sale of additional equity
or equity-related securities. We cannot predict the effect that future sales of our Common Stock or other equity-related securities would
have on the market price of our Common Stock.

 Our
share price could be volatile and our trading volume may fluctuate substantially.

 The
price of our Common Stock has been and may in the future continue to be extremely volatile. Many factors could have a significant impact
on the future price of our shares of Common Stock, including:

 our inability to raise
 additional capital to fund our operations, whether through the issuance of equity securities or debt;

 our failure to successfully
 implement our business objectives;

 compliance with ongoing
 regulatory requirements;

 market acceptance of our
 products;

 changes in government regulations;

 the
discontinuation of the ACP program;

 actual or anticipated fluctuations
 in our quarterly financial and operating results; and

 the degree of trading liquidity
 in our shares of Common Stock.

 A
decline in the price of our shares of Common Stock could affect our ability to raise further working capital and adversely impact our
ability to continue operations.

 The
decline in the price of our shares of Common Stock, could result in a reduction in the liquidity of our Common Stock and a reduction
in our ability to raise capital. Because a significant portion of our operations has been and will continue to be financed through the
sale of equity securities, a decline in the price of our shares of Common Stock could be especially detrimental to our liquidity and
our operations. Such reductions and declines may force us to reallocate funds from other planned uses and may have a significant negative
effect on our business plans and operations, including our ability to continue our current operations. If the price for our shares of
Common Stock declines, it may be more difficult to raise additional capital. If we are unable to raise sufficient capital, and we are
unable to generate funds from operations sufficient to meet our obligations, we will not have the resources to continue our operations.

 The
market price for our shares of Common Stock may also be affected by our ability to meet or exceed expectations of analysts or investors.
Any failure to meet these expectations, even if minor, may have a material adverse effect on the market price of our shares of Common
Stock.

 We
currently do not intend to pay dividends on our Common Stock. As result, your only opportunity to achieve a return on your investment
is if the price of our Common Stock appreciates.

 We
currently do not expect to declare or pay dividends on our Common Stock. In addition, in the future we may enter into agreements that
prohibit or restrict our ability to declare or pay dividends on our Common Stock. As a result, your only opportunity to achieve a return
on your investment will be if the market price of our Common Stock appreciates and you sell your shares at a profit.

 We
could issue additional Common Stock, which might dilute the book value of our Common Stock.

 The
Board has authority, without action or vote of our shareholders, to issue all or a part of our authorized but unissued shares. Such stock
issuances could be made at a price that reflects a discount or a premium from the then-current trading price of our Common Stock. In
addition, in order to raise capital, we may need to issue securities that are convertible into or exchangeable for our Common Stock.
These issuances would dilute the percentage ownership interest, which would have the effect of reducing your influence on matters requiring
shareholders vote and might dilute the book value of our Common Stock. You may incur additional dilution if holders of stock warrants
or options, whether currently outstanding or subsequently granted, exercise their options, or if warrant holders exercise their warrants
to purchase shares of our Common Stock.

 Future
Issuance of Our Common Stock, Preferred Stock, Options and Warrants Could Dilute the Interests of Existing Stockholders.

 We
may issue additional shares of our Common Stock, preferred stock, options and warrants in the future. These issuances may include substantial
milestone-based issuances of securities to our executive officers as described in Item 11 of this Annual Report under the heading "Employment
Agreements." The issuance of a substantial amount of Common Stock, options and warrants could have the effect of substantially
diluting the interests of our current stockholders. In addition, the sale of a substantial amount of Common Stock or preferred stock
in the public market, or the exercise of a substantial number of warrants and options either in the initial issuance or in a subsequent
resale by the target company in an acquisition which received such Common Stock as consideration or by investors who acquired such Common
Stock in a private placement could have an adverse effect on the market price of our Common Stock.

 ITEM
1B. UNRESOLVED STAFF COMMENTS

 None.

 ITEM
1C. CYBERSECURITY

 Cybersecurity Risk
Management and Strategy

 We have developed and maintain a cybersecurity
risk management methodology intended to protect the confidentiality, integrity, and availability of our critical systems and information.
Our cybersecurity risk management methodology is integrated into our overall enterprise risk management, and shares common methodologies,
reporting channels and governance processes that apply across the Company to other legal, compliance, strategic, operational, and financial
risk areas. As part of our overall risk management processes and procedures, we have instituted a cybersecurity awareness designed to
identify, assess and manage material risks from cybersecurity threats, including by engaging a third-party cybersecurity service provider,
which communicates directly with our management and compliance personnel. The cyber risk management methodology involves risk assessments,
implementation of security measures and ongoing monitoring of systems and networks, including networks on which we rely. Through our
cybersecurity awareness, the current threat landscape is actively monitored in an effort to identify material risks arising from new
and evolving cybersecurity threats. We may engage external experts, including cybersecurity assessors, consultants and auditors to evaluate
cybersecurity measures and risk management processes as needed. We also depend on and engage various third parties, including suppliers,
vendors and service providers in connection with our operations. Our risk management, legal, and compliance personnel oversee and identify,
including through a third-party cybersecurity service provider, material risks from cybersecurity threats associated with our use of
such entities.

 Our cybersecurity risk management methodology
includes:

 risk
 assessments designed to help identify material cybersecurity risks to our critical systems,
 information, services, and our broader enterprise IT environment;

 individuals,
 including employees and external third-party service providers, who are responsible for managing
 our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity
 incidents;

 the
 use of external service providers, where appropriate, to assess, test or otherwise assist
 with aspects of our security controls;

 cybersecurity
 awareness training of our employees, incident response personnel, and senior management;

 a
 cybersecurity incident response plan that includes procedures for responding to cybersecurity
 incidents; and

 a
 third-party risk management process for service providers, suppliers, and vendors.

 We have not identified risks from known cybersecurity
threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business
strategy, results of operations, or financial condition. We face risks from cybersecurity threats that, if realized, are reasonably likely
to materially affect us, including our operations, business strategy, results of operations, or financial condition.

 Cybersecurity Governance

 Our Board provides strategic oversight on cybersecurity
matters, including material risks associated with cybersecurity threats. The Board has delegated to the Audit Committee oversight of
cybersecurity and other information technology risks. The Audit Committee oversees management's implementation of our cybersecurity
risk management methodology. Our Board and the Audit Committee receives periodic updates from our Chief Financial Officer and more frequently as needed, regarding the overall state of our cybersecurity preparedness, information on the current threat
landscape, and material risks from cybersecurity threats and cybersecurity incidents. The Audit Committee and our management team are
informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents, including through the receipt
of notifications from third-party service providers and reliance on communications with our risk management, legal, and/or compliance
personnel.

 The Audit Committee reports
to the full Board regarding cybersecurity activities. The full Board also receives briefings from management on cyber risk issues and
best practices. Our management team is responsible for assessing and managing our material risks from cybersecurity threats. The team
has primary responsibility for developing and maintaining our overall cybersecurity risk methodology and supervises both our internal
cybersecurity personnel and our retained external cybersecurity consultants. Our management team supervises efforts to prevent, detect,
mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel;
threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged
by us; and alerts and reports produced by security tools deployed in the information technology environment.

 ITEM
2. PROPERTIES

 We
presently occupy space at 3 locations: 3124 Brother Blvd, Suite 410, Bartlett, TN 38133 (this building is owned by an entity owned
by Mr. Cox, our CEO and Chair), which houses our corporate headquarters along with back office, inventory and marketing departments,
1375 E Woodfield Road, Schaumburg IL 60173, which houses our finance and human resources departments, and 1615 S Ingram Mill, Building
B, Springfield, Missouri 65804, which houses our Comprehensive Platform Services technical operations.

 See
pages F-25 - F-27 for detailed lease information.

 We
will acquire additional office space as needed.

 ITEM
3. LEGAL PROCEEDINGS

 (1)

 Blue
Skies Connections, LLC, and True Wireless, Inc. v. SurgePays, Inc., et. al.: In the District Court of Oklahoma County, OK, CJ-2021-5327,
filed on December 13, 2021. Plaintiffs petition alleges breach of a Stock Purchase Agreement by SurgePays, SurgePhone Wireless, LLC,
and Kevin Brian Cox, and makes other allegations related to SurgePays' consulting work with Jonathan Coffman, a True Wireless employee.
Blue Skies believes the Defendants are in violation of their non-competition and non-solicitation agreements related to the sale of True
Wireless from SurgePays to Blue Skies. Oklahoma state law does not recognize non-compete agreements and non-solicitation agreements in
the manner alleged by Plaintiffs, as such we believe SurgePays, SurgePhone, and Cox have a strong defense against the claims asserted
by Blue Skies and True Wireless. The matter continues in the discovery process. Mr. Coffman is no longer working for True Wireless. An
attempt at mediation in July, 2022 did not achieve a settlement. The petition requests injunctive relief, general damages, punitive damages,
attorney fees and costs for alleged breach of contract, tortious interference with a business relationship, and fraud. Plaintiffs have
made a written demand for damages and the parties continue to discuss a potential resolution. This matter is an anti-competitive attempt
by Blue Skies and True Wireless to damage SurgePays, SurgePhone, and Cox. Written discovery is winding down and depositions began in
the third quarter of 2023 and are expected to continue in 2024. The case is anticipated set for trial in January 2025.

 In the Circuit Court of Tennessee for the 30th Judicial District
at Memphis, Docket # CT-3219-23. On August 8, 2023, a complaint was filed by SurgePays for breach of a promissory note by Blue Skies Connections,
LLC. The note at issue is dated June 14, 2021, and requires Blue Skies Connections to repay the principal sum of $176,850.56, by monthly
payments of $7,461.37 commencing on June 1, 2023. Blue Skies Connections has failed to make any payments due under the terms of the note,
and this breach entitles SurgePays to demand payment of the entire amount of the note together with all accrued interest. Blue Skies Connections
has responded by preparing a Motion to Dismiss or, in the alternative, a Motion to Stay, taking the position that, under the prior suit
pending doctrine, the subject promissory note is subject to the prior litigation instituted by Blue Skies Connections against SurgePays,
styled Skies Connections, LLC and True Wireless, Inc. v. SurgePays, Inc., et al., Case No. CJ-2021-5327, District Court of Oklahoma County,
Oklahoma. Counsel for Blue Skies Connections has requested that Surge Pays either voluntarily dismiss the subject action or agree to stay
the subject action until conclusion of the Oklahoma litigation.

 (2)

 SurgePays, Inc. et al. v. Fina et al., Case No. CJ-2022-2782, District
Court of Oklahoma County, Oklahoma. Plaintiffs SurgePays, Inc. and Kevin Brian Cox initiated this case against its former officer Mike
Fina, his companies Blue Skies Connections, LLC, True Wireless, Inc., Government Consulting Solutions, Inc., Mussell Communications LLC,
and others. This case also arises from the June 2021 transaction by which SurgePays sold True Wireless to Blue Skies. During the litigation
of CJ-2021-5327 described above, SurgePays learned information that showed Mike Fina breached his duties owed to True Wireless during
his employment and consulting work for True Wireless prior to SurgePays' sale of True Wireless to Blue Skies. SurgePays alleges
that Mike Fina conspired with the other defendants to damage True Wireless thereby harming the value of the company and causing its eventual
sale at a greatly reduced price. SurgePays asserts claims for (i) breach of contract; (ii) breach of fiduciary duty; (iii) fraud; (iv)
tortious interference; and (v) unjust enrichment. At this stage, no defendant has asserted a counterclaim against SurgePays.

 SurgePays filed a Second Amended Petition on January 27, 2023. Defendants
Fina, Blue Skies, True Wireless, and Government Consulting Solutions filed a Motion to Dismiss on March 10, 2023. On June 29, 2023, the
Court granted the Motion to Dismiss, ruling the claims asserted are "derivative" and could only be asserted by the True Wireless
entity now owed by Blue Skies. The Court rejected SurgePays' request to certify this ruling for immediate appeal. Defendant Misty
Garrett has filed a Motion for Summary Judgment seeking the same relief as the Motion to Dismiss granted by the Court. Defendants Rob
Rowlen and Terracom, LLC remain as defendants in the case after answering the Second Amended Petition. It is SurgePays' present
intent to vigorously appeal the Court's dismissal of Fina, Blue Skies, True Wireless, and Government Consulting Solutions, and to
continue prosecuting the case against the other Defendants. At this stage, no attempts at settlement have been made.

 (3)

 Robert Aliotta and Steve Vasquesz, on behalf of themselves and others
similarly situated v. SurgePays, Inc. d/b/a Surge Logics, filed January 4, 2023, in the U.S. District Court for the Northern District
of Illinois, Case No. 1:23-cv-00042. Plaintiffs allege violations of the Telephone Consumer Protection Act (TCPA) and the Florida Telephone
Solicitations Act (FTSA) based on telephone solicitations allegedly made by or on behalf of SurgePays, Inc. Plaintiffs seek damages for
themselves and seek certification of a class action on behalf of others similarly situated. Defendants intend to vigorously defend the
action however most similar cases are eventually resolved by an out-of-court settlement. At this time, it is difficult to estimate the
amount or range of potential loss. SurgePays Inc has been removed from the case following a Motion to Dismiss and LogicsIQ, Inc. has been
named as the defendant. The case has begun written discovery and depositions are expected later this year.

 (4)

 Consumer Attorney Marketing Group, LLC v. LogicsIQ,
 Inc. and SurgePays, Inc. On February 13, 2024, in the Superior Court of California, Los Angeles County, Case No. 24 ST CV 03653,
 Consumer Attorney Marketing Group, LLC ("CAMG") filed a complaint naming SurgePays, Inc. (the "Company")
 a defendant and alleging claims for breach of contract, declaratory judgment and express and implied indemnity. The complaint demands
 that defendants indemnify CAMG for any damages or losses that CAMG may incur in the case Robert Aliotta, et al. v. SurgePays,
 Inc. d/b/a SurgeLogics, Case No. 23 C 00042, pending in the U.S. District Court for the Northern District of Illinois. CAMG's
 claims against the Company are solely based upon theories of participatory and vicarious liability. The Company was served on or
 about February 27, 2024. The Company's answer or other pleading is currently due on March 28, 2024. This case is in the initial
 stages. The Company has not yet filed an appearance in the matter, and the Court has not scheduled any dates or deadlines. The Company
 is reviewing the claims and determining its defenses. At this time, it is not possible to estimate the amount or range of potential
 loss.

 (5)

 On December 17, 2021, Ambess Enterprises, Inc. v SurgePays, Inc.,
Blair County Pa. case number 2021 GN 3222. Plaintiff alleges breach of contract and prays for damages of approximately $73,000, plus fees,
costs and interest. Litigation counsel is managing the motion practice and discovery process. The case was settled and dismissed in 2023
for $60,000, which has been recorded as a component of general and administrative expenses.

 ITEM
4. MINE SAFETY DISCLOSURES

 Not
Applicable.

 PART
II

 ITEM
5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Market
Information

 The
Common Stock and the Warrants began trading on the Nasdaq Capital Market under the symbols SURG and SURGW, respectively, on November
2, 2021.

 As
of March 5, 2024, there were approximately 7,277 holders of record of our Common Stock. Since certain shares of our Common Stock
are held by brokers and other institutions on behalf of stockholders, the foregoing number of holders of our Common Stock is not
representative of the number of beneficial holders of our Common Stock.

 The
last reported sales price for our Common Stock as reported on the Nasdaq Capital Market on March 5, 2024 was $6.64.

 Dividends

 We
have not declared or paid any cash dividends on our Common Stock, and we do not anticipate declaring or paying cash dividends for the
foreseeable future. We are not subject to any legal restrictions respecting the payment of dividends, except that we may not pay dividends
if the payment would render us insolvent. Any future determination as to the payment of cash dividends on our Common Stock will be at
the discretion of our Board and will depend on our financial condition, operating results, capital requirements and other factors that
the Board considers to be relevant.

 Securities
Authorized for Issuance under Equity Compensation Plans

 See the information incorporated by reference
in "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters" for information
regarding shares of our common stock authorized for issuance under our stock compensation plans, which information is incorporated herein
by reference.

 Preferred
Stock

 As
of December 31, 2023, the Company does not have any shares of preferred stock outstanding.

 Transfer
Agent

 The
transfer agent of our Common Stock is VStock Transfer, LLC. Their address is 18 Lafayette Place, Woodmere, NY 11598.

 Unregistered
Sales of Equity Securities

 We
have previously disclosed in our 10-Qs and 8-Ks filed in 2023 all 2023 sales of securities without registration under the Securities
Act of 1933.

 ITEM
6. SELECTED FINANCIAL DATA

 Not
applicable.

 ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 The
following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes appearing
elsewhere in this Annual Report. In addition to historical information, this discussion and analysis contains forward-looking statements
that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including but not limited to those set forth in "Part I – Item 1A. Risk Factors."

 Business
Overview

 We
were incorporated in Nevada on August 18, 2006 and a technology and telecommunications company focused on the underbanked and underserved
communities.

 Our Mobile Virtual Network
Operators consisting of SurgePhone Wireless and Torch Wireless provide mobile broadband (internet connectivity) to low-income
consumers nationwide. Our Comprehensive Platform Services consisting of SurgePays Fintech, ECS Prepaid, LLC, Electronic Check
Services, Inc. and Central States Legal Services, Inc. provides ACH banking relationships and a fintech transactions platform that
processes thousands of transactions a day independently owned convenience stores. We are aggressively
pursuing the underbanked market directly to the consumer and in the stores they shop.

 Please see the description in Item 1 of this Annual
Report for a description of our Mobile Virtual Network Operators, Comprehensive Platform Services and Lead Generation business segments.

 COMPARISON
OF YEAR ENDED DECEMBER 31, 2023 AND 2022

 We
measure our performance on a consolidated basis as well as the performance of each segment.

 We
report our financial performance based on the following segments: Mobile Virtual Network Operators (MVNO), Comprehensive Platform
Service (Top-up) and Lead Generation. The MVNO segment is further broken down into subsidized and non-subsidized components. The subsidized component or ACP is the result of the mobile broadband (internet
connectivity) services provided by SurgePhone Wireless and Torch Wireless to low-income consumers and accounts for the majority of our
revenue. The
Comprehensive Platform Service segment is comprised of Surge Fintech and ECS as previously shown. The Lead Generation is comprised
of LogicsIQ as previously shown.

 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.

during the years ended December 31, 2023 and 2022 consisted of the following:

 2023

 2022

 $

 $

 Cost of revenue (exclusive of depreciation and amortization)

 (101,499,341
)

 (108,074,782
)

 General and administrative

 (16,777,107
)

 (12,835,623
)

 Income (Loss) from operations

 $
 18,865,384

 $
 633,785

increased overall by $15,597,642 (12.8%) from year ended December 31, 2022 to year ended December 31, 2023. The breakout was as follows:

 For
 the Years Ended December 31,

 2023

 2022

 Revenues:

 Virtual Network Operator

 $
 118,577,920

 $
 88,351,547

 11,341,183

 16,319,076

 Lead

 7,184,283

 16,760,656

 Other

 38,446

 112,911

 Total

 $

 $

Virtual Network Operators consisting of SurgePhone Wireless and Torch Wireless revenues (as detailed in Notes 2 and 10 of the financial
statements) increased by $30,226,373 (34.2%) relating to the additional revenue stream generated by the increase in subscribers to over
260,000 at the end of 2023 from 200,000 at the end of 2022 since ACP started in August of 2021. According to the FCC website, on February
7, 2024, the ACP stopped accepting new applications and enrollments and the ACP will cease to be funded after April 2024.

 Lead
Generation services consisting of LogicsIQ revenues decreased by $9,576,373 as a result of operational changes by management in 2023.
The Company is still in the process of determining how best this service fits into the overall plans of SurgePays.

Platform Services revenues decreased by $4,977,893 as a result of focusing our efforts on our MVNO segment, specifically the ACP component
of the MVNO segment while we strategized on how to enhance our sales and on-boarding approach to adding convenience stores to our platform.
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 our Comprehensive Platform Service segment to tap into such growth opportunity.

 If
the ACP is fully funded, we expect revenue to grow overall for the Company in 2024 and we will be focusing our business efforts on the
continued growth of our Mobile Virtual Network Operators and rolling out a new sales approach for the Comprehensive Platform Service
segments. Specifically, we plan to grow our Comprehensive Platform Service business by increasing our subscriber base and active store
counts in 2024 by hiring a new head of sales. Our planned new head of sales has substantial experience and connections with convenience
stores that we believe can be added to our platform services. However, if the ACP is not renewed, we expect revenue for the Company in
2024 to substantially decrease because ACP reimbursement we derive a substantial portion of our revenue from the ACP. Additionally, the
Company 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 ending 2024.

 Cost
of Revenue, Gross Profit and Gross Margin

 For
the year of 2023, cost of revenue for services primarily consists of data plan expenses ($28,612,000), devices ($28,476,000), marketing
and advertising ($23,227,000), and other expenses such as royalties and call-center expenses ($3,604,000). For the year of 2022, cost
of revenue for services primarily consists of data plan expenses ($21,056,000), devices ($35,313,000), marketing and advertising ($17,449,000),
and other expenses such as royalties and call-center expenses ($2,312,000).

 We
expect that our cost of revenue will increase or decrease to the extent that our revenue increases and decreases.

 The
Company expects to continue the improvement of gross margin in the MVNO segment, assuming the ACP program if fully funded for 2024. The
Company expects the overall cost to acquire a new ACP subscriber will decrease in 2024 as we introduce new social media approaches to
capture new subscribers. We anticipate the cost of device acquisition will continue to be lower in 2024 as we transition from buying
devices to using SIM cards to capture and switch subscribers to our services. As we roll out new approaches to acquire an ACP subscriber,
our marketing-related expenses should decrease.

 In
addition, the Company plans to implement a new sales force for Comprehensive Platform Services to capture what we believe is an untapped
underbanked convenience store market.

 For
 the Years Ended December 31,

 2023

 2022

 Cost
 of Revenue (exclusive of depreciation and amortization):

 Virtual Network Operator

 $
 83,918,968

 $
 76,130,286

 11,281,722

 16,966,332

 Lead

 6,228,650

 14,975,647

 Other

 70,001

 2,517

 Total

 $
 101,499,341

 $

 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.

 For
 the Years Ended December 31,

 2023

 2022

 Gross
 Profit (Loss) (exclusive of depreciation and amortization):

 Virtual Network Operator

 $
 34,658,952

 $
 12,221,261

 59,461

 (647,256
)

 Lead

 955,633

 1,785,009

 Other

 (31,555
)

 110,394

 Total

 $
 35,642,491

 $
 13,469,408

 The
Company expects to continue the improvement of gross margin in all segments, assuming the ACP program is fully funded for 2024.

 For
 the Years Ended December 31,

 2023

 2022

 Gross
 Margin:

 Virtual Network Operator

 %

 29.2

 %
 13.8

 0.5

 (4.0
)

 Lead

 13.3

 10.6

 Other

 (82.1
)

 97.8

 Total

 %

 26.0

 %
 11.1

 We
expect that our gross profit margin for product and service will increase over the long term as our sales and production volumes increase
and our cost per unit decreases due to efficiencies of scale.

 General
and administrative during the years ended December 31, 2023 and 2022 consisted of the following:

 2023

 2022

 Depreciation and amortization

 $
 1,064,099

 $
 931,593

 Selling, general and administration

 15,713,008

 11,904,030

 Total

 $
 16,777,107

 $
 12,835,623

 The
increase in depreciation and amortization costs for 2023 is the result of capitalizing costs associated with software enhancements to
our various software platforms in 2023.

 Selling,
general and administrative expenses during the years ended December 31, 2023 and 2022 consisted of the following:

 2023

 2022

 Contractors and consultants

 $
 2,715,605

 $
 1,667,016

 Professional services

 1,949,407

 1,204,133

 Compensation

 6,342,955

 4,780,885

 Computer and internet

 858,041

 403,583

 Advertising and marketing

 152,851

 259,393

 Bad debt expense (recovery)

 -

 (7,767
)

 Insurance

 1,249,556

 1,535,687

 Other

 2,444,593

 2,061,100

 Total

 $
 15,713,008

 $
 11,904,030

 Selling,
general and administrative costs (S, G & A) increased by $3,808,978 (32.0%). The changes are discussed below:

 Contractors
 and consultants expense increased by $1,048,589 or 62.9% from $1,667,016 in 2022 to $2,715,605 in 2023. The Company engaged several
 contractors to overhaul the financial platform to allow for the conversion to a tablet-based transaction at the store level from the
 outdated VeriFone terminal. The Company also engaged with consultants to provide advisory services specifically in the area
 of investment relations to identify opportunities to increase our shareholder value.

 Professional
 services increased $745,274 or 61.9% in 2023 primarily due to an increase in legal fees of $599,535. Specifically, the legal fees for the Blue
 Skies Connections, LLC litigation increased by $199,153 from 2022 to 2023.

 Compensation increased from $4,780,885 in 2022 to $6,342,955 in 2023 primarily
as a result of one-time bonuses paid to various management personnel and the implementation of an employee stock program in 2023. There
was a non-cash component for $576,625 related to the implementation of a stock option plan for all employees except the executives. The
overall cash payment to executives increased by less than 10% year over year. The remaining increase in 2023 was related to additional
hires over the course of 2022.

 Computer
 and internet costs increased to $858,041 in 2023 from $403,583 in 2022. The increase was primarily the result of increased internet
 support services and database management costs. A significant portion of the increase was related to the continued maintenance and
 enhancements of the shockwave software platform. In 2022, the expenses for the Shockwave software represented only a 6-month period of time whereas the 2023 activity includes
12 months of similar expenses.

 Advertising and marketing costs decreased to $152,851 in 2023 from $259,393
in 2022 primarily as a result of a shift from marketing-oriented vendors to investor relation type vendors. This also relates to the increase
in the overall spending with contractors and consultants to try to obtain new ACP customers through direct marketing efforts to individuals
and social media marketing efforts to educate individuals that they may be eligible for ACP.

 Insurance
 expense decreased to $1,249,556 in 2023 from $1,535,687 in 2022 primarily as a result of improved premium rates for the renewal of coverage in 2023.

 Other costs increased to $2,444,593 in 2023 from $2,061,100 in 2022 primarily
due to an increase in the vesting of options for the board of directors and cybersecurity insurance premiums, as well as various administrative
expenses such as office, building, travel and bank fees.

 Other
(expense) income during the years ended December 31, 2023 and 2022 consisted of the following:

 2023

 2022

 Interest, net

 $
 (595,975
)

 $
 (1,843,396
)

 Gain (loss) on equity investment in Centercom

 110,203

 (89,082
)

 Gain (loss) on settlement of liabilities

 -

 336,726

 Amortization of debt discount

 -

 (115,404
)

 Other income

 -

 524,143

 Total other (expense) income

 $
 (485,772
)

 $
 (1,187,013
)

expense decreased to $595,975 in 2023 from $1,843,396 in 2022 primarily due to the payoff of various debt instruments in 2023.

 The equity investment in Centercom, an unconsolidated subsidiary of the
Company in which we are a minority owner, increased by $110,203 in 2023 compared to a decrease of $89,082 in 2022.

2022, the Company received a forgiveness on a PPP loan totaling $524,143, of which $518,167 was for principal and $5,976 for accrued
interest. The Company recorded this forgiveness as other income in the accompanying consolidated statements of operations.

Transactions for the Year Ended December 31, 2023

 Stock
Issued for Services

 The
Company issued 242,615 shares of common stock for services rendered, having a fair value of $1,290,024 ($4.19 - $9.40/share), based upon
the quoted closing trading price. All of these shares are for consultants based upon agreements.

 The
Company issued 43,814 shares of common stock in June 2023 upon an exercise of warrants with an exercise price of $4.73 for
$207,240.

 Non-Vested
Shares – Related Parties

 Chief
Financial Officer

 In
2023, the Company granted common stock to its Chief Financial Officer having a fair value of $3,114,000 ($5.19/share), based upon the
quoted closing trading price. The vesting schedule is as follows:

 July

 September

 October

 November

 December 1, 2024

 66,665 shares

 December
 31, 2025

 200,000

 For
the year ended December 31, 2023, the Company recognized stock compensation expense of $486,242 related to vesting.

 Board
Directors

 In
2023, the Company granted an aggregate 95,000 shares of common stock to various members of the Board of Directors, having a fair value
of $519,500 ($5.14 - $5.53/share), based upon the quoted closing trading price.

 The
shares will vest at the earlier to occur:

 -

 Board
 Member no longer serves in that capacity for any reason, except for reasons related to cause,

 -

 Occurrence
 of a change in control; and

 -

 Fifth
 anniversary of the effective date (2028)

 The
Company records stock compensation expense over the five (5) year vesting period. All shares are expected to vest in accordance with
the terms of the service agreement.

 For
the year ended December 31, 2023, the Company recognized stock compensation expense of $43,292 related to vesting.

 For
the year ended December 31, 2023, total related stock compensation expense due to vesting was $529,534.

Transactions for the Year Ended December 31, 2022

 Stock
Issued as Direct Offering Costs

 The
Company issued 200,000 shares of common stock for services rendered in connection with the listing of our common stock on the Nasdaq
Capital Market 2021. As a result, the Company recorded the par value of the common stock issued with a corresponding charge to additional
paid-in capital, resulting in a net effect of $0 to stockholders' equity.

 Stock
Issued for Acquisition of Software

 The
Company acquired software having a fair value of $711,400. Payment for the software consisted of $300,000 in cash and the Company issued
85,000 shares of common stock having a fair value of $411,400 ($4.84/share), based upon the quoted closing trading price.

of Warrants (Cashless)

 The
Company issued 147,153 shares of common stock in connection with the cashless exercise of 498,750 warrants. These transactions had a
net effect of $0 on stockholders' equity.

 The
Company issued one hundred (100) shares of common stock in connection with an exercise of one hundred (100) warrants at an exercise
price of $4.73 per share for proceeds of $473.

 LIQUIDITY
AND CAPITAL RESOURCES

 At
December 31, 2023 and 2022, our current assets were $33,366,661 and $27,563,785, respectively, and our current liabilities were $12,705,044
and $23,464,062, respectively, which resulted in a working capital surplus of $20,661,617 and of $4,099,723, respectively. The increase
in current assets is a result of expansion of the Affordable Connectivity Program, whereby cash increased by $7,586,406.

 Total
assets at December 31, 2023 and 2022 amounted to $41,925,307 and $34,003,506, respectively. The increase in total assets is a result
of the expansion of the Affordable Connectivity Program, whereby cash increased by $ 7,586,406 and inventory decreased by $2,139,648.
Total assets increased by $7,921,801 from December 31, 2022 to December 31, 2023. At December 31, 2023, assets consisted of current
assets of $33,366,661, net property and equipment of $361,841, net intangible assets of $2,126,470, goodwill of $1,666,782, equity
investment in Centercom of $464,409, note receivable of $176,851, internal use software of $539,424, operating lease right of use
asset of $387,869, and deferred income taxes of $2,835,000 compared to current assets of $27,563,785, net property and equipment of
$643,373, net intangible assets of $2,779,977, goodwill of $1,666,782, equity investment in Centercom of $354,206, note receivable
of $176,851, internal use software of $387,180, and operating lease right of use asset of $431,352.

 At
December 31, 2023, our total liabilities were $13,521,843 compared to total liabilities of $28,885,253 at December 31, 2022. This
$15,363,410 decrease was related to the repayment during 2023 of the installment sales liability of $13,018,184 at December 31,
2022.

 At December 31, 2023, our total stockholders'
surplus was $28,403,464 as compared to $5,118,253 at December 31, 2022.

 The Company's cash position on February 29,
2024 was approximately $40,500,000. This position was due to a capital raise we conducted in mid-January, resulting in net proceeds of
approximately $13,700,000 (2,678,571 shares of common stock) and the allotment exercise in mid-February for an additional $2,000,000 (401,785
shares of common stock). Additionally, the Company has seen a steady flow of tradeable warrants being exercised as of the new year. In
January 2024, 4,125 warrants were exercised at $4.73 for cash proceeds of $19,511 and in February 2024, 1,773,606 warrants were exercised
at $4.73 for cash proceeds of $8,389,156. The outstanding warrant balance as of February 29, 2024 is 3,468,355. As long as the tradeable
warrants are in the money, the Company expects to see continued exercise of warrants for the remainder of the year, as these tradeable
warrants expire in early November 2024.

 Additionally, on March 12, 2024, the Company entered
into an amended and restated promissory note (the "Amended Note") with SMDMM Funding, LLC, a Company owned and controlled
by our CEO, with which the Company currently has two outstanding notes, one in the original principal amount of $1,108,150.31 that was
due on December 31, 2023 (the "One Year Note"), and another in the original principal amount of $4,026,413.00 due on December
31, 2024 (the "Two Year Note"). The Amended Note consolidated the One Year Note and Two Year Note into one note with outstanding
principal of $4,758,088.74 and sets the principal and established interest to be paid over the course of thirty-three equal monthly payments
beginning March 31, 2024, and ending December 31, 2026. Assuming we do not take on additional debt, this will effectively eliminate the
debt from the balance sheet by the end of 2026. There will remain an SBA long-term note with favorable terms for approximately $460,000.

 We
also expect the positive operating income results of 2023 to continue into 2024, assuming the ACP program is fully funded for the
remainder of 2024. The Company has contingency plans in place if the funding is delayed or not approved. While this event would
impact all aspects of the Company, we believe the current cash position would be sufficient to bridge the gap as we continued our
efforts to grow other parts of the Company. The gross margins for each segment of the Company are also expected to improve over the
course of 2024, assuming the ACP program is fully funded for the remainder of 2024. The Company believes there continues to be operating and logistic savings to be implemented during 2024, directly
impact our cost to acquire subscribers and manage the relationship with the convenience store base.

 The
following table sets forth the major sources and uses of cash for the years ended December 31, 2023 and 2022.

 2023

 2022

 Net
 cash provided by or (used in) operating activities

 $
 10,287,345

 $
 793,272

 Net cash
 used in investing activities

 (281,304
)

 (1,498,582
)

 Net
 cash provided by financing activities

 (2,419,635
)

 1,457,468

 Net
 change in cash and cash equivalents

 $
 7,586,406

 $
 752,158

 As
a result of net positive cash provided by operating activities in 2023, the cash increased in 2023 by $7,586,406, compared to an
increase of cash increase provided in operations of $793,272 in 2022.

 At
December 31, 2022, the Company had the following material commitments and contingencies.

 Cash
requirements and capital expenditures –At the current level of operations, the Company does not anticipate borrowing funds
to meet basic operating costs. Based on the current financial position of the Company, even if the ACP program is delayed or not funded in 2024,
we have sufficient resources for the next twelve months.

 Known
trends and uncertainties – The Company is planning to acquire other businesses with similar business operations. The
uncertainty of the economy and program funding for the ACP program may delay the
planned business expansion.

 Critical
Accounting Policies and Estimates

 Management's
discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which
were prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these consolidated financial
statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue and expenses. Our estimates
are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions or conditions, and any such differences may be material.

 While
our significant accounting policies are more fully described in Note 2 — Summary of Significant Accounting Policies
of the Notes to Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data of this Annual
Report on Form 10-K, we believe the following discussion addresses our most critical accounting policies, which are those that are most
important to our financial condition and results of operations and which require our most difficult, subjective and complex judgments.

 Use
of Estimates

 Preparing
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues
and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.

 Significant
estimates during the years ended December 31, 2023 and 2022, 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.

 Fair
Value of Financial Instruments

 The
Company accounts for financial instruments under Financial Accounting Standards Board ("FASB") ASC 820, Fair Value Measurements.
ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined
as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date, based on the Company's principal or, in absence of a principal, most advantageous market for the specific
asset or liability.

 The
Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring
basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement.
The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining
fair value.

 The
three tiers are defined as follows:

 Level
 1 - Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;

 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

 Level
 3 - Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

 The
determination of fair value and the assessment of a measurement's placement within the hierarchy requires judgment. Level 3 valuations
often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation
methodologies applied to unobservable management estimates and assumptions. Management's assumptions could vary depending on the
asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions
of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors
to assist us in determining fair value, as appropriate.

 Impairment
of Long-lived Assets including Internal Use Capitalized Software Costs

evaluates the recoverability of the Company's identifiable intangible assets and other long-lived assets when events or circumstances
indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 "Impairment or Disposal of Long-Lived
Assets." Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible
assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative
to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes
in the Company's business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be
generated from the use and ultimate disposition of these assets.

 If
impairment is indicated based on a comparison of the assets' carrying values and the undiscounted cash flows, the impairment to
be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Valuation

is stated at the lower of cost or net realizable value (first-in, first-out method). For items manufactured by third parties, cost is
determined using the weighted average cost method (WAC). We write down inventory when it has been determined that conditions exist that
may not allow the inventory to be sold for at the intended price or the inventory is determined to be obsolete based on assumption about
future demand and market conditions. The charge related to inventory write-downs is recorded as cost of goods sold. We evaluate inventory
at least annually and at other times during the year. We have incurred and may in the future incur charges to write down inventory.

 Internal
Use Software Development Costs

 We
capitalize certain internal use software development costs associated with creating and enhancing internally developed software related
to our technology infrastructure. These costs include personnel and related employee benefits expenses for employees who are directly
associated with and who devote time to software projects, and external direct costs of materials and services consumed in developing
or obtaining the software. Software development costs that do not meet the qualification for capitalization, as further discussed below,
are expensed as incurred and recorded in general and administrative expenses in the consolidated results of operations.

from Contracts with Customers

 We
account for revenue earned from contracts with customers under ASC 606, Revenue from Contracts with Customers ("ASC 606"),
and ASC 842, Leases ("ASC 842"). The core principle of ASC 606 is that a company should recognize revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to
be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

Step 1: Identify the contract with the customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when, or as, the company satisfies a performance obligation.

 Stock-Based
Compensation

 The
Company accounts for our stock-based compensation under ASC 718 "Compensation – Stock Compensation" using the
fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized
over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions
in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities
in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by
the issuance of those equity instruments.

 The
Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the
fair value of options.

 The
fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services
is completed (measurement date) and is recognized over the vesting periods.

 Stock

 In
connection with certain financing (debt or equity), consulting and collaboration arrangements, the Company may issue warrants to purchase
shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the
holder and are classified as equity awards. The Company measures the fair value of warrants issued for compensation using the Black-Scholes
option pricing model as of the measurement date. However, for warrants issued that meet the definition of a derivative liability, fair
value is determined based upon the use of a binomial pricing model.

issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital
of the common stock issued. All other warrants (for services) are recorded at fair value and expensed over the requisite service period
or at the date of issuance if there is not a service period.

 Recent
Accounting Pronouncements

 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.

 ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 Not
applicable.

 ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 See
Index to Consolidated Financial Statements on page F-1 of this Annual Report.

 ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 None.

 ITEM
9A. CONTROLS AND PROCEDURES

 a)
Evaluation of Disclosure Controls and Procedures

 As
of December 31, 2023, our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Management identified no material weaknesses
in our internal control over financial reporting. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were effective as of the end of the period covered by this report. Disclosure controls and
procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed
or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief
Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

 b)
Management's Annual Report on Internal Control Over Financial Reporting

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed by, or under
the supervision of, our chief executive officer and chief financial officer, or persons performing similar functions, and effected by
our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the
United States of America (GAAP). Our internal control over financial reporting includes those policies and procedures that: (i) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets
of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with GAAP and that receipts and expenditures of the Company are being made only in accordance with authorization of management
and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Company's assets that could have a material effect on the financial statements.

conducted an evaluation of the effectiveness of our control over financial reporting based on the 2013 framework in Internal Control
- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management
concluded that our internal control over financial reporting was effective as of December 31, 2023. During the year ended December 31,
2023, management identified no weaknesses.

to Regulation S-K Item 308(b), as the Company is not an accelerated filer nor a large accelerated filer, this Annual Report does not
include an attestation report of our company's registered public accounting firm regarding internal control over financial reporting.

 Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions
or that the degree of compliance with the policies or procedures may deteriorate. A control system, no matter how well designed and operated
can provide only reasonable, but not absolute, assurance that the control system's objectives will be met. The design of a control
system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their cost.

 c)
Changes in Internal Control over Financial Reporting

the year ended December 31, 2023, there were no changes in our internal controls over financial reporting, which were identified in connection
with our management's evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that materially affected,
or is reasonably likely to have a materially affect, on our internal control over financial reporting.

 ITEM
9B. OTHER INFORMATION

 None.

 ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 Not
applicable.

 The information required
by Part III is omitted from this Annual Report in that we will file a definitive proxy statement pursuant to Regulation 14A with respect
to our 2024 Annual Meeting (the "Proxy Statement") on the date hereof and certain information included therein is incorporated
herein by reference. Only those sections of the Proxy Statement which specifically address the items set forth herein are incorporated
by reference.

 Item 10. Directors, Executive
Officers and Corporate Governance

 The

 Item 11. Executive Compensation

 The

 Item 12. Security Ownership
of Certain Beneficial Owner and Management and Related Stockholder Matters.

 The

 Item 13. Certain Relationships and Related
Transactions, and Director Independence

 The

 Item 14. Principal Accounting Fees and Services

 The

 PART
IV

 ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 Exhibit

 Incorporated
 by Reference

 Filed
 or

 Furnished

 Number

 Exhibit
 Description

 Form

 Exhibit

 Filing
 Date

 Herewith

 3.1

 Articles
 of Incorporation filed August 22, 2006

 SB-2

 3.1

 03/14/2007

 3.2

 Articles
 of Merger filed July 25, 2008

 S-1/A

 3.2

 10/21/2021

 3.3

 of Amendment to Articles of Incorporation filed April 27, 2009

 10-K/A

 3.1

 05/14/2013

 3.4

 of Amendment to Articles of Incorporation filed May 13, 2015

 8-K/A

 3.1

 12/11/2015

 3.5

 of Amendment to Articles of Incorporation filed June 30, 2015

 S-1/A

 3.5

 10/21/2021

 3.6

 of Amendment to Articles of Incorporation filed October 10, 2017

 S-1/A

 3.6

 10/21/2021

 3.7

 of Amendment to Articles of Incorporation filed December 21, 2017

 S-1/A

 3.7

 10/21/2021

 3.8

 of Amendment to Articles of Incorporation filed October 29, 2020

 3.1

 11/5/2020

 3.9

 of Amendment, filed November 1, 2021

 3.1

 11/5/2021

 3.10

 Bylaws

 SB-2

 3.2

 03/14/2007

 3.11

 Amended
 Bylaws

 10-K/A

 3.2

 05/14/2013

 3.12

 Amended
 Bylaws

 8-K/A

 3.2

 12/11/2015

 4.1

 Warrant,
 dated March 8, 2021, issued to Evergreen Capital Management LLC

 4.2

 03/16/2021

 4.2

 Form
 of Underwriter's Warrants

 4.1

 11/5/2021

 4.3

 Warrant
 Agency Agreement between SurgePays, Inc. and VStock Transfer, LLC, dated November 4, 2021

 4.2

 11/5/2021

 4.4

 Description of Securities

 4.4

 03/30/2023

 4.5

 Form
 of Promissory Note Issued to Inventory Lenders in March 2022 to May 2022

 4.1

 4.6

 Form
 of Warrant with $4.73 Exercise Price Issued to Inventory Lenders in March 2022 to May 2022

 4.2

 4.7

 Revolving
 Secured Promissory Note with Lender, dated April 8, 2022, as amended June 2, 2022

 4.3

 10.1+

 Consulting
 Agreement, dated September 25, 2017, by and between KSIX MEDIA HOLDINGS, INC. and David C. Ansani

 S-1

 10.2

 09/12/2019

 10.2+

 Agreement, dated July 17, 2019, by and between Surge Holdings, Inc. and David N. Keys

 10.1

 07/24/2019

 10.3+

 and Officer Indemnification Agreement, dated July 17, 2019, by and between Surge Holdings, Inc. and David N. Keys

 10.2

 07/24/2019

 10.4

 Promissory
 Note, issued by Surge Holdings, Inc. to AN Holdings, LLC on April 24, 2020

 10.22

 05/12/2020

 10.5

 Paycheck
 Protection Program Note, dated April 18, 2020, issued to Bank 3

 10.4

 08/14/2020

 10.6

 Office
 Lease, dated May 5, 2020, by and between Woodfield Financial Center LLC and Surge Holdings Inc.

 S-1/A

 10.31

 02/16/2021

 10.7

 Master
 Services Agreement by and between Surge Pays, Inc. and Glass Mountain BPO, dated January 1, 2021

 S-1/A

 10.32

 02/16/2021

 10.8

 Commercial
 Lease Agreement, dated July 10, 2019, by and between CardDawg Investments, LLC and Surge Holdings, Inc.

 S-1/A

 10.35

 02/16/2021

 10.9

 Form
 of On Demand Promissory Note issued by the Company in favor of SMDMM Funding, LLC

 S-1/A

 10.36

 09/22/2021

 10.10

 Stock
 Purchase Agreement, by and among, SurgePays, Inc., Torch Wireless, and the Parties Listed Therein, dated April 6, 2022

 10.1

 04/12/2022

 10.11

 Installment
 Sale Agreement, by and among, SurgePays, Inc., SurgePhone Wireless LLC, Torch Wireless, and Affordable Connectivity Financing V Limited
 Liability Company, dated November 17, 2022

 10.1

 11/23/2022

 10.12

 Paying
 Agent Agreement, by and among, SurgePhone Wireless LLC, Torch Wireless, Affordable Connectivity Financing V Limited Liability Company,
 and Ivy Dallas Funding, LLC, dated November 17, 2022

 10.2

 11/23/2022

 10.13

 Consulting
 Agreement, by and between the Company and Jay Jones, dated December 19, 2022

 10.1

 12/23/2022

 10.14+

 Weisberg
 Director Agreement, by and between the Company and Ms. Weisberg, dated December 19, 2022

 10.2

 12/23/2022

 10.15+

 Form
 of Indemnification Agreement

 10.3

 12/23/2022

 10.16+

 Employment
 Agreement between SurgePays, Inc. and Kevin Brian Cox

 10.1

 05/16/2022

 10.17+

 Employment
 Agreement between SurgePays, Inc. and Anthony Evers, dated August 8, 2022

 10.3

 10.18+

 SurgePays, Inc. 2022 Omnibus Securities and Incentive Plan

 10.18

 03/30/2023

 10.19

 Loan
 Agreement between the Company and Lender, dated April 8, 2022, as amended June 2, 2022

 10.1

 10.20

 Security
 Agreement between the Company and Lender, dated April 8, 2022

 10.2

 10.21

 Form of Restricted Share Award Agreement

 10.1

 08/10/2023

 10.22

 Form of Employment Agreement with Anthony Evers

 10.1

 11/14/2023

 10.23

 Form of Employment Agreement with Kevin Brian Cox

 10.1

 01/03/2024

 10.24

 Underwriting Agreement, dated as of January 17, 2024, between SurgePays, Inc. and Titan Partners Group

 1.1

 01/22/2024

 10.25

 Form of Promissory Note with SMDMM Funding, LLC

 X

 14.1

 Inc. Code of Ethics and Business Conduct

 14.1

 03/24/2022

 19.1

 SurgePays, Inc. Insider Trading Policy

 X

 21.1

 List of Subsidiaries

 X

 23.1

 Consent of Rodefer Moss & Co., PLLC

 X

 31.1

 Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 X

 31.2

 Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 X

 32.1*

 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 2002

 X

 32.2*

 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 2002

 X

 97.1

 SurgePays, Inc. Executive Compensation Clawback Policy

 X

 101.INS

 X

 101.SCH

 X

 101.CAL

 X

 101.DEF

 X

 101.LAB

 X

 101.PRE

 X

 +

 contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.

 *

 Furnished
 herewith

 ITEM
16. FORM 10-K SUMMARY

 Not
applicable.

 SIGNATURES

to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

 Inc.

 Date:
 March 12, 2024

 By:

 /s/
 Kevin Brian Cox

 Name:

 Kevin
 Brian Cox

 Title:

 Chief
 Executive Officer

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

 Signature

 Title

 Date

 /s/
 Kevin Brian Cox

 Chief
 Executive Officer and Director

 March

 Kevin
 Brian Cox

 ( Principal
 Executive Officer)

 /s/
 Anthony Evers

 Chief
 Financial Officer

 March

 Anthony
 Evers

 (Principal
 Financial Officer and Principal Accounting Officer

 /s/
 David N. Keys

 March

 David
 N. Keys

 /s/
 David May

 March

 David
 May

 /s/
 Laurie Weisberg

 March

 Laurie
 Weisberg

 /s/
 Richard Schurfeld

 March

 Richard
 Schurfeld

 Page(s)

 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 910)

 Consolidated Balance Sheets

 Consolidated Statements of Operations

 Consolidated Statements of Changes in Stockholders' Equity

 - F-6

 Consolidated Statements of Cash Flows

 Notes to Consolidated Financial Statements

 - F-42

 F- 1

 Report
of Independent Registered Public Accounting Firm

 To
the Board of Directors and Stockholders of

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, 2023 and 2022, 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, 2023 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, 2023 and 2022, 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, 2023, 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.

Recognition

 Description
of the matter

 The
Company generates revenue from the delivery of processing, service and product solutions. Revenue is measured based on consideration
specified in a contract with a customer, 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 with customers. Revenue is recognized when the services and products are delivered to the customers and control is
transferred, which is at a point in time. The Company also has significant revenue from providing services and products under the Affordable
Connectivity Program. Revenue is recognized after services and products have been delivered to an eligible customer based on contracts
with the customer.

 How
the Critical Audit Matter Was Addressed in the Audit

 Our
audit procedures related to revenue recognition included the following, among others:

 We
obtained and understanding and evaluated management's significant accounting policies around revenue recognition for each of the
company significant segments including management's assessment of when control of goods and services is 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.

/s/ Rodefer Moss & Co, PLLC

 We have served as the Company's auditor since 2017

 Johnson City, Tennessee

 March

 F- 2

Balance Sheets

 Assets

 Current Assets

 Cash

 $
 14,622,060

 $
 7,035,654

 Accounts receivable - net

 9,536,074

 9,230,365

 9,046,594

 11,186,242

 Prepaids and other

 161,933

 111,524

 Total Current Assets

 33,366,661

 27,563,785

 Property and equipment - net

 361,841

 643,373

 Other Assets

 Note receivable

 176,851

 176,851

 Intangibles - net

 2,126,470

 2,779,977

 Internal use software development costs - net

 539,424

 387,180

 Goodwill

 1,666,782

 1,666,782

 Investment in CenterCom

 464,409

 354,206

 Operating lease - right of use asset - net

 387,869

 431,352

 Deferred income taxes - net

 2,835,000

 -

 Total Other Assets

 8,196,805

 5,796,348

 Total Assets

 $
 41,925,307

 $
 34,003,506

 Liabilities and Stockholders' Equity

 Current Liabilities

 Accounts payable and accrued expenses

 $
 6,439,120

 $
 5,784,374

 Accounts payable and accrued expenses - related party

 1,048,224

 1,728,721

 Accrued income taxes payable

 570,000

 -

 Installment sale liability

 -

 13,018,184

 Deferred revenue

 20,000

 243,110

 Operating lease liability

 43,137

 39,490

 Notes payable - related parties

 1,108,150

 Notes payable

 -

 1,542,033

 Total Current Liabilities

 12,705,044

 23,464,062

 Long Term Liabilities

 Note payable

 -

 53,134

 Notes payable - related parties

 -

 4,493,798

 Notes payable - SBA government

 474,846

 Operating lease liability

 356,276

 399,413

 Total Long-Term Liabilities

 816,799

 5,421,191

 Total Liabilities

 13,521,843

 28,885,253

 Stockholders' Equity

 Common stock, $ 0.001
 par value, 500,000,000
 shares authorized 14,403,261
 and 14,116,832
 shares issued and outstanding, respectively

 14,404

 14,117

 Additional paid-in capital

 43,421,019

 40,780,707

 Accumulated deficit

 ( 15,186,203
)

 ( 35,804,106
)

 Stockholders' equity

 28,249,220

 4,990,718

 Non-controlling interest

 154,244

 Total Stockholders' Equity

 28,403,464

 5,118,253

 Total Liabilities and Stockholders' Equity

 $
 41,925,307

 $
 34,003,506

 F- 3

Statements of Operations

 2023

 2022

 2023

 2022

 $

 $

 Costs and expenses

 Cost of revenues

 101,499,341

 108,074,782

 General and administrative expenses

 16,777,107

 12,835,623

 Total costs and expenses

 118,276,448

 120,910,405

 Income from operations

 18,865,384

 633,785

 Other income (expense)

 Interest expense

 ( 595,975
)

 ( 1,843,396
)

 Gain (loss) on investment in CenterCom

 110,203

 ( 89,082
)

 Amortization of debt discount

 -

 ( 115,404
)

 Gain on forgiveness of PPP loan - government

 -

 524,143

 Other income

 -

 336,726

 Total other income (expense) - net

 ( 485,772
)

 ( 1,187,013
)

 Net income (loss) before provision for income taxes

 18,379,612

 ( 553,228
)

 Provision for income tax benefit (expense)

 2,265,000

 -

 Net income (loss) including non-controlling interest

 20,644,612

 ( 553,228
)

 Non-controlling interest

 26,709

 Net income (loss) available to common stockholders

 $
 20,617,903

 $
)

 Earnings (loss) per share - attributable to common stockholders

 Basic

 $
 1.45

 $
 ( 0.05
)

 Diluted

 $
 1.38

 $
 ( 0.05
)

 Weighted average number of shares outstanding - attributable to common stockholders

 Basic

 14,258,172

 12,395,364

 Diluted

 14,922,881

 12,395,364

 F- 4

Statements of Changes in Stockholders' Equity

 For
the Year Ended December 31, 2023

 Capital

 Deficit

 Common Stock

 Additional
 Paid-in

 Accumulated

 Non-Controlling

 Total
 Stockholders'

 Capital

 Deficit

 -

 14,116,832
 -

 $
 14,117

 $
 40,780,707

 $
 ( 35,804,106
)

 $

 $
 5,118,253

 Stock issued for services

 242,615

 1,289,781

 -

 -

 1,290,024

 Recognition of stock-based compensation - unvested shares - related parties

 -

 -

 529,534

 -

 -

 529,534

 Recognition of stock-based compensation - stock options

 -

 -

 576,625

 -

 -

 576,625

 Recognition of stock-based compensation - stock options - related party

 -

 -

 -

 -

 Exercise of warrants for cash

 43,814

 207,196

 -

 -

 207,240

 Non-controlling interest

 -

 -

 -

 -

 26,709

 26,709

 Net income
 -

 -
 -

 -

 -

 20,617,903

 -

 20,617,903

 -

 14,403,261
 -

 $
 14,404

 $
 43,421,019

 $
 ( 15,186,203
)

 $
 154,244

 $
 28,403,464

 F- 5

Statements of Changes in Stockholders' Equity

 For
the Year Ended December 31, 2022

 Capital

 Deficit

 Series A

 Preferred Stock

 Series C

 Preferred Stock

 Common Stock

 Additional
 Paid-in

 Accumulated

 Non-Controlling

 Total
 Stockholders'

 Capital

 Deficit

 December 31, 2021

 260,000

 $

 -

 $
 -

 12,063,834

 $
 12,064

 $
 38,662,340

 $
 ( 35,123,343
)

 $
 -

 $
 3,551,321

 Balance

 260,000

 $

 -

 $
 -

 12,063,834

 $
 12,064

 $
 38,662,340

 $
 ( 35,123,343
)

 $
 -

 $
 3,551,321

 Conversion of preferred stock to common stock - related parties

 ( 260,000
)

 ( 260
)

 -

 -

 1,300,000

 1,300

 ( 1,040
)

 -

 -

 -

 Conversion of debt into common stock - related party

 -

 -

 -

 -

 270,745

 1,086,142

 -

 -

 1,086,413

 Stock issued for services

 -

 -

 -

 -

 50,000

 103,450

 -

 -

 103,500

 Recognition of stock-based compensation - stock options

 -

 -

 -

 -

 -

 -

 -

 -

 Stock issued as direct offering costs

 -

 -

 -

 -

 200,000

 ( 200
)

 -

 -

 -

 Stock issued to purchase software

 -

 -

 -

 -

 85,000

 411,315

 -

 -

 411,400

 Warrants issued as debt issue costs

 -

 -

 -

 -

 -

 -

 -

 -

 Warrants issued as interest expense

 -

 -

 -

 -

 -

 -

 365,794

 -

 -

 365,794

 Exercise of warrants (cashless)

 -

 -

 -

 -

 147,153

 ( 147
)

 -

 -

 -

 Exercise of warrants

 -

 -

 -

 -

 -

 -

 -

 Non-controlling interest

 -

 -

 -

 -

 -

 -

 -

 -

 Net loss

 -

 -

 -

 -

 -

 -

 -

)

 -

)

 Net income (loss)

 -

 -

 -

 -

 -

 -

 -

)

 -

)

 -

 $
 -

 -

 $
 -

 14,116,832

 $
 14,117

 $
 40,780,707

 $
 ( 35,804,106
)

 $

 $
 5,118,253

 Balance

 -

 $
 -

 -

 $
 -

 14,116,832

 $
 14,117

 $
 40,780,707

 $
 ( 35,804,106
)

 $

 $
 5,118,253

 F- 6

Statements of Cash Flows

 2023

 2022

 Operating activities

 Net income (loss) - including non-controlling interest

 $
 20,644,612

 $
 ( 553,228
)

 Adjustments to reconcile net income (loss) to net cash provided by operations

 Bad debt expense (recovery)

 90,009

 ( 59,485
)

 Provision for inventory obsolescence

 -

 51,718

 Depreciation and amortization

 935,039

 933,384

 Amortization of right-of-use assets

 43,483

 55,316

 Amortization of debt discount/debt issue costs

 -

 Amortization of internal use software development costs

 129,060

 -

 Stock issued for services

 1,290,024

 103,500

 Recognition of stock-based compensation - unvested shares - related parties

 529,534

 -

 Recognition of share-based compensation - options

 576,625

 -

 Recognition of share-based compensation - options - related party

 Recognition of share based compensation - options

 Warrants issued for interest expense

 -

 365,794

 (Gain) loss on equity method investment - CenterCom

 ( 110,203
)

 89,082

 Gain on forgiveness of PPP loan

 -

 ( 524,143
)

 Changes in operating assets and liabilities

 (Increase) decrease in

 Accounts receivable

 ( 395,718
)

 ( 5,920,991
)

 2,139,648

 ( 6,878,664
)

 Prepaids

 ( 50,409
)

 ( 111,524
)

 Deferred income taxes - net

 ( 2,835,000
)

 -

 Increase (decrease) in

 Accounts payable and accrued expenses

 654,746

 ( 812,227
)

 Accounts payable and accrued expenses - related party

 ( 680,497
)

 966,468

 Accounts payable and accrued expenses

 Accrued income taxes payable

 570,000

 -

 Installment sale liability - net

 ( 13,018,184
)

 13,018,184

 Deferred revenue

 ( 223,110
)

 ( 33,140
)

 Operating lease liability

 ( 39,490
)

 ( 49,352
)

 Net cash provided by operating activities

 10,287,345

 793,272

 Investing activities

 Purchase of property and equipment

 -

 ( 11,402
)

 Capitalized internal use software development costs

 ( 281,304
)

 ( 387,180
)

 Purchase of software

 -

 ( 300,000
)

 Acquisition of Torch, Inc.

 -

 ( 800,000
)

 Net cash used in investing activities

 ( 281,304
)

 ( 1,498,582
)

 Financing activities

 Proceeds from exercise of common stock warrants

 207,240

 Repayments of loans - related party

 ( 1,017,385
)

 -

 Proceeds from notes payable

 -

 6,700,000

 Repayments on notes payable

 ( 1,595,167
)

 ( 5,231,251
)

 Repayments on notes payable - SBA government

 ( 14,323
)

 ( 11,754
)

 Net cash provided (used in) by financing activities

 ( 2,419,635
)

 1,457,468

 Net increase in cash

 7,586,406

 752,158

 Cash - beginning of year

 7,035,654

 6,283,496

 Cash - end of year

 $
 14,622,060

 $
 7,035,654

 Supplemental disclosure of cash flow information

 Cash paid for interest

 $
 222,326

 $
 523,005

 Cash paid for income tax

 $
 -

 $
 -

 Supplemental disclosure of non-cash investing and financing activities

 Debt issue costs recorded in connection with notes payable

 $
 -

 $

 Stock issued to acquire software

 $
 -

 $
 411,400

 F- 7

 NOTES

 Note
1 - Organization and Nature of Operations

 Organization
and Nature of Operations

Inc. ("SurgePays," "SP," "we," "our" or "the Company"), and its operating
subsidiaries, is a technology-driven company building a next generation supply chain software platform that can offer wholesale goods
and services more cost efficiently than traditional and existing wholesale distribution models.

 The
parent (SurgePays, Inc.) and subsidiaries are organized as follows:

of Subsidiaries

 Company
 Name

 Incorporation
 Date

 State
 of Incorporation

 Inc.

 18, 2006

 KSIX
 Media, Inc.

 November
 5, 2014

 KSIX,
 LLC

 September
 14, 2011

 Surge
 Blockchain, LLC

 January
 29, 2009

 Injury
 Survey, LLC

 July
 28, 2020

 DigitizeIQ,
 LLC

 July
 23, 2014

 Illinois

 LogicsIQ,
 Inc.

 October
 2, 2018

 Surge
 Payments, LLC

 December
 17, 2018

 SurgePhone
 Wireless, LLC

 29, 2019

 SurgePays
 Fintech, Inc.

 22, 2019

 ECS
 Prepaid, LLC

 June
 9, 2009

 Missouri

 Central
 States Legal Services, Inc.

 1, 2003

 Missouri

 Electronic
 Check Services, Inc.

 May
 19, 1999

 Missouri

 Torch
 Wireless *

 January
 29, 2019

 Wyoming

 *

 Effective January 1, 2022, the Company acquired Torch Wireless

 Basis
of Presentation

 The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial statements ("U.S. GAAP").

 Liquidity
and Management's Plans

 As
reflected in the accompanying consolidated financial statements, for the year ended December 31, 2023, the Company had:

 Net
 income available to common stockholders of $ 20,617,903; and

 Net cash provided by operations was $ 10,287,345

 Additionally,
at December 31, 2023, the Company had:

 Accumulated deficit of $ 15,186,203

 Stockholders' equity of $ 28,403,464; and

 Working capital of $ 20,661,617

 We
manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company has cash on hand
of $ 14,622,060 at December 31, 2023.

 The
Company has historically incurred significant losses and has not, prior to 2023, demonstrated an ability to generate sufficient revenues
from the sales of its products and services to achieve profitable operations. There can be no assurance that profitable operations will
continue to be sustained on a continuing basis. In making this assessment we performed a comprehensive analysis
of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the twelve months ended December
31, 2024, and our current capital structure including equity-based instruments and our obligations and debts.

 The
Company believes it has sufficient cash resources on hand along with access to additional debt and/or equity-based capital from third
parties and related parties as needed to meet its current obligations for a period that is one year from the issuance date of these financial
statements.

 F- 8

 NOTES

 Management's
strategic plans include the following:

 Sustain
 our growth of the Affordable Connectivity Program revenue stream,

 Expand product and services offerings to a larger surrounding
geographic area,

 Continuing
 to explore and execute prospective partnering or distribution opportunities and

 Identifying
 unique market opportunities that represent potential positive short-term cash flow.

 Note
2 - Summary of Significant Accounting Policies

 Principles
of Consolidation and Non-Controlling Interest

 These
consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly
owned subsidiaries. All intercompany transactions and balances have been eliminated.

 For
entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity is allocated to owners other
than the Company. The aggregate of the income or loss and corresponding equity that is not owned by us is included in Non-controlling
Interests in the consolidated financial statements.

 Business
Combinations

 The
Company accounts for business acquisitions using the acquisition method of accounting, in accordance with which assets acquired and liabilities
assumed are recorded at their respective fair values at the acquisition date.

 The
fair value of the consideration paid, including contingent consideration, is assigned to the assets acquired and liabilities assumed
based on their respective fair values. Goodwill represents the excess of the purchase price over the estimated fair values of the assets
acquired and liabilities assumed.

 Significant
judgments are used in determining fair values of assets acquired and liabilities assumed, as well as intangibles. Fair value and useful
life determinations are based on, among other factors, estimates of future expected cash flows, and appropriate discount rates used in
computing present values. These judgments may materially impact the estimates used in allocating acquisition date fair values to assets
acquired and liabilities assumed, as well as the Company's current and future operating results. Actual results may vary from these
estimates which may result in adjustments to goodwill and acquisition date fair values of assets and liabilities during a measurement
period or upon a final determination of asset and liability fair values, whichever occurs first. Adjustments to fair values of assets
and liabilities made after the end of the measurement period are recorded within the Company's operating results.

January 1, 2022, the Company executed a management agreement with Torch Wireless ("Torch" or "TW"). Generally, the Company was
engaged to handle the following services:

 Oversee
 management of the business being conducted by Torch,

 Involved
 in the performance of Torch's obligations under contracts regarding its business operations
 and maintenance of Torch's customer relationships,

 Assist
 Torch with regulatory compliance,

 Manage
 all billing and collection functions, including the right to collect revenues related to
 Torch's business operations, as part of the agreement, Torch may not participate in
 this function; and

 Manage
 all payment functions related to the business, including the right to disburse funds, as
 part of the agreement, Torch may not participate in this function

 F- 9

 NOTES

 Torch
is a provider of subsidized mobile broadband services to consumers qualifying under the federal guidelines of the U.S. Federal Communication
Commission's Affordable Connectivity Program ("ACP"). The ACP provides the Company with up to a $ 100 reimbursement
for the cost of each tablet device distributed and a $ 30 per customer, per month subsidy for mobile broadband (internet connectivity)
services. With the purchase of Torch, the Company offers subsidized mobile broadband in all fifty (50) states.

 It
was determined that the Company had acquired 100 % of Torch, effective January 1, 2022, resulting in Torch becoming a wholly owned subsidiary,
in a transaction accounted for as a business combination. Pursuant to ASC 805-10-25-7, the Company determined that the acquisition date
preceded the closing date as it was managing Torch and in full control of all operational decision making. At this time, the Company
had obtained control of Torch through its management contract.

 At
the time of acquisition, Torch had no significant assets or liabilities. The Company paid $ 800,000. As a result of the acquisition, the
Company recorded goodwill of $ 800,000.

 At
the time of acquisition, Torch had nominal revenues and losses. As a result, and given the immaterial nature of this acquisition, the
Company elected not to present any pro-forma financial information during the year ended December 31, 2022.

 In
addition, the Company was required to pay the Sellers monthly residual payments for customers enrolled by the Company through December
31, 2022 of either $ 2 or $ 3 per customer (depending on the category of customer).

 For
the years ended December 31, 2023 and 2022, the Company incurred expenses of $ 0 and $ 1,679,723, respectively, related to the residual
payments. All expenses are included as a component of cost of goods sold.

 This
transaction did not involve the purchase of a "significant amount of assets" as defined in the Instructions to Item 2.01
of Form 8-K. Additionally, the acquisition of Torch was not deemed to be significant at any level under SEC Regulation S-X 3.05 and did
not require the presentation of any additional historical audited financial statements.

 For
financial reporting purposes, Torch has been consolidated into the Company's consolidated statements of financial position, results
of operations, and cash flows.

 At
December 31, 2023 and December 31, 2022 goodwill was $ 1,666,782.

 There
were no impairment losses for the years ended December 31, 2023 and 2022, respectively.

 Note
Receivable (Sale of Former Subsidiary)

 On
May 7, 2021, the Company disposed of its subsidiary True Wireless, Inc.

 In
connection with the sale, the Company received an unsecured note receivable for $ 176,851, bearing interest at 0.6 %, with a default interest
rate of 10 %. The Company will receive twenty-five (25) monthly payments of principal and accrued interest totaling $ 7,461 commencing
in June 2023.

 Payments
are scheduled as follows:

of Receivables

 2024

 $
 141,759
 **

 2025

 44,766

 186,525

 Less: amount representing interest

 ( 9,674
)

 Total

 $
 176,851

 On
July 12, 2023, Notice of Default was provided by SurgePays, Inc. to Blue Skies Connections, LLC for failure to pay amounts due under
that certain Promissory Note dated June 14, 2021 by Blue Skies Connections, LLC in favor of SurgePays, Inc. in the original principal
amount of $ 176,851 (the "Note"). Pursuant to the terms of the Note, SurgePays, Inc. accelerated the amount due.

 See
Note 8 for Contingencies – Legal Matters for additional discussion.

 ** The
amount due for the year ended December 31, 2024 includes $ 52,227 of payments which were due as of December 31, 2023.

 As
of December 31, 2023, the Company believes the note is collectible.

 Business
Segments and Concentrations

 The
Company uses the "management approach" to identify its reportable segments. The management approach requires companies to
report segment financial information consistent with information used by management for making operating decisions and assessing performance
as the basis for identifying the Company's reportable segments. The Company manages its business as multiple reportable segments.
See Note 10 regarding segment disclosure.

 F- 10

 NOTES

 The
Mobile Virtual Network Operators consisting of SurgePhone Wireless and Torch Wireless business segment made up approximately
 86 % and 73 %
of total consolidated revenues for the years ended December 31, 2023 and 2022, respectively.

related to this business segment are 100 % derived from programs administered by the Federal Communications Commission (FCC), and all
funds related to these programs are received directly from organizations under the direction of the FCC and subject to administrative
rulings, statutory changes, and other funding restrictions that could impact the Company's operations in this segment.

 Accounts
receivable related to these programs made up 97 % and 96 % of accounts receivable at December 31, 2023 and 2022, respectively.

 Customers
in the United States accounted for 100 % of our revenues. We do not have any property or equipment outside of the United States.

 Use
of Estimates

 Preparing
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues
and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.

 Significant
estimates during the years ended December 31, 2023 and 2022, 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, income tax payable and the valuation
allowance on deferred tax assets.

 Risks
and Uncertainties

 The
Company operates in an industry that is subject to intense competition and changes in consumer demand. The Company's operations
are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business
failure.

 The
Company has experienced, and in the future may experience, variability in sales and earnings. The factors expected to contribute to this
variability include, among others, (i) the cyclical nature of the industry, (ii) general economic conditions in the various local markets
in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices in connection
with the Company's distribution of the product. These factors, among others, make it difficult to project the Company's operating
results on a consistent basis.

 Effective February 7, 2024, the Affordable Connectivity
Program ("ACP") stopped accepting new applications and enrollments. The program will cease to be funded after April 2024.
The Company believes that the program will be funded by Congress, however, at this time, we cannot predict any outcome. See discussion
below regarding revenue recognition.

 Fair
Value of Financial Instruments

 The
Company accounts for financial instruments under Financial Accounting Standards Board ("FASB") ASC 820, Fair Value Measurements.
ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined
as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date, based on the Company's principal or, in absence of a principal, most advantageous market for the specific
asset or liability.

 The
Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring
basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement.
The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining
fair value.

 The
three tiers are defined as follows:

 Level
 1 – Observable inputs that reflect quoted market prices (unadjusted) for identical
 assets or liabilities in active markets;

 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

 Level
 3 – Unobservable inputs that are supported by little or no market data, which require
 the Company to develop its own assumptions.

 F- 11

 NOTES

 The
determination of fair value and the assessment of a measurement's placement within the hierarchy requires judgment. Level 3 valuations
often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation
methodologies applied to unobservable management estimates and assumptions. Management's assumptions could vary depending on the
asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions
of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors
to assist us in determining fair value, as appropriate. Although the Company believes that the recorded fair value of our financial instruments
is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values.

 The
Company's financial instruments, including cash, accounts receivable, note receivable, accounts payable and accrued expenses, and
accounts payable and accrued expenses – related party, are carried at historical cost. At December 31, 2023 and 2022, respectively,
the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

 ASC
825-10 "Financial Instruments" allows entities to voluntarily choose to measure certain financial assets and liabilities
at fair value ("fair value option"). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable
unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument
should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding
financial instruments.

 Cash
and Cash Equivalents and Concentration of Credit Risk

 For
purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months
or less at the purchase date and money market accounts to be cash equivalents.

 At
December 31, 2023 and 2022, respectively, the Company did not have any cash equivalents.

 The
Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent
account balances exceed the amount insured by the FDIC, which is $ 250,000.

 At
December 31, 2023 and 2022, respectively, the Company did not experience any losses on cash balances in excess of FDIC insured limits.

 Accounts
Receivable

 Accounts
receivable are stated at the amount management expects to collect from outstanding customer balances. Credit is extended to customers
based on an evaluation of their financial condition and other factors. Interest is not accrued on overdue accounts receivable. The Company
does not require collateral.

periodically assesses the Company's accounts receivable and, if necessary, establishes an allowance for estimated uncollectible
amounts. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical
collection information and existing economic conditions. Accounts determined to be uncollectible are charged to operations when that
determination is made.

 Allowance
for doubtful accounts was $ 17,525 at December 31, 2023 and 2022, respectively.

 There
was bad debt expense of $ 90,009 and $ 0
for the years ended December 31, 2023 and 2022, respectively.

 Bad
debt expense (recoveries) is recorded as a component of general and administrative expenses in the accompanying consolidated statements
of operations.

primarily consists of tablets, cell phones and sim cards. Inventories are stated at the lower of cost or net realizable value using the
average cost valuation method.

 There
was a provision for inventory obsolescence of $ 0 and $ 51,718 for the years ended December 31, 2023 and 2022, respectively.

 During 2023, management determined that $ 2,411,445
of tablets purchased and made available for distribution were not claimed. These tablets were recorded as a component of cost of goods
sold in the accompanying consolidated statements of operations.

 At
December 31, 2023 and 2022, the Company had inventory of $ 9,046,594 and $ 11,186,242, respectively.

 F- 12

 NOTES

 Impairment
of Long-lived Assets including Internal Use Capitalized Software Costs

evaluates the recoverability of the Company's identifiable intangible assets and other long-lived assets when events or circumstances
indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 "Impairment or Disposal of Long-Lived
Assets." Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible
assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative
to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes
in the Company's business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be
generated from the use and ultimate disposition of these assets.

 If
impairment is indicated based on a comparison of the assets' carrying values and the undiscounted cash flows, the impairment to
be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

 There
were no impairment losses for the years ended December 31, 2023 and 2022, respectively.

 Property
and Equipment

 Property
and equipment is stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over the estimated
useful lives of the assets.

 Expenditures
for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When
property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective
accounts with the resulting gain or loss reflected in operations.

reviews the carrying value of its property and equipment whenever events or changes in circumstances indicate that the carrying amount
of the asset may not be recoverable.

 There
were no impairment losses for the years ended December 31, 2023 and 2022, respectively.

 Internal
Use Software Development Costs

 We
capitalize certain internal use software development costs associated with creating and enhancing internally developed software related
to our technology infrastructure. These costs include personnel and related employee benefits expenses for employees who are directly
associated with and who devote time to software projects, and external direct costs of materials and services consumed in developing
or obtaining the software. Software development costs that do not meet the qualification for capitalization, as further discussed below,
are expensed as incurred and recorded in general and administrative expenses in the consolidated results of operations.

 Software
development activities generally consist of three stages:

 (i)
 planning
 stage,

 (ii)
 application
 and infrastructure development stage, and

 (iii)
 post
 implementation stage.

 Costs
incurred in the planning and post implementation stages of software development, including costs associated with the post-configuration
training and repairs and maintenance of the developed technologies, are expensed as incurred.

 We
capitalize costs associated with software developed for internal use when the planning stage is completed, management has authorized
further funding for the completion of the project, and it is probable that the project will be completed and perform as intended. Costs
incurred in the application and infrastructure development stages, including significant enhancements and upgrades, are capitalized.
Capitalization ends once a project is substantially complete, and the software and technologies are ready for their intended purpose.
There is judgment involved in estimating the stage of development as well as estimating time allocated to a particular project. A significant
change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent
periods.

 We
amortize internal use software development costs using a straight-line method over a three-year estimated useful life, commencing when
the software is ready for its intended use. The straight-line recognition method approximates the manner in which the expected benefit
will be derived. We determined the life of internal use software based on historical software upgrades and replacement.

 On
an ongoing basis, we assess if the estimated remaining useful lives of capitalized projects continue to be reasonable based on the remaining
expected benefit and usage. If the remaining useful life of a capitalized project is revised, it is accounted for as a change in estimate
and the remaining unamortized cost of the underlying asset is amortized prospectively over the updated remaining useful life.

 We
also evaluate internal use software for abandonment and use that as a significant indicator for impairment on a quarterly basis.

 F- 13

 NOTES

 Right
of Use Assets and Lease Obligations

 The
Right of Use Asset and Lease Liability reflect the present value of the Company's estimated future minimum lease payments over
the lease term, which may include options that are reasonably assured of being exercised, discounted using a collateralized incremental
borrowing rate.

 Typically,
renewal options are considered reasonably assured of being exercised if the associated asset lives of the building or leasehold improvements
exceed that of the initial lease term, and the performance of the business remains strong. Therefore, the Right of Use Asset and Lease
Liability may include an assumption on renewal options that have not yet been exercised by the Company. The Company's operating
leases contained renewal options that expire at various dates with no residual value guarantees. Future obligations relating to the exercise
of renewal options is included in the measurement if, based on the judgment of management, the renewal option is reasonably certain to
be exercised. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of
leasehold improvements, the value of the renewal rate compared to market rates, and the presence of factors that would cause a significant
economic penalty to the Company if the option is not exercised. Management reasonably plans to exercise all options, and as such, all
renewal options are included in the measurement of the right-of-use assets and operating lease liabilities.

 As
the rate implicit in leases are not readily determinable, the Company uses an incremental borrowing rate to calculate the lease liability
that represents an estimate of the interest rate the Company would incur to borrow on a collateralized basis over the term of a lease
within a particular currency environment.

 See
Note 8 regarding operating leases.

Recognition

 The
Company recognizes revenue in accordance with ASC 606 to align revenue recognition more closely with the delivery of the Company's
services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when
a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects
to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps:

 Identify
the contract with a customer

 A
contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party's
rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial
substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable
based on the customer's intent and ability to pay the promised consideration. The Company applies judgment in determining the customer's
ability and intention to pay, which is based on a variety of factors including the customer's historical payment experience or,
in the case of a new customer, published credit and financial information pertaining to the customer.

 Identify
the performance obligations in the contract

 Performance
obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable
of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily
available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services
is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company
must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract.
If these criteria are not met the promised services are accounted for as a combined performance obligation.

 F- 14

 NOTES

 Determine
the transaction price

 The
transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services
to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration
that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending
on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company's judgment,
it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company's
contracts contain a significant financing component and there are no contracts with variable consideration.

 Allocate
the transaction price to performance obligations in the contract

 If
the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.
However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract
with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a
specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised
in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations
require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless
the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service
that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance
obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the
standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines
related to the performance obligations.

 Recognize
revenue when or as the Company satisfies a performance obligation

 The
Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance
obligation is satisfied by transferring a promised service to a customer.

 The
following reflects additional discussion regarding our revenue recognition policies for each of our material revenue streams. For each
revenue stream we do not offer any returns, refunds or warranties, and no arrangements are cancellable. Additionally, all contract consideration
is fixed and determinable at the initiation of the contract. Performance obligations for Torch and LogicsIQ are satisfied when services
are performed. Performance obligations for ECS and SB are satisfied at point of sale. For each of our revenue streams we only have a
single performance obligation.

 Mobile Virtual Network Operators

 SurgePhone
Wireless ("SPW") and Torch Wireless are licensed to provide subsidized mobile broadband services through the ACP to
qualifying low-income customers to all fifty (50) states. Revenues are recognized when an ACP application is completed and accepted.
Each month we reconcile subscriber usage to ensure the service was utilized. A monthly file is submitted to the Universal Service
Administrative Company for review and approval, at which time we have completed our performance obligation and recognize accounts
receivable and revenue. Revenues are recorded in the month when services were rendered, with payment typically received on the 28th
of the following month.

 Lead
Generation Services

 LogicsIQ,
Inc. is a lead generation and case management solutions company primarily serving law firms in the mass tort industry. Revenues are earned
from our lead generation retained services offerings and call center activities through CenterCom.

 F- 15

 NOTES

 Lead
generation consist of sourcing leads, which requires us to drive traffic to our landing pages for a specific marketing campaign. We also
achieve this in certain marketing campaigns by using third-party preferred vendors to meet the needs of our clients. Revenues are recognized
at the time the lead is delivered to the client. If payment is received in advance of the delivery of services, it is included in deferred
revenue, and subsequently recognized once the performance obligation has been completed.

 Retained
service offerings consist of turning leads into a retained legal case. To provide this service to our customers, we qualify leads through
verification of information collected during the lead generation process. Additionally, we further qualify these leads using a client
questionnaire which assists in determining the services to be provided. The qualification process is completed using our call center
operations.

February 1, 2023, LogicsIQ started offering call center services to existing clients. These services are similar in nature to the services
CenterCom offers LogicsIQ. The total revenue from these services for the years ended December 31, 2023 and 2022, was $ 1,545,397 and $ 0,
respectively.

 If
payment is received in advance of the delivery of services, it is included in deferred revenue, and subsequently recognized once the
performance obligation has been completed. At the time of delivery of leads and the creation of retained cases (customers are qualified
at this point), our performance obligation has been completed and revenues are recognized. Arrangements with customers do not provide
the customer with the right to take possession of our software or platform at any time. Once the advertising is delivered, it is non-refundable.

are generated through the sale of telecommunication products such as mobile phones, wireless top-up refills, and other mobile related
products. At the time in which our products are sold through our online web portal (point of sale), our performance obligation is considered
complete. At point of sale (completion of performance obligation), our web portal platform initiates an automated clearing house transaction
(ACH) resulting in the recording revenue.

 Contract
Liabilities (Deferred Revenue)

 Contract
liabilities represent deposits made by customers before the satisfaction of performance obligation and recognition of revenue. Upon completion
of the performance obligation(s) that the Company has with the customer based on the terms of the contract, the liability for the customer
deposit is relieved and revenue is recognized.

 At
December 31, 2023 and 2022, the Company had deferred revenue of $ 20,000 and $ 243,110, respectively.

 The
following represents the Company's disaggregation of revenues for the years ended December 31, 2023 and 2022:

of Disaggregation of Revenue from Contracts With Customers

 2023

 2022

 % of Revenues

 % of Revenues

 Mobile Virtual Network Operators

 $
 118,577,920

 86.46
 %

 $
 88,351,547

 72.69
 %

 11,341,183

 8.27
 %

 16,319,076

 13.43
 %

 7,184,283

 5.24
 %

 16,760,656

 13.79
 %

 Other

 38,446

 0.03
 %

 112,911

 0.09
 %

 Total Revenues

 $

 %

 $

 %

 The
above disaggregation of revenues includes the following entities:

 Mobile Virtual Network Operators (SPW and TW),

Comprehensive Platform Services (Surge Fintech and ECS),

 Lead
Generation (LogicsIQ); and

 Other
(Surge Blockchain)

 F- 16

 NOTES

 Cost
of Revenues

 Cost
of revenues consists of purchased telecom services including data usage and access to wireless networks. Additionally, cost of revenues
consists of prepaid phone cards, commissions, and advertising costs.

 Income
Taxes

 The
Company accounts for income tax using the asset and liability method prescribed by ASC 740, "Income Taxes". Under
this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases
of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse.
The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not
that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is
recognized as income or loss in the period that includes the enactment date.

 The
Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 "Income Taxes". Using
that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position
will be sustained upon examination by the tax authorities. As of December 31, 2023 and 2022, respectively, the Company had no uncertain
tax positions that qualify for either recognition or disclosure in the financial statements.

 The
Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related
to uncertain income tax positions were recorded for the years ended December 31, 2023 and 2022, respectively.

 For
the year ended December 31, 2023, the Company generated net income. The Company currently has an unapplied net operating loss carryforward
(deferred tax asset), which was evaluated for applicability in offsetting the current taxable net income. The Company has determined
that the net operating loss carryforward is limited to 80% of the current year's net taxable income.

 The
Company has accrued an income tax liability of $ 570,000,
which is a component of the accompanying consolidated balance sheet. See Note 12.

 Investment
– Former Related Party

 On
January 17, 2019, we announced the completion of an agreement to acquire a 40 % equity ownership of CenterCom Global, S.A. de C.V. ("CenterCom").
CenterCom is a dynamic operations center currently providing sales support, customer service, IT infrastructure design, graphic media,
database programming, software development, revenue assurance, lead generation, and other various operational support services. Our CenterCom
team is based in El Salvador. CenterCom also provides call center support for various third-party clients.

 Anthony
N. Nuzzo, a former director and officer and the holder of approximately 10% of our voting equity, had a controlling interest in CenterCom
Global. During 2022, Mr. Nuzzo passed away. See Form 8-K filed on March 24, 2022.

 The
strategic partnership with CenterCom as a bilingual operations hub has powered our growth and revenue. CenterCom has been built to support
the infrastructure required to rapidly scale in synergy and efficiency to support our sales growth, customer service and development.

 We
account for this investment under the equity method. Investments accounted for under the equity method are recorded based upon the amount
of our investment and adjusted each period for our share of the investee's income or loss. All investments are reviewed for changes
in circumstance or the occurrence of events that suggest an other than temporary event where our investment may not be recoverable. The
financial information used to account for the investment is unaudited.

 At
December 31, 2023 and December 31, 2022, our investment in CenterCom was $ 464,409 and $ 354,206, respectively.

the years ended December 31, 2023 and 2022, we recognized a gain of $ 110,203 and a loss of $ 89,082, respectively.

 Advertising
Costs

 Advertising
costs are expensed as incurred. Advertising costs are included as a component of general and administrative expense in the consolidated
statements of operations.

 The
Company recognized $ 152,851 and $ 259,393 in marketing and advertising costs during the years ended December 31, 2023 and 2022, respectively.

 F- 17

 NOTES

 Stock-Based
Compensation

 The
Company accounts for our stock-based compensation under ASC 718 "Compensation – Stock Compensation" using the
fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized
over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions
in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities
in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by
the issuance of those equity instruments.

 The
Company uses the fair value method for equity instruments granted to non-employees and uses the Black-Scholes model for measuring the
fair value of options.

 The
fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services
is completed (measurement date) and is recognized over the vesting periods.

 When
determining fair value of stock-based compensation, the Company considers the following assumptions in the Black-Scholes model:

 Exercise price,

 Expected dividends,

 Expected volatility,

 Risk-free interest rate; and

 Expected life of option

 Stock

 In
connection with certain financing (debt or equity), consulting and collaboration arrangements, the Company may issue warrants to purchase
shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the
holder and are classified as equity awards. The Company measures the fair value of warrants issued for compensation using the Black-Scholes
option pricing model as of the measurement date. However, for warrants issued that meet the definition of a derivative liability, fair
value is determined based upon the use of a binomial pricing model.

issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital
of the common stock issued. All other warrants (for services) are recorded at fair value and expensed over the requisite service period
or at the date of issuance if there is not a service period.

 Basic
and Diluted Earnings (Loss) per Shar e

to ASC 260-10-45, basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of
shares of common stock outstanding for the periods presented.

 Diluted
earnings per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents
and potentially dilutive securities outstanding during the period.

 Potentially
dilutive common shares may consist of contingently issuable shares, common stock issuable upon the conversion of stock options and warrants
(using the treasury stock method), and convertible debt. These common stock equivalents may be dilutive in the future.

 In
the event of a net loss, diluted loss per share is the same as basic loss per share since the effect of the potential common stock equivalents
upon conversion would be anti-dilutive.

 The
following potentially dilutive equity securities outstanding as of December 31, 2023 and 2022 were as follows:

of Diluted Net Income (Loss) Per Share

 5,574,253

 5,681,392

 Stock options

 116,174

 6,801

 Total common stock equivalents

 5,690,427

 5,688,193

and stock options included as commons stock equivalents represent those that are fully vested and exercisable. See Note 9.

 Based
on the potential common stock equivalents noted above at December 31, 2023, the Company has sufficient authorized shares of common stock
( 500,000,000) to settle any potential exercises of common stock equivalents.

 F- 18

 NOTES

 The
following table shows the computation of basic and diluted earnings per share for the years ended December 31, 2023 and 2022. The Company
had a net loss in 2022, as a result, basic and diluted earnings per share for the year ended December 31, 2022 are the same.

of Earnings per Share Basic and Diluted

 Year Ended

 Year Ended

 Numerator

 Net income

 $
 20,617,903

 $
)

 Denominator

 Weighted average shares outstanding - basic

 14,258,172

 12,395,364

 Effect of dilutive securities

 664,709

 -

 Weighted average shares outstanding - diluted

 14,922,881

 12,395,364

 Earnings (loss) per share - basic

 $
 1.45

 $
 ( 0.05
)

 Earnings (loss) per share - diluted

 $
 1.38

 $
 ( 0.05
)

 Related
Parties

 Parties
are considered to be related to the Company if the parties, directly or indirectly, control, are
controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management,
members of the immediate families of principal owners of the Company and its management and other parties with which the Company may
deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one
of the transacting parties might be prevented from fully pursuing its own separate interests.

the years ended December 31, 2023 and 2022, the Company incurred expenses with related parties in the normal course of business totaling
$ 166,356 and $ 20,125,153, respectively, as follows:

of Related Party Expenses

 Related Parties

 321 Communications, Inc.

 $
 -

 $
 16,035,093

 Carddawg Investments, Inc.

 166,356

 166,356

 CenterCom USA, Inc.

 -

 2,759,763

 National Relief Telecom

 -

 1,163,941

 Total

 $
 166,356

 $
 20,125,153

 - represents an
affiliate of our Chief Executive Officer (Kevin Brian Cox)

 - represents an
entity controlled by a former officer and director (Anthony N. Nuzzo), who passed away in 2022.

 - represents an
entity controlled by a former director (Jay Jones), who resigned in 2022.

 From
time to time, the Company may use credit cards to pay corporate expenses, these credit cards are in the names of certain of the Company's
officers and directors. These amounts are insignificant.

 See Note 6 for debt transactions with our Chief Executive
Officer.

 Recent
Accounting Standards

 Changes
to accounting principles are established by the FASB in the form of Accounting Standards Updates ("ASU's") to the FASB's
Codification. We consider the applicability and impact of all ASU's on our consolidated financial position, results of operations,
stockholders' equity, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements issued
through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not
yet effective accounting pronouncements, when adopted, will have a material impact on the consolidated financial statements of the Company.

 In
March 2022, the Financial Accounting Standards Board (the "FASB") issued ASU 2022-02, Financial Instruments – Credit
Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"), which eliminates the accounting
guidance on troubled debt restructurings ("TDRs") for creditors in ASC 310, Receivables (Topic 310), and requires entities
to provide disclosures about current period gross write-offs by year of origination. Also, ASU 2022-02 updates the requirements related
to accounting for credit losses under ASC 326, Financial Instruments – Credit Losses (Topic 326), and adds enhanced disclosures
for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. ASU 2022-02 was effective
for the Company January 1, 2023. The adoption of ASU 2022-02 did not have a material impact on the Company's consolidated financial
statements.

 F- 19

 NOTES

 This
guidance was adopted on January 1, 2023. The adoption of ASU 2022-02 did not have a material impact on the Company's consolidated
financial statements.

 There
are various other updates recently issued, most of which represented technical corrections to the accounting literature or application
to specific industries and are not expected to a have a material impact on our consolidated financial position, results of operations
or cash flows.

 Reclassifications

 Certain
prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no material
effect on the consolidated results of operations, stockholders' equity, or cash flows.

 Note
3 – Property and Equipment

 Property
and equipment consisted of the following:

 Schedule of Property and Equipment

 Estimated Useful

 Type

 Lives (Years)

 Computer equipment and software

 $
 1,006,286

 $
 1,006,286

 3 - 5

 Furniture and fixtures

 82,752

 82,752

 5 - 7

 1,089,038

 1,089,038

 Less: accumulated depreciation/amortization

 727,197

 445,665

 Property and equipment - net

 $
 361,841

 $
 643,373

 In
June 2022, the Company acquired software having a fair value of $ 711,400. Payment for the software consisted of $ 300,000 as well as the
issuance of 85,000 shares of common stock having a fair value of $ 411,400 ($ 4.84 /share), based upon the quoted closing trading price.

 Depreciation
and amortization expense for the years ended December 31, 2023 and 2022 was $ 281,532 and $ 279,877, respectively.

 These
amounts are included as a component of general and administrative expenses in the accompanying consolidated statements of operations.

 Note
4 – Intangibles

 Intangibles
consisted of the following:

of Intangible Assets

 Estimated Useful

 Type

 Lives (Years)

 Proprietary Software

 $
 4,286,402

 $
 4,286,402

 Tradenames/trademarks

 617,474

 617,474

 ECS membership agreement

 465,000

 465,000

 Noncompetition agreement

 201,389

 201,389

 Customer Relationships

 183,255

 183,255

 Intangible assets gross

 5,753,520

 5,753,520

 Less: accumulated amortization

 ( 3,627,050
)

 ( 2,973,543
)

 Intangibles - net

 $
 2,126,470

 $
 2,779,977

 Amortization
expense for the years ended December 31, 2023 and 2022 was $ 653,507, respectively.

 Estimated
amortization expense for each of the five (5) succeeding years is as follows:

of Estimated Amortization Expenses

 For the Years Ended December 31:

 2024

 653,507

 2025

 653,507

 2026

 653,507

 2027

 165,949

 Total

 $
 2,126,470

 F- 20

 NOTES

 Note
5 – Internal Use Software Development Costs

 Internal
Use Software Development Costs consisted of the following:

of Intangible Assets

 Estimated Useful

 Type

 Life (Years)

 Internal Use Software Development Costs

 $
 668,484

 $
 387,180

 Less: accumulated amortization

 129,060

 -

 Internal Use Software Development Costs - net

 $
 539,424

 $
 387,180

 Costs
incurred for Internal Use Software Development Costs

has determined that all costs incurred in 2023 ($ 281,304) related to internal use software development costs related to the application
and infrastructure development stage were completed as of December 31, 2023. Amortization of these costs will begin in 2024.

determined that all costs incurred in 2022 ($ 387,180) related to internal use software development costs related to the application and
infrastructure development stage which were completed as of December 31, 2022. Amortization of these costs began in 2023.

 For
the years ended December 31, 2023 and 2022, amortization of internal use software development costs was $ 129,060 and $ 0, respectively.

 Estimated
amortization expense is as follows for the years ended December 31:

of Estimated Amortization Expenses

 2024

 222,828

 2025

 222,828

 2026

 93,768

 Total

 $
 539,424

 Note
6 – Debt

 The
following represents a summary of the Company's notes payable – SBA government, notes payable – related parties, and
notes payable, key terms, and outstanding balances at December 31, 2023 and December 31, 2022, respectively:

 Notes
Payable – SBA government

 (1)
 Paycheck
 Protection Program - PPP Loan

 Pertaining
to the Company's eighteen (18) month loan and in accordance with the Paycheck Protection Program ("PPP") and Conditional
Loan Forgiveness, the promissory note evidencing the loan contains customary events of default relating to, among other things, payment
defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result
in the repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining judgment
against the Company.

 Under
the terms of the PPP loan program, all or a portion of this Loan may be forgiven upon request from Borrower to Lender, provided the Loan
proceeds are used in accordance with the terms of the Coronavirus Aid, Relief and Economic Security Act (the "Act" or "CARES"),
Borrower is not in default under the Loan or any of the Loan Documents, and Borrower has provided documentation to Lender supporting
such request for forgiveness that includes verifiable information on Borrower's use of the Loan proceeds, to Lender's satisfaction,
in its sole and absolute discretion.

 (2)
 Economic
 Injury Disaster Loan ("EIDL")

 This
program was made available to eligible borrowers in light of the impact of the COVID-19 pandemic and the negative economic impact on
the Company's business. Proceeds from the EIDL are to be used for working capital purposes.

 F- 21

 NOTES

 Installment
payments, including principal and interest, are due monthly (beginning twelve (12) months from the date of the promissory note) in amounts
ranging from $ 109 - $ 751 /month. The balance of principal and interest is payable over the next thirty (30) years from the date of the
promissory note. There are no penalties for prepayment. The EIDL Loan was not required to be refinanced by the PPP loan.

of Notes Payable

 PPP

 EIDL

 EIDL

 PPP

 Terms

 SBA

 SBA

 SBA

 SBA

 Total

 Issuance dates of SBA loans

 April 2020

 May 2020

 July 2020

 March 2021

 Term

 18 months

 30 Years

 30 Years

 5 Years

 Maturity date

 October 2021

 May 2050

 July 2050

 March 2026

 Default interest rate

 Interest rate

 1 %

 3.75 %

 3.75 %

 1 %

 Collateral

 Warrants issued as debt discount/issue costs

 Conversion price

 N/A

 N/A

 N/A

 N/A

 Balance - December 31, 2021

 $
 126,418

 $
 150,000

 $
 336,600

 $
 518,167

 $
 1,131,185

 Forgiveness of loan

 -

 -

 -

 ( 518,167
)

 ( 518,167
)

 Conversion of debt into common stock

 Reclass of accrued interest to note payable

 Gross proceeds

 Reclassification from SBA - PPP note payable

 Debt issue costs

 Amortization of debt issue costs

 -

 ( 4,078
)

 ( 7,676
)

 -

 ( 11,754
)

 Reclassification to note payable

 ( 126,418
)

 -

 -

 -

 ( 126,418
)

 -

 145,922

 328,924

 -

 474,846

 -

 ( 3,928
)

 ( 10,395
)

 -

 ( 14,323
)

 Balance - December 31, 2023

 $
 -

 $
 141,994

 $
 318,529

 $
 -

 $

 During 2022, the
Company received forgiveness on a PPP loan totaling $ 524,143, of which $ 518,167 was for principal and $ 5,976 for accrued interest. The
Company recorded this forgiveness as other income in the accompanying consolidated statements of operations.

 During 2021, the
Company received a partial forgiveness on a PPP loan totaling $ 377,743, of which $ 371,664 was for principal and $ 6,079 for accrued interest.
The Company recorded this forgiveness as other income in the accompanying consolidated statements of operations. In March 2022, the Company
refinanced the balance with a third-party bank and the maturity date was extended to March 2025. Monthly payments are $3,566/month. See
additional disclosure as part of notes payable summary Note 6 and related note repayment.

 F- 22

 NOTES

 Notes
Payable – Related Parties

of Notes Payable

 Note Payable

 Note Payable

 Terms

 Related Party

 Related Party

 Total

 Issuance dates of notes

 Various

 August 2021

 Maturity dates

 December 31, 2023 December 31, 2024

 August 2031

 Interest rate

 10 %

 10 %

 Collateral

 Conversion price

 N/A

 N/A

 Balance - December 31, 2021

 $
 5,593,431

 $
 467,385

 6,060,816

 Conversion of debt into common stock

 ( 1,086,413
)

 -

 ( 1,086,413
)

 Reclass of accrued interest to note payable

 627,545

 -

 627,545

 5,134,563

 467,385

 5,601,948

 Less: short term

 1,108,150

 -

 1,108,150

 Long term

 $
 4,026,413

 $
 467,385

 $
 4,493,798

 $
 5,134,563

 $
 467,385

 $
 5,601,948

 ( 550,000
)

 ( 467,385
)

 ( 1,017,385
)

 Balance - December 31, 2023

 -

 Less: short term

 -

 Long term

 $
 -

 $
 -

 $
 -

 1-
 Activity is with
the Company's Chief Executive Officer and Board Member (Kevin Brian Cox).

 In
2022, the Company included $ 627,545 of accrued interest payable into the note balance. In 2022, the Company issued 270,745 shares of
common stock at $ 4.01 /share to settle $ 1,086,413 of debt principal. As a result of the debt conversion with a related party, since gains
are not recognized, the Company increased additional paid in capital for $ 1,086,413.

 At
December 31, 2023, of the total $ 4,584,563 due, the Company owed $ 558,150 that had not been repaid (due December 31, 2023), the balance
of $ 4,026,413 is due December 31, 2024. The Chief Executive Officer has waived any events of default as of December 31, 2023.

 F- 23

 NOTES

 In
March 2024, as approved by the Audit Committee, the Company consolidated all remaining outstanding principal ($ 4,584,563)
and accrued interest payable ($ 498,991)
into one note totaling $ 5,083,554.
This note bears interest at 10% and will be repaid ratably over a period of 36
months aggregating $ 5,905,427
in total payments to be made (inclusive of interest). Each monthly payment will be $ 164,039.
The note is unsecured. The note is expected to be paid in full by December 2026.

 Subsequent
to year end the Company is current in all payments due.

 2-
 Activity is with
David May, who is a Board Member. The note of $ 467,385 and related accrued interest of $ 63,641 (aggregate $ 531,026) was repaid in 2023.

 Notes

of Notes Payable

 Terms

 Notes

 Notes

 Notes

 Note

 Total

 Issuance dates of notes

 April/May 2022

 April/June 2022

 March 2022

 2022

 Maturity date

 October/November 2022

 January/February 2023

 March 2023

 2025

 Interest rate

 19 %

 24 %

 19 %

 1 %

 Default interest rate

 26 %

 N/A

 26 %

 0 %

 Collateral

 All assets

 Warrants issued as debt discount/issue costs

 36,000

 N/A

 15,000

 N/A

 Balance - December 31, 2021

 $
 -

 $
 -

 $
 -

 $
 -

 $
 -

 Gross proceeds

 1,200,000

 5,000,000

 500,000

 -

 6,700,000

 Reclassification from SBA - PPP note payable

 -

 -

 -

 126,418

 126,418

 ( 100,000
)

 ( 5,000,000
)

 ( 100,000
)

 ( 31,251
)

 ( 5,231,251
)

 Debt issue costs

 ( 76,451
)

 -

 ( 38,953
)

 -

 ( 115,404
)

 Amortization of debt issue costs

 76,451

 -

 38,953

 -

 1,100,000

 -

 400,000

 95,167

 1,595,167

 ( 1,100,000
)

 -

 ( 400,000
)

 ( 95,167
)

 ( 1,595,167
)

 Balance - December 31, 2023

 $
 -

 $
 -

 $
 -

 $
 -

 $
 -

 1-
 These notes were
issued with 36,000, three ( 3) year warrants, which have been reflected as debt issue costs and are amortized over the life of the debt.

 F- 24

 SURGEPAYS, INC. AND SUBSIDIARIES

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 DECEMBER 31, 2023 AND 2022

 2-
 The Company executed
a $ 5,000,000, secured, revolving promissory note with a third party. The Company may draw down on the note at 80 % of eligible accounts
receivable. The note was repaid in full in November 2022. See below secured revolving date.

 3-
 These notes were
issued with 15,000, three ( 3) year warrants, which have been reflected as debt issue costs and were amortized over the life of the debt.
Additionally, in September 2022, the Company issued 12,000, three ( 3) year warrants, which have been treated as interest expense in connection
with extending the maturity date for notes totaling $ 400,000 to March 2023. In October 2022, the Company repaid $ 100,000.

 4-
 This loan, originally a PPP loan, was refinanced in 2022 and was extended from October 2021 to March 2025. Monthly
payments were $ 3,566 per month. In 2023, the remaining balance of the note was repaid in full. See Notes Payable – SBA Government
Note Summary table above.

 Secured
Revolving Debt

 In
April 2022, a maximum of $ 3,000,000 was made available to the Company, issued pursuant to a series of 270-day (9 months) revolving notes
for purposes of purchasing inventory. In June 2022, this amount was increased to $ 5,000,000.

 The
notes accrued interest at a monthly rate of 2 % ( 24 % annualized). The Company took drawdowns based upon eligible accounts receivable.
In the event that eligible accounts receivable were less than 80% of the loan amount, within four (4) business days, the Company would
have been required to make a payment to the lender so that the loan amount was no greater than 80 % of the then current eligible accounts
receivable.

 The
maximum amount outstanding under the loan was the lesser of $ 5,000,000 or 80 % of eligible accounts receivable. Additionally, any related
accrued interest associated with this mandatory payment was also due. These advances were secured by all assets of the Company.

 In
2022, the Company repaid the $ 5,000,000 plus accrued interest of $ 46,027 and the line was terminated.

 Debt
Maturities

 The
following represents the maturities of the Company's various debt arrangements for each of the five (5) succeeding years and thereafter
as follows:

of Debt Maturities

 Notes Payable - Related Parties

 Notes Payable - SBA Government

 Total

 2024

 $

 $
 -

 $

 Thereafter

 -

 Total

 $

 $

 $
 5,045,086

 Note
7 – Fair Value of Financial Instruments

 The
Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate
level in which to classify them for each reporting period. This determination requires significant judgments to be made.

 The
Company did not have any assets or liabilities measured at fair value on a recurring basis at December 31, 2023 and 2022, respectively.

 Note
8 – Commitments and Contingencies

 Operating
Leases

 We
have entered into various operating lease agreements, including our corporate headquarters. We account for leases in accordance with
ASC Topic 842: Leases, which requires a lessee to utilize the right-of-use model and to record a right-of-use asset and a lease
liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either financing or operating,
with classification affecting the pattern of expense recognition in the statement of operations. In addition, a lessor is required to
classify leases as either sales-type, financing or operating. A lease will be treated as a sale if it transfers all of the risks and
rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control,
the lease is treated as financing. If the lessor does not convey risk and rewards or control, the lease is treated as operating. We determine
if an arrangement is a lease, or contains a lease, at inception and record the lease in our financial statements upon lease commencement,
which is the date when the underlying asset is made available for use by the lessor.

 F- 25

 NOTES

 Right-of-use
assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease
payments over the lease term. Lease right-of-use assets and liabilities at commencement are initially measured at the present value of
lease payments over the lease term. We generally use our incremental borrowing rate based on the information available at commencement
to determine the present value of lease payments except when an implicit interest rate is readily determinable. We determine our incremental
borrowing rate based on market sources including relevant industry data.

 We
have lease agreements with lease and non-lease components and have elected to utilize the practical expedient to account for lease and
non-lease components together as a single combined lease component, from both a lessee and lessor perspective with the exception of direct
sales-type leases and production equipment classes embedded in supply agreements. From a lessor perspective, the timing and pattern of
transfer are the same for the non-lease components and associated lease component and, the lease component, if accounted for separately,
would be classified as an operating lease.

 We
have elected not to present short-term leases on the balance sheet as these leases have a lease term of 12 months or less at lease inception
and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities
are recognized based on the present value of lease payments over the lease term at commencement date. Because most of our leases do not
provide an implicit rate of return, we used our incremental borrowing rate based on the information available at lease commencement date
in determining the present value of lease payments.

 Our
leases, where we are the lessee, do not include an option to extend the lease term. For purposes of calculating lease liabilities, lease
term would include options to extend or terminate the lease when it is reasonably certain that we will exercise such options.

 Lease
expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense, included as a component
of general and administrative expenses, in the accompanying consolidated statements of operations.

 Certain
operating leases provide for annual increases to lease payments based on an index or rate, our lease has no stated increase, payments
were fixed at lease inception. We calculate the present value of future lease payments based on the index or rate at the lease commencement
date. Differences between the calculated lease payment and actual payment are expensed as incurred.

 At
December 31, 2023 and 2022, respectively, the Company had no financing leases as defined in ASC 842, "Leases."

 The
tables below present information regarding the Company's operating lease assets and liabilities at December 31, 2023 and 2022,
respectively:

of Lease Expense

 For the Year Ended

 For the Year Ended

 Operating Leases

 $
 43,483

 $
 34,294

 Interest on lease liabilities

 20,804

 11,598

 Total net lease cost

 $
 64,287

 $
 45,892

 Supplemental
balance sheet information related to leases was as follows:

 Supplemental
cash flow and other information related to leases was as follows:

of Supplemental Cash Flow and Other Information Related to Leases

 For the Year Ended

 For the Year Ended

 Cash paid for amounts included in measurement of lease liabilities

 Operating cash flows from operating leases

 $
 39,490

 $
 30,948

 ROU assets obtained in exchange for lease liabilities

 Operating leases

 $
 -

 $
 -

 Weighted average remaining lease term (in years)

 Operating leases

 6.50

 7.99

 Weighted average discount rate

 Operating leases

 %

 %

 F- 26

 NOTES

 Future
minimum lease payments for the years ended December 31:

of Future Minimum Payments

 2024

 $
 61,876

 2025

 73,460

 2026

 65,044

 2027

 66,627

 2028

 100,246

 Thereafter

 107,261

 Total lease payments

 474,514

 Less: amount representing interest

 ( 75,101
)

 Total lease obligations

 399,413

 Less: short term lease liability

 ( 43,137
)

 Long term lease liability

 $
 356,276

 Employment
Agreements (Chief Executive Officer and Chief Financial Officer)

 Chief
Financial Officer

 In
November 2023, the Company finalized the terms of its employment agreement with its Chief Financial Officer as follows:

 1.
 Base
 salary

 a.
 For
 the year ended December 31, 2023 - $ 475,000,

 b.
 For
 the year ended December 31, 2024 - $ 489,250; and

 c.
 For
 the year ended December 31, 2025 - $ 503,928

 2.
 Annual
 cash bonus

 a.
 For
 the year ended December 31, 2023 - $ 510,000; and

 b.
 Future
 years – to be determined by the Board of Directors

 3.
 Restricted
 Stock Awards

 a.
 November 10, 2023, an award of 600,000
 shares of common stock. The fair value of this grant was $ 3,114,000, based upon the quoted closing price
of $ 5.19 /share.

 b.
 The
 shares will vest as follows (see below for table on non-vested shares):

 i.
 400,000
 shares ratably over the period July 2024 – December 2024 ( 66,667 shares per month over
 a six-month period); and

 ii.
 200,000
 on December 31, 2025,

 iii.
 shall immediately vest if any of the following occur and the Chief Financial Officer is employed
 by the Company at the time of:

 1.
 Death,

 2.
 Total
 disability,

 3.
 Termination
 without cause; and

 4.
 Change
 in control

 F- 27

 NOTES

 4.
 Other

 a.
 Vacation,

 b.
 Car
 allowance of $ 500 per month; and

 c.
 Home
 office expense reimbursement of $ 667 per month,

 d.
 401(K)
 plan participation,

 e.
 Life
 insurance; and

 f.
 Liability
 insurance

 See
Note 9 regarding the vesting provisions of these shares.

 Chief
Executive Officer

 In
December 2023, the Company finalized the terms of its employment agreement with its Chief Financial Officer as follows:

 1.
 Term
 – through December 31, 2028

 2.
 Base
 salary

 a.
 For
 the year ended December 31, 2023 - $ 750,000,

 b.
 For
 each year thereafter an increase of 3 %

 3.
 Annual
 cash bonus

 a.
 For
 the year ended December 31, 2023 - $ 870,000; and

 b.
 Future
 years – to be determined by the Board of Directors

 4.
 Restricted
 Stock Awards

 a.
 March 1, 2024, future stock awards totaling 2,500,000
 shares of common stock.

 b.
 The
 shares will be issued and vest as follows:

 i.
 500,000
 shares ratably over the period July 2024 – December 2024 ( 83,333 shares per month over a six-month period).
The fair value of this grant was $ 3,800,000, based upon the quoted closing price of $ 7.60 /share.

 ii.
 500,000 on June 1, of each subsequent year (2025, 2026, 2027 and 2028), at which time these shares will have their
fair value determined. These shares have no stated performance or service requirements, other than to be remain as the Chief Executive
Officer, and the expense will be recorded on the grant date; and

 iii.
 shall immediately vest if any of the following occur and the Chief Executive Officer is employed
 by the Company at the time of:

 1.
 Death,

 2.
 Total
 disability,

 3.
 Termination
 without cause; and

 4.
 Change
 in control

 5.
 Annual
 Revenue Goals (only one (1) award per goal may be earned until next threshold is achieved

 a.
 $250,000,000
 – value of restricted stock award will be $6,250,000,

 b.
 $500,000,000
 – value of restricted stock award will be $25,000,000,

 c.
 $1,000,000,000
 – value of restricted stock award will be $50,000,000,

 d.
 $2,000,000,000
 – value of restricted tock award will be $100,000,000; and

 e.
 Each
 additional $1,000,000,000 – value of restricted tock award will be $50,000,000,

 F- 28

 NOTES

 6.
 Annual
 EBITDA Goals (only one (1) award per goal may be earned until next threshold is achieved

 a.
 $50,000,000
 - value of restricted stock award will be $2,500,000,

 b.
 $100,000,000
 - value of restricted stock award will be $5,000,000; and

 c.
 Each
 additional $50,000,000 - value of restricted stock award will be $2,500,000

 7.
 Market
 Capitalization Goals (only one (1) award per goal may be earned until next threshold is achieved

 a.
 $250,000,000
 - value of restricted stock award will be $25,000,000,

 b.
 $500,000,000
 - value of restricted stock award will be $50,000,000,

 c.
 $1,000,000,000
 - value of restricted stock award will be $100,000,000,

 d.
 $2,000,000,000
 - value of restricted stock award will be $200,000,000; and

 e.
 Each
 additional $1,000,000,000 - value of restricted stock award will be $100,000,000

 8.
 Other

 a.
 Vacation,

 b.
 Car
 allowance of $ 500 per month; and

 c.
 Home
 office expense reimbursement of $ 667 per month,

 d.
 401(K)
 plan participation,

 e.
 Life
 insurance; and

 f.
 Liability
 insurance

 Contingencies
– Legal Matters

the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates
the merits of the case in accordance with Financial Accounting Standards Board ("FASB") ASC 450-20-50, "Contingencies".
The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome.
If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals.

 As
of December 31, 2023, for all matters listed below, the Company is not aware of any contingent liabilities that should be reflected in
the consolidated financial statements.

 F- 29

 NOTES

 (1)

 Juno Financial v. AATAC
 and Surge Holdings Inc. AND Surge Holdings Inc. v. AATAC; Circuit Court of Hillsborough County, Florida, Case # 20-CA-2712 DIV A:
 Breach of Contract, Account Stated and Open Account claims against Surge by a factoring company. Surge has filed a cross-complaint
 against defendant AATAC for Breach of Contract, Account Stated, Open Account and Common Law Indemnity. The case remains in discovery
 but has been inactive for some time. Following analysis by our litigation counsel stating that there is a good defense, management
 has decided that a reserve is not necessary. The case remains on the docket and has no court dates set at this time.

 (2)

 Blue Skies Connections,
 LLC, and True Wireless, Inc. v. SurgePays, Inc., et. al.: In the District Court of Oklahoma County, OK, CJ-2021-5327, filed on December
 13, 2021. Plaintiffs petition alleges breach of a Stock Purchase Agreement by SurgePays, SurgePhone Wireless, LLC, and Kevin Brian
 Cox, and makes other allegations related to SurgePays' consulting work with Jonathan Coffman, a True Wireless employee. Blue
 Skies believes the Defendants are in violation of their non-competition and non-solicitation agreements related to the sale of True
 Wireless from SurgePays to Blue Skies. Oklahoma state law does not recognize non-compete agreements and non-solicitation agreements
 in the manner alleged by Plaintiffs, as such we believe SurgePays, SurgePhone, and Cox have a strong defense against the claims asserted
 by Blue Skies and True Wireless. The matter continues in the discovery process. Mr. Coffman is no longer working for True Wireless.
 An attempt at mediation in July, 2022 did not achieve a settlement. The petition requests injunctive relief, general damages, punitive
 damages, attorney fees and costs for alleged breach of contract, tortious interference with a business relationship, and fraud. Plaintiffs
 have made a written demand for damages and the parties continue to discuss a potential resolution. This matter is an anti-competitive
 attempt by Blue Skies and True Wireless to damage SurgePays, SurgePhone, and Cox. Written discovery is winding down and depositions
 began in the third quarter of 2023 and are expected to continue in 2024. The case is anticipated set for trial in January 2025.

 In the Circuit Court of
 Tennessee for the 30th Judicial District at Memphis, Docket # CT-3219-23. On August 8, 2023, a complaint was filed by SurgePays for
 breach of a promissory note by Blue Skies Connections, LLC. The note at issue is dated June 14, 2021, and requires Blue Skies Connections
 to repay the principal sum of $ 176,850.56, by monthly payments of $ 7,461.37 commencing on June 1, 2023. Blue Skies Connections has
 failed to make any payments due under the terms of the note, and this breach entitles SurgePays to demand payment of the entire amount
 of the note together with all accrued interest. Blue Skies Connections has responded by preparing a Motion to Dismiss or, in the
 alternative, a Motion to Stay, taking the position that, under the prior suit pending doctrine, the subject promissory note is subject
 to the prior litigation instituted by Blue Skies Connections against SurgePays, styled Skies Connections, LLC and True Wireless,
 Inc. v. SurgePays, Inc., et al., Case No. CJ-2021-5327, District Court of Oklahoma County, Oklahoma. Counsel for Blue Skies Connections
 has requested that Surge Pays either voluntarily dismiss the subject action or agree to stay the subject action until conclusion
 of the Oklahoma litigation.

 (3)

 SurgePays, Inc. et al.
 v. Fina et al., Case No. CJ-2022-2782, District Court of Oklahoma County, Oklahoma. Plaintiffs SurgePays, Inc. and Kevin Brian Cox
 initiated this case against its former officer Mike Fina, his companies Blue Skies Connections, LLC, True Wireless, Inc., Government
 Consulting Solutions, Inc., Mussell Communications LLC, and others. This case also arises from the June 2021 transaction by which
 SurgePays sold True Wireless to Blue Skies. During the litigation of CJ-2021-5327 described above, SurgePays learned information
 that showed Mike Fina breached his duties owed to True Wireless during his employment and consulting work for True Wireless prior
 to SurgePays' sale of True Wireless to Blue Skies. SurgePays alleges that Mike Fina conspired with the other defendants to
 damage True Wireless thereby harming the value of the company and causing its eventual sale at a greatly reduced price. SurgePays
 asserts claims for (i) breach of contract; (ii) breach of fiduciary duty; (iii) fraud; (iv) tortious interference; and (v) unjust
 enrichment. At this stage, no defendant has asserted a counterclaim against SurgePays.

 SurgePays
 filed a Second Amended Petition on January 27, 2023. Defendants Fina, Blue Skies, True Wireless, and Government Consulting Solutions
 filed a Motion to Dismiss on March 10, 2023. On June 29, 2023, the Court granted the Motion to Dismiss, ruling the claims asserted
 are "derivative" and could only be asserted by the True Wireless entity now owed by Blue Skies. The Court rejected SurgePays'
 request to certify this ruling for immediate appeal. Defendant Misty Garrett has filed a Motion for Summary Judgment seeking the
 same relief as the Motion to Dismiss granted by the Court. Defendants Rob Rowlen and Terracom, LLC remain as defendants in the case
 after answering the Second Amended Petition. It is SurgePays' present intent to vigorously appeal the Court's dismissal
 of Fina, Blue Skies, True Wireless, and Government Consulting Solutions, and to continue prosecuting the case against the other Defendants.
 At this stage, no attempts at settlement have been made.

 (4)

 Robert
 Aliotta and Steve Vasquesz, on behalf of themselves and others similarly situated v. SurgePays, Inc. d/b/a Surge Logics, filed January
 4, 2023, in the U.S. District Court for the Northern District of Illinois, Case No. 1:23-cv-00042. Plaintiffs allege violations of
 the Telephone Consumer Protection Act (TCPA) and the Florida Telephone Solicitations Act (FTSA) based on telephone solicitations
 allegedly made by or on behalf of SurgePays, Inc. Plaintiffs seek damages for themselves and seek certification of a class action
 on behalf of others similarly situated. Defendants intend to vigorously defend the action however most similar cases are eventually
 resolved by an out-of-court settlement. At this time, it is difficult to estimate the amount or range of potential loss. SurgePays
 Inc has been removed from the case following a Motion to Dismiss and LogicsIQ, Inc. has been named as the defendant. The case has
 begun written discovery and depositions are expected later this year.

 (5)

 Consumer
 Attorney Marketing Group, LLC v. LogicsIQ, Inc. and SurgePays, Inc. On February 13, 2024, in the Superior Court of California,
 Los Angeles County, Case No. 24 ST CV 03653, Consumer Attorney Marketing Group, LLC ("CAMG") filed a complaint naming
 SurgePays, Inc. (the "Company") a defendant and alleging claims for breach of contract, declaratory judgment and express
 and implied indemnity. The complaint demands that defendants indemnify CAMG for any damages or losses that CAMG may incur in the
 case Robert Aliotta, et al. v. SurgePays, Inc. d/b/a SurgeLogics, Case No. 23 C 00042, pending in the U.S. District Court
 for the Northern District of Illinois. CAMG's claims against the Company are solely based upon theories of participatory and
 vicarious liability. The Company was served on or about February 27, 2024. The Company's answer or other pleading is currently
 due on March 28, 2024. This case is in the initial stages. The Company has not yet filed an appearance in the matter, and the Court
 has not scheduled any dates or deadlines. The Company is reviewing the claims and determining its defenses. At this time, it is not
 possible to estimate the amount or range of potential loss.

 (6)

 On
 December 17, 2021, Ambess Enterprises, Inc. v SurgePays, Inc., Blair County Pa. case number 2021 GN 3222. Plaintiff alleges breach
 of contract and prays for damages of approximately $ 73,000, plus fees, costs and interest. Litigation counsel is managing the motion
 practice and discovery process. The case was settled and dismissed in 2023 for $ 60,000, which has been recorded as a component of
 general and administrative expenses.

 F- 30

 NOTES

 Consumer
Attorney Marketing Group, LLC v. LogicsIQ, Inc. and SurgePays, Inc.

 Consumer
Attorney Marketing Group, LLC v. LogicsIQ, Inc. and SurgePays, Inc. On February 13, 2024, in the Superior Court of California, Los Angeles
County, Case No. 24 ST CV 03653, Consumer Attorney Marketing Group, LLC ("CAMG") filed a complaint naming SurgePays, Inc.
(the "Company") a defendant and alleging claims for breach of contract, declaratory judgment and express and implied indemnity.
The complaint demands that defendants indemnify CAMG for any damages or losses that CAMG may incur in the case Robert Aliotta, et al.
v. SurgePays, Inc. d/b/a SurgeLogics, Case No. 23 C 00042, pending in the U.S. District Court for the Northern District of Illinois.
CAMG's claims against the Company are solely based upon theories of participatory and vicarious liability. The Company was served
on or about February 27, 2024. The Company's answer or other pleading is currently due on March 28, 2024. This case is in the initial
stages. The Company has not yet filed an appearance in the matter, and the Court has not scheduled any dates or deadlines. The Company
is reviewing the claims and determining its defenses. At this time, it is not possible to estimate the amount or range of potential loss.

 Demiray
v. SurgePays, Inc.

 Meral
Demiray v Surge Holdings, Inc. a/k/a SurgePays, Inc.: In the United States District Court for the Northern District of Illinois, Case
# 22-cv-6591, filed November 23, 2022. Plaintiff filed a claim against SurgePays following her dismissal from her position as an employee
of the company. Following negotiations among and between SurgePays, SurgePays' insurance carrier and the Plaintiff, a settlement
has been reached and documentation is currently being drafted for full settlement, release, and dismissal of the claim. The case was
settled and dismissed in 2023 for $ 7,500, which has been recorded as a component of general and administrative expenses.

 SurgePays
– Ambess Litigation

 On
December 17, 2021, Ambess Enterprises, Inc. v SurgePays, Inc., Blair County Pa. case number 2021 GN 3222. Plaintiff alleges breach of
contract and prays for damages of approximately $ 73,000, plus fees, costs and interest. Litigation counsel is managing the motion practice
and discovery process. The case was settled and dismissed in 2023 for $ 60,000, which has been recorded as a component of general and
administrative expenses.

 True
Wireless and Surge Holdings - Terracom Litigation

 Global
Reconnect, LLC and Terracom, Inc. v. Jonathan Coffman, Jerry Carroll, True Wireless, & Surge Holdings: In the Chancery Court of Hamilton
County, TN, Docket # 20-00058, Filed Jan 21, 2020. On January 21, 2020, a complaint was filed related to a noncompetition dispute. Terracom
believes Mr. Coffman and Mr. Carroll are in violation of their non-compete agreements by working for us and True Wireless, Inc. Oklahoma
and Tennessee state law does not recognize non-compete agreements and are not usually enforced in the state courts of these states, as
such we believe True Wireless has a strong case against Terracom. The matter is entering the discovery process. Both Mr. Carroll and
Mr. Coffman are no longer working for True Wireless in sales. Mr. Carroll is off the payroll and Mr. Coffman works for SurgePays, Inc.,
but not in wireless sales. The complaint requests general damages plus fees and costs for tortious interference with a business relationship
in their prayer for relief. They have made no written demand for damages at this point in time. The Company believes this matter is simply
an anti-competitive attempt by Terracom to cause distress to True Wireless. The case was dismissed without prejudice by the Court on
December 15, 2022.

 F- 31

 NOTES

 Note
9 – Stockholders' Equity

 At
December 31, 2023, the Company had three (3) classes of stock:

 Common
Stock

 -
 500,000,000
 shares authorized

 -
 Par
 value - $ 0.001

 -
 Voting
 at 1 vote per share

 Series
A, Convertible Preferred Stock

 -
 13,000,000
 shares authorized

 -
 none
 issued and outstanding

 -
 Par
 value - $ 0.001

 -
 Voting
 at 10 votes per share

 -
 Ranks
 senior to any other class of preferred stock

 -
 Dividends
 - none

 -
 Liquidation
 preference – none

 -
 Rights
 of redemption - none

 -
 Conversion
 into 1/10 of a share of common stock for each share held

 In
2022, all Series A, Preferred stockholders, representing 260,000 shares issued and outstanding, agreed to convert their holdings into
 1,300,000 shares of common stock. The transaction had a net effect of $ 0 on stockholders' equity.

 Series
C, Convertible Preferred Stock

 -
 1,000,000
 shares authorized

 -
 None
 issued and outstanding

 -
 Par
 value - $ 0.001

 -
 Voting
 at 250 votes per share

 -
 Ranks
 junior to any other class of preferred stock

 -
 Dividends
 – equal to the per share amount (as converted basis) as the common stockholders should
 the Board of Directors declare a dividend

 -
 Liquidation
 preference – original issue price plus any declared yet unpaid accrued dividends

 -
 Rights
 of redemption - none

 -
 Conversion
 into 250 shares of common stock for each share held

 F- 32

 NOTES

 Securities
and Incentive Plan

 In
March 2023, the Company's shareholders approved the 2022 Plan (the "Plan") initially approved, authorized and adopted
by the Board of Directors in August 2022.

 The
Plan initially provided for the following:

 1.
 3,500,000
 shares of common stock

 2.
 An
 annual increase on the first day of each calendar year beginning January 1, 2023 and ending
 on January 31, 2031 equal to the lesser of:

 a.
 10 %
 of the common stock outstanding on the final day of the immediately preceding calendar year,
 or

 b.
 Such
 smaller amount of common stock as determined by the Board of Directors.

 3.
 The
 shares may be issued as follows to directors, officers, employees, and consultants:

 a.
 Distribution
 equivalent rights

 b.
 Incentive
 share options

 c.
 Non-qualified
 share options

 d.
 Performance
 unit awards

 e.
 Restricted
 share awards

 f.
 Restricted
 share unit awards

 g.
 Share
 appreciation rights

 h.
 Tandem
 share appreciation rights

 i.
 Unrestricted
 share awards

 See
the proxy statement filed with the SEC on January 19, 2023 for a complete detail of the Plan.

January 1, 2024, in accordance with the Plan, we increased the available amount of shares by 10 % of the common stock outstanding on December
31, 2023, approximating an additional 1,400,000 shares of common stock. After this increase, total shares authorized and available to
be issued under the Plan approximated 4,900,000 shares.

 Of
the total shares authorized and available, the Company has reserved shares for its officers, directors and employees for non-vested shares
that are expected to vest in accordance with the terms of the related employment agreements and stock options that may be converted into
common stock. At December 31, 2023, the Company had sufficient authorized shares to settle any possible awards that vested or stock options
eligible for conversion.

 F- 33

 NOTES

Transactions for the Year Ended December 31, 2023

 Stock
Issued for Services

 The
Company issued 242,615 shares of common stock for services rendered, having a fair value of $ 1,290,024 ($ 4.19 - $ 9.40 /share), based upon
the quoted closing trading price.

 The
Company issued 43,814
shares of common stock upon the exercise of warrants with an exercise price of $ 4.73
for $ 207,240.

 Non-Vested
Shares – Related Parties

 Chief
Financial Officer

 In
2023, the Company granted common stock to its Chief Financial Officer ( 600,000
shares – see Note 8), having a fair value of $ 3,114,000
($ 5.19 /share),
based upon the quoted closing trading price.

 The
shares will vest as noted above (see Note 8). The Company records stock compensation expense over these vesting periods. All shares are
expected to vest in accordance with the terms of the agreement.

 For
the year ended December 31, 2023, the Company recognized stock compensation expense of $ 486,242 related to vesting.

 Board
Directors

 In
2023, the Company granted an aggregate 95,000 shares of common stock to various members of the Board of Directors, having a fair value
of $ 519,500 ($ 5.14 - $ 5.53 /share), based upon the quoted closing trading price.

 The
shares will vest at the earlier to occur:

 -
 Board
 Member no longer serves in that capacity for any reason, except for reasons related to cause,

 -
 Occurrence
 of a change in control; and

 -
 5 th
 anniversary of the effective date (2028)

 The
Company records stock compensation expense over the five ( 5) year vesting period. All shares are expected to vest in accordance with
the terms of the agreement.

 F- 34

 NOTES

 For
the year ended December 31, 2023, the Company recognized stock compensation expense of $ 43,292 related to vesting.

 For
the year ended December 31, 2023, total related stock compensation expense due to vesting was $ 529,534.

 The
following is a summary of the Company's non-vested shares at December 31, 2023.

of Non-vested Shares Related Parties

 Weighted Average

 Non-Vested Shares

 Number of Shares

 Grant Date Fair Value

 -

 $
 -

 695,000

 5.24

 Vested

 -

 -

 -

 -

 Balance - December 31, 2023

 695,000

 $
 5.24

 Unrecognized Compensation

 $
 3,103,967

 Weighted average period (years)

 1.23

 See
Note 8 for discussion of common stock award to the Company's Chief Financial Officer pursuant to an employment agreement.

Transactions for the Year Ended December 31, 2022

 Stock
Issued as Direct Offering Costs

 The
Company issued 200,000 shares of common stock for services rendered in connection with the Company's NASDAQ uplisting in 2021.
As a result, the Company recorded the par value of the common stock issued with a corresponding charge to additional paid-in capital,
resulting in a net effect of $ 0 to stockholders' equity.

 Stock
Issued for Acquisition of Software

 The
Company acquired software having a fair value of $ 711,400. Payment for the software consisted of $ 300,000 in cash and the Company issued
 85,000 shares of common stock having a fair value of $ 411,400 ($ 4.84 /share), based upon the quoted closing trading price.

of Warrants (Cashless)

 The
Company issued 147,153 shares of common stock in connection with a cashless exercise of 498,750 warrants. The transaction had a net effect
of $ 0 on stockholders' equity.

 F- 35

 NOTES

 The
Company issued 100 shares of common stock in connection with the exercise of 473 warrants for $ 473.

 Stock
Options

 Stock
option transactions for the years ended December 31, 2023 and 2022 are summarized as follows:

 Schedule of Stock Option Transactions

 Stock Options

 Number of Options

 Weighted Average Exercise Price

 Weighted Average Remaining Contractual Term (Years)

 Aggregate Intrinsic Value

 Weighted Average Grant Date Fair Value

 Outstanding - December 31, 2021

 17,004

 $
 16.00

 5.16

 $
 -

 Vested and Exercisable - December 31, 2021

 3,401

 $
 16.00

 5.16

 $
 -

 Unvested and non-exercisable - December 31, 2021

 13,603

 $
 16.00

 5.16

 $
 -

 -

 -

 $
 -

 Exercised

 -

 -

 -

 -

 Outstanding - December 31, 2022

 17,004

 $
 16.00

 4.16

 $
 -

 Vested and Exercisable - December 31, 2022

 6,801

 $
 16.00

 4.16

 $
 -

 Unvested and non-exercisable - December 31, 2022

 10,203

 $
 16.00

 4.16

 $
 -

 104,272

 6.45

 $
 5.53

 Exercised

 -

 -

 -

 -

 Outstanding - December 31, 2023

 121,276

 $
 7.79

 6.47

 $
 -

 Vested and Exercisable - December 31, 2023

 116,174

 $
 7.43

 6.61

 $
 -

 Unvested and non-exercisable - December 31, 2023

 5,101

 $
 16.00

 3.16

 $
 -

 F- 36

 NOTES

 Stock
Options - Related Party

2023 and 2022, 5,101 and 3,401 stock options vested each year, respectively, and were held by the Company's Chief Financial Officer.
The remaining 5,101 stock options vest in 2024.

 Stock-based
compensation expense for the years ended December 31, 2023 and 2022 was $ 37,176 and $ 37,176, respectively.

 Stock
Options - Employees

 In
2023, the Company granted 104,272 seven ( 7) year stock options to various employees for services rendered, having a fair value of $ 576,625.
These options have an exercise price of $ 6.45 per share.

 The
fair value of these stock options was determined using a Black-Scholes option pricing model with the following inputs:

of Fair Value of Stock Options

 term

 years

 volatility

 106 %

 dividends

 0 %

 Risk
 free interest rate

 3.88 %

 Total
stock-based compensation expense for the years ended December 31, 2023 and 2022 was $ 613,801 and $ 37,176, respectively.

 Weighted
average period in which unrecognized compensation ($ 6,196) will vest is 0.16 years. The unvested stock option expense is expected to
be recognized through March 2024.

 Warrant
activity for the years ended December 31, 2023 and 2022 are summarized as follows:

 Schedule of Warrants Activity

 Number of Warrants

 Weighted Average Exercise Price

 Weighted Average Remaining Contractual Term (Years)

 Aggregate Intrinsic Value

 Outstanding - December 31, 2021

 6,082,984

 $
 8.68

 2.93

 $
 -

 Vested and Exercisable - December 31, 2021

 5,852,984

 $
 8.70

 2.85

 $
 -

 Unvested - December 31, 2021

 230,000

 $
 8.00

 4.85

 $
 -

 189,000

 $
 4.73

 -

 Exercised

 ( 498,850
)

 $
 6.49

 -

 ( 91,743
)

 $
 40.02

 -

 Outstanding - December 31, 2022

 5,681,392

 $
 5.05

 1.85

 $
 10,026,387

 Vested and Exercisable - December 31, 2022

 5,681,392

 $
 5.05

 1.85

 $
 10,026,387

 Unvested - December 31, 2022

 -

 $
 -

 -

 $
 -

 -

 $
 -

 -

 Exercised

 ( 43,814
)

 $
 4.73

 -

 ( 63,325
)

 $
 26.39

 -

 Outstanding - December 31, 2023

 5,574,253

 $
 4.81

 0.86

 $
 9,348,348

 Vested and Exercisable - December 31, 2023

 5,574,253

 $
 4.81

 0.86

 $
 9,348,348

 Unvested and non-exercisable - December 31, 2023

 -

 $
 -

 -

 $
 -

 Warrant
Transactions for the Year Ended December 31, 2022

Issued as Debt Issue Costs

 In
connection with $ 1,700,000 in notes payable (See Note 6), the Company issued 51,000 warrants, which were accounted for as debt issue
costs, having a fair value of $ 115,404. These debt issue costs were amortized in full as of December 31, 2022.

 F- 37

 NOTES

 The
fair value of these warrants was determined using a Black-Scholes option pricing model with the following inputs:

 Schedule of Fair Value of Warrants

 term (years)

 years

 volatility

 119 %
 - 120 %

 dividends

 0 %

 Risk
 free interest rate

 2.45 %
 - 2.80 %

Issued as Interest Expense

 A
vendor increased the amount of credit the Company had for making purchases. In consideration for the increase, the Company issued 90,000
warrants, which are accounted for as interest expense, having a fair value of $ 212,608.

 The
fair value of these warrants was determined using a Black-Scholes option pricing model with the following inputs:

 Schedule of Fair Value of Warrants

 term (years)

 years

 volatility

 120 %

 dividends

 0 %

 Risk
 free interest rate

 2.71 %

 In
2022, the Company extended the due dates of certain notes payable totaling $ 1,600,000 for an additional 6 months. In consideration for
the extension of the maturity date, the Company issued 48,000 warrants, which are accounted for as additional interest expense, having
a fair value of $ 153,186. The Company also determined that these transactions were classified as debt modifications and that extinguishment
accounting did not apply.

 The
fair value of these warrants was determined using a Black-Scholes option pricing model with the following inputs:

 Schedule of Fair Value of Warrants

 term (years)

 years

 volatility

 116 %
 - 119 %

 dividends

 0 %

 Risk
 free interest rate

 4.13 %
 - 4.25 %

 Note
10 – Segment Information

 Operating
segments are defined as components of an enterprise about which separate financial information is available and evaluated regularly by
the chief operating decision maker, or decision–making group, in deciding how to allocate resources and in assessing performance.
The Company's chief operating decision maker is its Chief Executive Officer.

 The
Company evaluated the performance of its operating segments based on revenue and operating loss. All data below is prior to intercompany
eliminations.

 F- 38

 NOTES

 Segment
information for the Company's operations for the years ended December 31, 2023 and 2022, are as follows:

 Schedule of Operating Segments

 2023

 2022

 2023

 2022

 $
 118,577,920

 $
 88,351,547

 11,341,183

 16,319,076

 7,184,283

 16,760,656

 Other

 38,446

 112,911

 Total

 $

 $

 Cost of revenues

 $
 83,918,968

 $
 76,130,286

 11,281,722

 16,966,332

 6,228,650

 14,975,647

 Other

 70,001

 2,517

 Total

 $
 101,499,341

 $
 108,074,782

 Operating expenses

 $
 427,493

 $
 299,406

 1,799,469

 1,327,517

 775,704

 1,460,750

 Other

 3,256

 53,571

 Corporate overhead

 13,771,185

 9,694,379

 Total

 $
 16,777,107

 $
 12,835,623

 Income (loss) from operations

 $
 34,231,459

 $
 11,921,855

 ( 1,740,008
)

 ( 1,974,773
)

 179,929

 324,259

 Other

 ( 34,811
)

 56,823

 Corporate overhead

 ( 13,771,185
)

 ( 9,694,379
)

 Total

 $
 18,865,384

 $
 633,785

 Segment
information for the Company's assets and liabilities at December 31, 2023 and 2022, are as follows:

 Total Assets

 $
 32,502,760

 $
 25,550,587

 2,584,245

 3,205,030

 1,596,236

 1,880,087

 Other

 135,548

 165,172

 Corporate overhead

 5,106,518

 3,202,630

 Total

 $
 41,925,307

 $
 34,003,506

 Total Liabilities

 $
 2,426,964

 $
 15,484,392

 155,295

 198,197

 899,485

 2,619,521

 Other

 198,197

 58,919

 Corporate overhead

 9,841,902

 10,524,224

 Total

 $
 13,521,843

 $
 28,885,253

 All
intercompany accounts are separately presented above as both a component of the assets and liabilities. These amounts net to $ 0 in the
Company's consolidated balance sheets.

 Note
11 – Installment Sale Liability

 Agreement

 In
2022, the Company executed a two-year (2) financing arrangement with Affordable Connectivity Financing ("ACF", "Seller")
to receive up to $ 25,000,000 to purchase devices for sale.

 This
agreement was based upon the Company submitting a purchase order and ACF approving the request. The Company could cancel the purchase
order prior to ACF paying for the devices. The agreement could be extended by a period of one (1) year upon mutual consent.

 Under
the terms of the agreement, ACF was directly purchasing products and reselling to the Company at a markup. At December 31, 2022, the
markup was 9.85 %. Effective April 1, 2023 and each quarter thereafter, this amount was subject to increase based upon the secured overnight
financing rate.

 F- 39

 NOTES

 Repayment
Period

 Each
installment sale contract was to be repaid over a period of nine (9) months.

 Security

 This
arrangement was fully secured by all assets of the Company.

 Minimum
Outstanding Balance

month rolling average of 70% of the installment sale credit amount.

 Prepayment
Penalty

 The
Company was subject to a cancellation fee of 3% during the first year and 2% during the second year.

 Administrative
Fee

 The
Company was required to pay $ 2,000 per month.

 Default
Rate

 For
any unpaid amounts under this agreement, the Company was subject to a fee of 1.35% per month (16.2% annualized).

 Commitment
Fee

 ACF
charged a 2 % commitment fee on the initial installment sale, and 2 % for each incremental increase of $ 5,000,000 in the installment sale
credit amount.

 For
example, if the initial installment sale credit amount is $15,000,000, the credit availability fee would be $300,000 (2%). Any subsequent
increase of $5,000,000 or more would result in an additional fee of $100,000 (2%). Commitment fees are paid over a period of 12 months
as part of the Seller's monthly invoicing.

 Covenants

 At
December 31, 2023 and December 31, 2022, respectively, the Company was in compliance with all of the following ratios:

 1.
 Company
 adjusted EBITDA,

 2.
 Total
 Leverage Ratio,

 3.
 Fixed
 Charge Coverage Ratio,

 4.
 Minimum
 Subscriber Base; and

 5.
 Minimum
 Liquidity

 Additionally,
the Company is required to provide various data to the vendor on a periodic basis. The Company has not received notice from the vendor
regarding any instances of non-compliance.

 Lockbox

 The
Company will maintain a lockbox for the benefit of the Seller.

 Installment
Sale Liability

 At
December 31, 2023 and 2022, the Company has recorded an installment sale liability of $ 0 and $ 13,018,184, respectively, which is included
in the accompanying consolidated balance sheets.

the years ended December 31, 2023 and 2022, the Company paid fees of $ 491,536 and $ 1,499,007, respectively. These amounts have been included
as a component of cost of goods sold in the accompanying consolidated statements of operations.

 The
liability was repaid in full in 2023.

 F- 40

 NOTES

 Note
12 – Income Taxes

 Provision
(benefit) for Income Taxes and Effective Income Tax Rate

 Schedule of Income Taxes and Effective
Income Tax Rate

 Federal

 Current

 $
 570,000

 $
 -

 Deferred

 ( 2,835,000
)

 -

 Total provision (benefit)

 $
 ( 2,265,000
)

 $
 -

 State

 Current

 $
 -

 $
 -

 Deferred

 -

 -

 Total provision (benefit)

 $
 -

 $
 -

 A
reconciliation of the provision for income taxes to the amount computed by applying the statutory federal income tax rate of 21% to income
before provision for income taxes for the years ended December 31, 2023 and 2022, respectively, is as follows:

 Schedule of Components of Income Tax Expense (Benefit)

 Federal income tax expense (benefit) - 19.64 %

 $
 3,848,000

 $
 ( 134,000
)

 Federal income tax expense (benefit) - 19.64 %

 $
 3,848,000

 $
 ( 134,000
)

 State income tax expense (benefit) - 6.5 % - net of federal effect

 923,000

 ( 44,000
)

 Tax-exempt income

 -

 ( 137,000
)

 Non-deductible items

 174,000

 138,000

 Subtotal

 4,945,000

 ( 177,000
)

 Change in valuation allowance

 ( 7,210,000
)

 177,000

 Income tax expense (benefit)

 $
 ( 2,265,000
)

 $
 -

 Effective tax rate

 - 12.36
 %

 0.00
 %

 Deferred
Tax Assets and Liabilities

 As
of December 31, 2023 and 2022, respectively, the significant components of deferred tax assets and liabilities is as follows:

 Schedule of Deferred Tax Assets

 Deferred Tax Assets

 Reserve for uncollectible accounts

 $
 5,000

 $
 5,000

 Net operating loss carryforwards

 3,844,000

 8,000,000

 Total deferred tax assets

 3,849,000

 8,005,000

 Less: valuation allowance

 ( 790,000
)

 ( 8,005,000
)

 Net deferred tax assets

 3,059,000

 -

 Deferred Tax Liabilities

 Depreciation

 224,000

 -

 Deferred income taxes - net

 $
 2,835,000

 $
 -

 Deferred
tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary
differences and other tax attributes, such as net operating loss carryforwards. In assessing if the deferred tax assets will be realized,
the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible
temporary differences reverse.

 As
of December 31, 2023, the Company had federal and state net operating loss carryforwards of approximately $ 15,000,000 and $ 12,000,000,
respectively. The federal net operating losses carry forward indefinitely, and accordingly have not been reserved. The state net operating
losses will expire between the years ending December 31, 2036 and 2038. The state net operating losses have been fully reserved as management
does not believe that is probable that the losses will be utilized before their expiration.

the year ended December 31, 2023, the valuation allowance decreased by approximately $ 7,619,000. The total valuation allowance results
from the Company's estimate of its future recoverability of its net deferred tax assets.

 The
Company is in the process of analyzing their NOL and has not determined if the Company has had any change of control issues that could
limit the future use of these NOL's. As of December 31, 2023, all federal NOL carryforwards that were generated after 2017 may
only be used to offset 80% of taxable income and are carried forward indefinitely.

 F- 41

 NOTES

 The
Company follows the provisions of ASC 740, which requires the computations of current and deferred income tax assets and liabilities
only consider tax positions that are more likely than not (defined as greater than 50% chance) to be sustained if the taxing authorities
examined the positions. There are no significant differences between the tax provisions represented in the accompanying consolidated
financial statements and that reported in the Company's income tax returns. The Company is subject to U.S. Federal and State income
tax examination by taxing authorities for the years after December 31, 2020.

 The
Company files corporate income tax returns in the United States and State of Tennessee jurisdictions. Due to the Company's net
operating loss posture, all tax years are open and subject to income tax examination by tax authorities. The Company's policy is
to recognize interest expense and penalties related to income tax matters as tax expense. At December 31, 2023 and 2022, respectively,
there are no unrecognized tax benefits, and there were no significant accruals for interest related to unrecognized tax benefits or tax
penalties.

 Note
13 – Subsequent Events

 Acquisition
of ClearLine Mobile, Inc (Asset Purchase)

 On
January 5, 2024, the Company closed a purchase agreement and acquired ClearLine Mobile, Inc's. ("CLMI") software development
and point-of-sale ("POS") equipment and operations in exchange for $2,500,000. Payments are due as follows:

 -
 $ 100,000
 at signing,

 -
 $ 800,000
 at closing,

 -
 $ 800,000
 90 days from closing (April 2024)

 -
 $ 800,000
 180 days from closing (July 2024)

 At
the time of purchase, CLMI's assets and operations were insignificant.

to ASU 2017-01, Business Combinations (Topic 805): "Clarifying the Definition of a Business", this acquisition was determined
to be that of an asset and not a business, therefore, there was not a business combination requiring acquisition accounting or related
financial reporting. Since this was deemed to be an asset purchase, this did not result in the recognition of goodwill or other identifiable
intangible assets.

 This
transaction did not involve the purchase of a "significant amount of assets" as defined in the Instructions to Item 2.01
of Form 8-K. Additionally, the acquisition of CLMI was not deemed to be significant at any level under SEC Regulation S-X 3.05 and did
not require the presentation of any additional historical audited financial statements.

 Stock
Issued for Cash - Capital Raise

 On
January 17, 2024, the Company, entered into an underwriting agreement (the "Underwriting Agreement") with Titan Partners
Group, a division of American Capital Partners, as representative of the underwriters named therein (the "Underwriters")
relating to the issuance and sale of 2,678,571 shares (the "Shares") of the Company's common stock, par value $ 0.001
per share (the "Offering"). All the Shares are being sold by the Company.

 The
price to the public of the Shares was $5.60, before underwriting discounts and commissions. Under the terms of the Underwriting Agreement,
the Company granted the Underwriter an option, exercisable for 45 days, to purchase up to an additional 401,785 shares of common stock.
The net proceeds to the Company from the Offering will be approximately $13.7 million, or approximately $15.9 million if the Underwriters
exercise in full their option to purchase additional shares, in both instances after deducting underwriting discounts and commissions
and estimated Offering expenses payable by the Company.

 The
Offering was made pursuant to the Company's registration statement on Form S-3 (File No. 333-273110) previously filed with the
Securities and Exchange Commission (the "SEC") on July 3, 2023, as amended, and declared effective by the SEC on November
3, 2023. A preliminary and final prospectus supplement were filed with the Securities and Exchange Commission pursuant to Rule 424(b)
under the Securities Act of 1933 (the "Securities Act") on January 17, 2024 and January 19, 2024, respectively. The Offering
closed on January 22, 2024.

 On
February 12, 2024, the underwriters exercised their over-allotment option to purchase an additional 401,785 shares of common stock for
$ 2,249,996 ($ 5.60 /share). After applying the underwriting discount of 7 % ($ 157,500), net proceeds were $ 2,092,496.

 From January 1, 2024 through March 6,
2024, the Company issued 1,824,497 shares of common stock in connection with the exercise of 1,824,497 warrants for $ 8,629,871 ($ 4.73 /share).

 Consolidated Amended and Restated Note

 On March 12, 2024, the Company
entered into an amended and restated promissory note (the "Amended Note") with SMDMM Funding, LLC, with which the Company
currently has two outstanding notes, one in the original principal amount of $ 1,108,150.31 that was due on December 31, 2023 (the "One
Year Note"), and another in the original principal amount of $ 4,026,413.00 due on December 31, 2024 (the "Two Year Note").
The Amended Note consolidated the One Year Note and Two Year Note into one note with outstanding principal of $ 4,758,088.74 and sets the
principal and established interest to be paid over the course of thirty-three equal monthly payments beginning March 31, 2024, and ending
December 31, 2026.

 SMDMM Funding, LLC is a Wyoming limited liability
company for which the Company's CEO, Brian Cox, is the Manager.

 F- 42