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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, 2024

 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

 Stock

 SURG

 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.

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 21, 2025 was 20,411,549 shares.

 As
of June 28, 2024, 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 $ 43,673,936 based on the $3.19 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

 Item
 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 PART
 III

 Item
 10.

 Directors,
 Executive Officers and Corporate Governance

 Item
 11.

 Executive

 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

Overview and History

 About
SurgePays, Inc.

Inc. ("SurgePays", "we", the "Company") is a financial technology and telecommunications company
with one clear mission: to enhance connectivity and financial access in the places people live, shop, and work. 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.

 Corporate
Vision and Objective

 At
SurgePays, we believe we are just scratching the surface of what we believe is a valuable market opportunity. Our foundation is
built on a robust infrastructure, a diversified product suite, and strategic partnerships that position us for a potential to expand
rapidly. We are focused on capturing additional market potential and business opportunities across telecommunications, financial
technology, and retail solutions.

 Our
integrated approach is not just about incremental growth; it is designed for scalability. We are not in this to compete on small,
tactical wins. We are here to redefine how underserved and value-conscious markets access essential services, from prepaid wireless
and financial products to digital engagement solutions. With a nationwide network of convenience stores, bodegas, and neighborhood
locations as our distribution backbone, we believe we are positioned to bring these services directly to the communities that need
them most.

 We
believe this is an important opportunity in an underserved market, and we are on the frontline. By seamlessly integrating
telecommunications and fintech on a single platform, we strive to deliver the value and convenience customers demand while aiming to create
a recurring revenue model. Our data-driven marketing strategies and the flexibility of our software enable us to tailor
offerings in real time, driving high customer retention and capturing new opportunities at every turn.

 With
every new customer and every new partner, we are advancing towards our goals. SurgePays has laid the groundwork; now, it is about
execution, speed, and capturing market share. This is a pivotal moment for the Company, and we believe we are positioned not just to
compete but to dominate. We are building the foundation to achieve future success and we believe the opportunity is massive.

 Our
Business Segments

operates through two primary business segments, each strategically designed to meet the diverse needs of our customers. These segments
are driven by independent technology platforms that also function synergistically to foster mutual growth:

 MVNO
 Telecommunications: Providing reliable, affordable prepaid wireless services.

 Platform Services: Offering Point-of-sale ("POS") transaction and marketing technology.

 In addition,
in November 2024, the Company entered into a multi-year strategic agreement with AT&T, providing direct access to its nationwide
4G LTE and 5G wireless network. This integration represents a significant advancement in the Company's infrastructure and capabilities,
enabling SurgePays to operate not only as a Mobile Virtual Network Operator (MVNO), but also as a Mobile Virtual Network Enabler (MVNE).
As an MVNE, the Company now offers wireless services, including SIM provisioning, billing, and airtime, to other wireless providers that
do not have a direct carrier relationship. This expansion creates a new high-margin, scalable revenue channel with minimal incremental
cost to the Company, and anticipate this to become another major segment for the Company starting in 2025.

 The Company previously also
operated a Lead Generation segment; however, this business segment was discontinued in 2024.

 MVNO
Telecommunications

 SurgePays'
Mobile Virtual Network Operator (MVNO) business delivers high-speed, reliable, and affordable wireless services by leveraging
agreements with national telecom leaders. Generating $43,450,244 of year ended December 31, 2024 operating revenue, we believe this
segment will be central to our growth, offering subsidized and prepaid options to meet diverse financial needs.

 Subsidized
Services

 Our
subsidized offerings—through programs like Lifeline —enable us to bridge the digital divide in underserved communities.
These federal initiatives empower us to provide essential connectivity, driving social impact while targeting sustainable growth.
Even as funding changes, we strategically maintain resilience by utilizing our Lifeline program to keep these critical services
accessible, establishing a strong foundation. Brands like SurgePhone Wireless and Torch Wireless embody this mission, reaching
customers where they need it most.

 The Company previously offered subsidized offerings
through the Affordable Connectivity Program (ACP), however funding for this program ended in June 2024. As a transition strategy, we decided
to keep the existing base of subscribers from the former ACP enrolled in our network. a built-in subscriber base of 250,000. We chose
to keep our subscribers active, absorbing the wholesale costs (averaging around $7-10 per subscriber per month), and put our strong balance
sheet to work to replace the cash inflow we lost once ACP funding ran out. We transitioned over 80,000 subscribers to the Lifeline program
during 2024.

 Prepaid
Services

 Our
prepaid plans deliver flexibility, with contract-free, affordable solutions that provide unlimited talk and text across the USA, Mexico,
and Canada—no credit checks or hidden fees. Through Link Up Mobile, we leverage our purchasing power and established retailer relationships
to offer low-cost SIM kits at convenience stores, creating accessible, local service hubs.

 Our
distribution strategy centers on empowering local community stores as trusted service points, where activations and payments are
seamlessly integrated into customers' routines. We believe this approach will not only drive subscriber growth but builds
loyalty, allowing customers to switch from competitors effortlessly. By meeting customers in familiar locations, we strengthen
long-term relationships and fuel desired sustainable growth.

 Our
 Comprehensive Platform Services segment is tailored to the needs of retailers, using advanced POS technology to elevate operational
efficiency and customer engagement. Through SurgePays Prepaid Wireless Top-ups and ClearLine, we deliver innovative transaction
and marketing solutions that aim to transform how thousands of convenience stores operate.

 Prepaid
Wireless Top-Ups

 Our
Prepaid Wireless Top-Ups platform empowers convenience store clerks to handle top-ups for all major wireless brands efficiently.
Additionally, it supports debit and gift card activations, creating a seamless, all-in-one payment processing solution. This functionality not only drives recurring revenue but also gives us
critical feedback on what consumers are looking for in today's Prepaid Wireless Market, allowing us to offer targeted promotions that
increase retention and incremental sales. By presenting customers with a comparable Linkup wireless plan at the
point of transaction, we maximize opportunities to upsell higher-margin brands, further enhancing growth.

 ClearLine

 Our ClearLine technology transforms
POS terminals and customer-facing screens into powerful engagement tools. This patent-pending touchscreen application enables
in-store marketing campaigns, loyalty program enrollment, and even QR code scanning for streamlined customer interactions. ClearLine
replaces traditional posters with smart TVs, displaying interactive QR-code ads and real-time coupon redemptions, creating a
measurable impact on store revenue and customer satisfaction.

 By
capturing detailed analytics, ClearLine offers merchants actionable insights to drive growth and foster customer loyalty. This Software
as a Service (SaaS) solution is compatible across various devices, positioning ClearLine as a high-value asset for retailers and an anticipated
growing significant revenue driver for SurgePays.

 Lead
Generation

December 31, 2024, the Company's management elected to abandon its lead generation segment operations as part of a strategic reassessment
of its business lines. This decision followed a review by the Chief Operating Decision Maker ("CODM", which is our Chief
Executive Officer), who had been regularly evaluating the segment's financial performance and determined that its continued operation
was no longer aligned with the Company's long-term strategic objectives.

 Growth
Strategies

 At
SurgePays, our growth strategy is simple yet powerful: leverage our strengths across business segments to drive for sustainable,
scalable growth. Each business unit and service is aligned with our mission to create lasting value, enabling us to be strategically
positioned for our goal of long-term profitability.

 MVNO
Communications

 Subsidized
Services:

 Expand
 Distribution: Strengthen our footprint in convenience stores, bodegas, and neighborhood
 retail locations to meet customers where they are, while accelerating growth through online
 sales channels.

 Simplify
 Engagement: Make Lifeline enrollments easy by integrating them directly at the
 point of sale, eliminating friction for eligible customers.

 Drive
 Growth: Fuel subscriber growth through strategic partnerships and incentives, focusing
 on expanding our reach and value to customers.

 Prepaid
Services:

 Optimize
 Sales Channels: Amplify the POS platform to maximize every sales opportunity,
 while seamlessly converting subsidized subscribers to non-subsidized services as their needs
 evolve.

 Leverage
 Buying Power: Harness our purchasing power to offer competitively priced plans and affordable
 SIM kits through our convenience store network, delivering a strong value proposition.

 Expand
 Rural Reach: Target rural markets where competition is low and demand is high, offering
 compelling pricing and retaining customers by promoting non-subsidized services in times
 of funding variability.

Prepaid Wireless Top-Ups:

 Enhance
 Service Delivery: Continuously evolve our prepaid wireless offerings to align with customer
 needs, creating a seamless experience that keeps customers coming back.

 Strengthen
 Partnerships: Expand our distributor relationships with innovative POS technology,
 deepening market penetration and maximizing channel efficiency.

 Leverage
 Data: Deploy transaction data insights for targeted marketing, tailoring offers that
 boost customer retention and increase lifetime value.

 ClearLine:

 Engage
 Customers: Transform each payment terminal into a dynamic engagement and SaaS marketing
 tool, maximizing brand interaction at every transaction.

 Boost
 Revenues: Drive sales through digital loyalty programs, targeted marketing campaigns,
 and customer feedback initiatives that enhance satisfaction and retention.

 Leverage
 Data Insights: Use customer data to create targeted promotions and operational improvements,
 giving merchants actionable insights that deepen their customer relationships.

 Synergy
Across Business Units

 Our
integrated approach means all units work in unison, creating efficiency and value that is hard to replicate. By aligning technology,
data, and market expansion strategies, we are building a cohesive platform with a unique value proposition:

 Technology
 Integration: Our POS platforms unify transactions across prepaid wireless, financial
 products, and merchant services, delivering a streamlined retail experience.

 Data-Driven
 Engagement: Data analytics from our ACH banking and fintech transactions platform unlock
 valuable insights, enhancing customer engagement across all segments.

 Strategic
 Market Expansion: With a focus on underserved and rural markets, we are capturing
 untapped potential and fostering lasting customer loyalty.

 Market
Opportunity

 MVNO
Communications

 Subsidized
Services

 According to Forbes Advisor from May 26, 2023, 42 million americans still
do not have access to broadband internet. It is the Company's initiative to address the gap created by the lack of access to high-speed
internet, particularly rural areas. By focusing on these underserved regions, SurgePays not only meets an essential need but also positions
itself within a market poised for growth. Government initiatives like Lifeline provide a steady stream of eligible customers allowing
a consistent demand base.

 Our strategy aligns with these government-backed programs, allowing us
to capture steady demand among value-conscious households. Lower-income Americans are still less likely to have home broadband or smartphone.
According to the Pew Research Center (from June 22, 2021), research shows that 27% of low-income adults rely on smartphones for internet
access, underscoring the need for affordable mobile connectivity in these communities. By serving this critical market, we are positioned
for both growth and resilience.

 Prepaid
Services

 According
to Research and Markets published January 3, 2025, the prepaid wireless market in the U.S. is thriving, with 74 million of the 307
million smartphone users choosing prepaid plans—a number expected to grow at a 5.2% CAGR from 2022 to 2030. SurgePays'
prepaid offerings directly address this demand, appealing to consumers seeking flexible, no-contract options.

 Targeting
rural areas, where competition is minimal and pricing is often higher, gives us a strategic edge. With rural Americans comprising
nearly 17.9% of the U.S. population (according to NCESC.com from June 22, 2024), these regions represent a significant growth opportunity. Additionally, the multicultural
segment—particularly Hispanic Americans—is one of the fastest-growing demographics, with a projected growth rate of 2.3%
annually, published by the United States Census Bureau dated June 27, 2024. By aligning our offerings with the needs of these expanding demographics, we are aiming to capture a significant market
share, supporting our vision for sustained growth.

Prepaid Wireless Top-ups

 We
believe there is a strong market for prepaid wireless top-ups through convenience stores, bodegas, and neighborhood retail
locations. Our approach aims to leverage the more than over 150,000 convenience stores (according to the National Association of Convenience Stores dated February 5, 2025) in
the U.S. to deliver accessible prepaid wireless top-ups and essential services, creating a potential for a broad distribution
network and we believe this high-transaction environment will become a significant revenue driver for the Company. The U.S. prepaid
card market alone was valued at $542 billion in 2023 (according to Research and Markets dated May 30, 2024), and our platform is designed to captures value from every transaction in
which it is utilized. Using transaction data to drive targeted marketing further enhances engagement, retention, and customer
lifetime value.

 ClearLine

 Through
our ClearLine channel, we are transforming traditional payment terminals into high-impact engagement and marketing tools that increase
merchant revenue and customer satisfaction. Digital engagement can increase customer spending by up to 20% (according to
McKinsey's annual Digital Payments Consumer Survey from November 25, 2020), while personalized offers and loyalty programs
improve retention by up to 10% and lifetime value by 25% (according to the article titled, A Guide on Impact of Personalization on
Customer Lifetime Value dated February 27, 2025). We believe ClearLine solutions can be utilized across more retail locations to
maximize market penetration and revenue potential, growing alongside the digital signage market expected to grow at a CAGR of 6.9%
through 2028 (according to PR Newswire dated June 28, 2023).

 Marketing
and Sales

 Our
marketing strategies are meticulously designed for each business segment, anchored in three strategic pillars: strengthening retail partnerships,
amplifying digital engagement, and extending market reach through direct and channel sales teams dedicated to customer retention.

 Our
retail distribution portfolio is the backbone of our MVNO business units. Being able to reach consumers where they are is our strength.
Through software enhancements, we are able to reach potential MVNO subscribers in wireless retail stores, convenience stores, markets,
and online sites. By collaborating with third-party partners, we facilitate Lifeline enrollments and offer a range of non-subsidized
prepaid wireless plans. Through targeted education and proactive engagement, we maximize subscriber acquisition in underserved regions.
By delivering tailored, incentivized plans to existing Lifeline, we enhance retention and create enduring value within this critical
market segment.

 For
Comprehensive Platform Services, we prioritize building strong retail partnerships that ensure extensive distribution and easy
access to our solutions. Our approach integrates the convenience of our expansive store network with powerful digital engagement
tools, enabling us to reach a broad audience and deliver consistent customer value. To support this growth, we have and will
continue as necessary to scale our national sales and distribution teams to deepen market penetration and deliver
personalized, high touch support, driving for customer satisfaction and long-term growth.

 Competition

operates in a competitive and rapidly evolving market, where both traditional and non-traditional players in telecommunications and technology
compete to capture market share.

 In
telecommunications, major MVNOs dominate the prepaid wireless landscape, while national carriers leverage their infrastructure and
brand strength to attract prepaid customers. Regional providers further intensify competition by focusing on specific geographic
areas. In financial technology, established prepaid card providers hold significant ground, while fintech startups push the envelope
with digital innovation and streamlined user experiences. Traditional convenience store distributors, with decades of legacy behind
them, rely on a manufacturing-to-warehouse-to-store logistics model that has remained largely unchanged. Currently, our MVNO market
share at convenience store sales is under 1%, highlighting a substantial growth opportunity.

 Yet,
we believe our diverse product suite and operational efficiencies position us to capture a larger share of this market. Our ability
to seamlessly integrate with others in this space, creates a unique dynamic allowing us to compensate for growth
opportunities while unlocking the potential for additional revenue for stores. This collaborative approach is fueled by our unique
product offerings, which drive more value for retail partners. Additionally, we may explore strategic acquisitions as a way to accelerate our path forward.

 Across
our product markets, competition is shaped by key factors: technical features, quality, availability, price, customer support, and distribution
coverage. Each region may weigh these factors differently, but by deploying our direct store distribution model nationwide, we are
positioned to meet these demands head-on and open substantial growth opportunities.

 Differentiation

 At
SurgePays, our competitive edge is rooted in relentless adaptability, a tightly integrated service ecosystem, and robust retail partnerships.
These strengths allow us to bring our communication and technology platform products to market with speed and precision, creating a clear
path to success.

 We
stand apart by offering a seamless blend of telecommunications and transactions services on a single platform—a one-stop solution
that delivers both convenience and exceptional value to our customers. By targeting underserved and rural communities, often overlooked
by larger players, we provide vital services where people live, shop, and work. Through our network of convenience stores, bodegas, and
local retail spots, we bring affordable, accessible solutions to the neighborhoods that need them most.

 Owning
the transaction software for processing, activations, and top-ups allows us to offer prepaid wireless and financial products at lower
prices right at the community level. This structure not only captures a significant, value-conscious segment but also leverages efficiencies
that drive down costs and improve margins.

 In
a fragmented distribution landscape where no single player offers top consumables alongside essential services like prepaid wireless,
gift cards, bill payments, and reloadable debit cards, we see a major opportunity. Our partnerships with distributors enable broad market
reach and higher customer engagement. Our vision extends to building a wholesale e-commerce platform that unites these services under
one roof—a scalable model that enhances customer loyalty and operational efficiency.

 Agility is our backbone. We continuously adapt our offering to stay ahead of customer needs. Using a combination of information gathered
by extracting data from our customer service system and comparing it with industry marketing trends and offerings, we are able to offer
targeted social media engagement and personalized offers. Incorporating these solutions helps us drive customer acquisition and retention
by allowing our product offering to meet the market where we uncover the need.

 With
these strengths—an integrated platform, a focus on underserved markets, robust retail partnerships, and a commitment to
data-driven insights—we believe SurgePays is well-positioned to thrive in a competitive market. Our approach is built to drive
for long-term growth and profitability, supported by a foundation of innovation and customer focus that we believe is unmatched in
the industry.

Development Activities

 At
SurgePays, innovation is not a department—it is our DNA. We are relentlessly focused on enhancing our products to deliver
efficient, secure, and lightning-fast transactions at convenience stores. Our software platform, hosted on Amazon Web Services (AWS)
Cloud, leverages the power of world-class infrastructure to enable our goal of unmatched reliability and scalability.

 Success
demands a mindset of continuous improvement. We have developed integrated software solutions for popular point-of-sale
systems from such companies as Clover, PAX, and Landi. These integrations provide additional opportunities to operate our platform in
various types of retail businesses without the need for additional hardware, with a single goal in mind: to create powerful tools that help our retail partners operate more efficiently and serve
their customers better. By embracing technology's rapid evolution, we are not just keeping pace with change, we are
shaping it.

 Seasonality

 Our diverse product portfolio helps mitigate
any significant fluctuations, and as we continue to expand our offerings, we expect the impact of seasonality to diminish further.

Team

 At
SurgePays, our people are the driving force behind everything we accomplish. As of March 2025, our team of over 130 dedicated
professionals—across various areas such as accounting and finance (4), human resources (3), programming (13), customer service
(79), sales (6), and operations (25)—is committed to solving real problems and delivering value to our customers and
shareholders every day.

 Our
leadership team brings over a century of combined experience across telecommunications, technology, and national distribution. This depth of expertise fuels our ability to innovate, think long-term,
and make bold bets that set us apart in the market.

 We
know that a business only grows by hiring exceptional talent and empowering them with a culture that prizes continuous improvement and
ownership. We focus on attracting the best, building an environment that nurtures growth, and aligning incentives to performance through
equity and cash plans. These plans not only reward high performance but are designed to create alignment with our long-term vision, fostering
a team that acts like owners, not employees.

 At
SurgePays, we think in decades, not quarters. By investing in our people and cultivating a culture of excellence, we are building
a foundation that will support our growth for years to come.

 Corporate
Information

 Our
executive offices are located at:

 3124
Brother Blvd, Suite 410, Bartlett, TN 38133

 Telephone:
(800) 760-9689 Website: www.surgepays.com

 Please
note that our website and the information contained in, or accessible through, it will not be deemed incorporated by reference into this
Annual Report and does not constitute a 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 of the Affordable Connectivity Program ("ACP") has had a substantial adverse effect on our business operations
and profitability.

 Since the introduction of the
ACP, we derived over 70% of our revenue from reimbursement payments from the federal government under the ACP. According to the Federal
Communications Commission (the "FCC"), the government entity that oversees the ACP, the ACP wound down and stopped accepting
new applications and enrollments as of February 7, 2024, and June 2024 was the last funded month of the ACP due to lack of additional
funding from Congress. The expiration of the ACP and the cessation in reimbursement payments had a substantial adverse effect on our business,
financial condition, and operating results during the year ended December 31, 2024. Without revenue from the ACP, we have shifted our
focus to other business segments, including our MVNO Communications and Comprehensive Platform Services further described herein, however
there is no guarantee that we will be able to successfully replicate our revenues from the ACP or past profitability, which will have
a substantial adverse effect on our business, financial condition, and operating results.

 Additionally, there is no guarantee whether or for
how long the FCC or other federal agencies will continue to provide funding for the Lifeline program. As a material component of our current
business operations and source of revenue, any decrease or end to funding of the Lifeline program would 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

 Low demand for our products and services, and the inability to develop
and introduce new products and services at favorable margins, could adversely impact our performance and prospects for future growth.

 Without revenue from the ACP, we have shifted
our focus to other business segments, including our MVNO Communications and Comprehensive Platform Services further described
herein, however we will need to continue to develop our products and services, and introduce new products and services in a
timely manner at favorable margins. There are numerous uncertainties associated with developing and introducing new products and
services, including higher costs, limited market opportunity, and low demand. An increase in costs, which may continue indefinitely
or until increased demand and greater availability of our products and services are available, could adversely affect our results of
operations and profitability. Market acceptance of the new products and services may not meet sales expectations due to various
factors, such as the failure to accurately predict consumer demands, end-user preferences, evolving industry standards, or the
emergence of new or disruptive technologies. Moreover, the ultimate success and profitability of the new products and services may
depend on our ability to resolve technical and technological challenges in a timely and cost-effective manner.

 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 modern 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
have, and may continue to 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") assets. 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.

 Commercialization
of our products and services, require us to 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 continues to be 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.

 We may require additional financing to sustain
or grow our operations. Raising additional capital may cause dilution to our existing stockholders and investors, or restrict our operations.

 We may need to seek additional capital through a variety
of means, including through private and public equity offerings and debt financings, collaborations, or strategic alliances and acquisitions.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, or through the issuance of shares
under other types of contracts, the ownership interests of our stockholders may be diluted, and the terms of such financings may include
liquidation or other preferences, anti-dilution rights, conversion and exercise price adjustments and other provisions that adversely
affect the rights of our stockholders, including rights, preferences and privileges that are senior to those of our holders of Common
Stock in terms of the payment of dividends or in the event of a liquidation. In addition, debt financing, if available, could include
covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures,
entering into contractual arrangements, or declaring dividends and may require us to grant security interests in our assets.

 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 28.3% 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 has been 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, ranging from a high of $8.43 and a low of $1.13, since the beginning of 2024. 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 and new lines of business;

 compliance
 with ongoing regulatory requirements;

 market
 acceptance and demand of our products;

 changes
 in government regulations;

 Replacing lost revenues from ACP;

 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, a reduction in
our ability to raise capital and hinder our ability to stay in compliance with Nasdaq listing rules. 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 sufficient funds
from operations 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, including through the Company's 2022 Omnibus Securities and Incentive Plan and the evergreen provisions contained
therein. 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 maintained 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,
8745 West Higgins, Chicago, IL 60361, which houses our human resources departments, 1615 S Ingram Mill, Building B, Springfield,
Missouri 65804, which houses our Comprehensive Platform Services technical operations, and 73 Av. Norte y 5 Calle Poniente, Colonia Escalon, San Salvador, SV, which house our business process operations.

 See
pages F-42 - F-46 for detailed lease information.

 We
will acquire additional office space as needed.

 ITEM
3: LEGAL PROCEEDINGS

 From
time to time, we may be engaged in various lawsuits and legal proceedings in the ordinary course of our business. Except as described
below, we are currently not aware of any legal proceedings, the ultimate outcome of which, in our judgment based on information currently
available, would have a material adverse effect on our business, financial condition or results of operations.

 The
following is a summary of threatened, pending, asserted or unasserted claims against us or any of our wholly owned subsidiaries for which
there have been material developments since our last annual report for the year ended December 31, 2023.

 (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 Court
 dismissed the case with the agreement of the parties at a case management conference on September 12, 2024.

 (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 ("Defendants"), and makes other allegations related to SurgePays' consulting
work with Jonathan Coffman, formerly a True Wireless employee. 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. Blue Skies alleged
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. Defendants filed various dispositive motions with the Court demonstrating Oklahoma state law does not recognize non-compete
agreements and non-solicitation agreements in the manner alleged by Plaintiffs, and the Court granted these motions, finding the non-solicitation
and non-competition clauses in the Stock Purchase Agreement void as a matter of Oklahoma law. Defendants then filed additional dispositive
motions on Plaintiffs' claims in tort and equity, which the Court granted in part based on its prior rulings. Plaintiffs took the
position the Court granting Defendants' dispositive motions on these material issues only leaves partial contract claims that are
inextricably intertwined with the remaining claims and defences. Plaintiffs sought a certified interlocutory appeal of the Court's
orders. On March 10, 2025, the Oklahoma Supreme Court entered an order denying Plaintiffs' Petition for Certiorari to review the
certified interlocutory appeal. The case will now proceed in the district court on the parties' remaining claims. Presently, there
is no trial date.

 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 responded by filing
 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. Surge
 Pays elected to dismiss its complaint without prejudice and is in the process of re-filing the matter in the District Court of Oklahoma
 County, Oklahoma.

 (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. A Confidential Settlement Agreement and Release of Claims has been entered into in April
 2024 and a Dismissal Order was entered by the Court on April 30, 2024.

 (4)

 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 filed a Motion for Summary Judgment seeking the same relief as the Motion
 to Dismiss, which was granted by the Court. It is SurgePays' intent to appeal the Court's dismissal of Fina, Blue Skies,
 True Wireless, Government Consulting Solutions, and Misty Garrett. At this stage, no attempts at settlement have been made.

 (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. A Confidential Settlement Agreement and Release of Claims has been entered into in April 2024 and the parties
 await a Dismissal Order to be entered by the Court.

 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 began trading on the Nasdaq Capital Market under the symbol SURG on November 2, 2021.

 As
of March 5, 2025, 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 21, 2025 was $1.34.

 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, 2024, 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 2024 all 2024 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 as a pioneering financial technology and telecommunications company with one clear mission:
to enhance connectivity and financial access in the places people live, shop, and work.

 Our
Mobile Virtual Network Operators consisting of SurgePhone Wireless and Torch Wireless provide mobile broadband (internet connectivity)
to consumers nationwide. Our Comprehensive Platform Services provides ACH banking relationships and a fintech transactions platform that
processes thousands of transactions a day with independently owned convenience stores.

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

 COMPARISON
OF YEAR ENDED DECEMBER 31, 2024 AND 2023

 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) and Comprehensive Platform
Service (Top-up). The MVNO segment is further broken down into subsidized and non-subsidized components. The
subsidized component 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
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, 2024 and 2023 consisted of the following:

 2024

 2023

 $

 $

 Cost
 of revenue (exclusive of depreciation and amortization)

 (75,205,372
)

 (101,499,341
)

 General
 and administrative

 (27,458,152
)

 (16,777,107
)

 (Loss) from operations

 $
 (41,782,351
)

 $
 18,865,384

decreased overall by $76,260,659 (55.6%) from year ended December 31, 2023 to year ended December 31, 2024. The breakout was as follows:

 For

 2024

 2023

 Revenues:

 Virtual Network Operator

 $
 43,450,244

 $
 118,577,920

 17,419,088

 11,341,183

 11,841

 7,222,729

 Total

 $

 $

Virtual Network Operators consisting of SurgePhone Wireless and Torch Wireless revenues (as detailed in Notes 2 and 10 of the financial
statements) decreased by $75,127,676 or (63.4%). Due to a lack of additional funding from Congress, April 2024 was the last month ACP
households received the full ACP discount, as they had received in prior months, and effective June 1, 2024, households no longer receive
an ACP discount.

 As
a transition strategy, we decided to keep the existing base of subscribers from the former ACP enrolled in our network with a built-in
subscriber base of 250,000. We chose to keep our subscribers active, absorbing the wholesale costs (averaging around $7-10 per
subscriber per month), and put our strong balance sheet to work to replace the cash inflow we lost once ACP funding ran out. We
transitioned over 80,000 subscribers to the Lifeline program during 2024.

 The
Company signed a Master Services Agreement (MSA) with TerraCom, Inc. ("TerraCom"), a wireless service provider and
licensed Lifeline provider, effective October 3, 2024, in order to execute the strategy of offering Lifeline to our existing ACP
subscriber base. This agreement allows us to offer a government-subsidized program to our previous 250,000 ACP wireless subscribers.
We transitioned over 80,000 subscribers to the Lifeline program during 2024. Equally important, this allows us to reignite our sales
channels to acquire new Lifeline subscribers who lost their ACP service when their carrier chose to shut them off.

Platform Services revenues increased by $6,077,905 as a result of increasing our sales force and hiring of a new Director of Sales.

 Effective December 31, 2024, the Company's management elected to
abandon its lead generation segment operations as part of a strategic reassessment of its business lines. This decision followed a review
by the Chief Operating Decision Maker ("CODM", which is our Chief Executive Officer), who had been regularly evaluating the
segment's financial performance and determined that its continued operation was no longer aligned with the Company's long-term
strategic objectives. The revenue was $0 and $7,184,283 respectively in years ended December 31, 2024 and 2023. Comparison numbers for the lead generation segment are shown in the respective Other Corporate Overhead lines.

 Cost
of Revenue, Gross Profit and Gross Margin

 For
the year 2024, cost of revenue for services primarily consists of data plan expenses ($21,684,451), prepaid retail expenses
($16,779,312), devices ($5,685,656), marketing ($15,632,078), advertising ($4,808,305), and other expenses such as royalties and
call-center expenses ($4,233,099). With the stoppage of ACP, we reviewed the inventory associated with the program and decided to
write off the entirety of the tablets ($6,382,471). Efforts to find buyers of this inventory have been challenging, thus, the
Company has decided to write-off any inventory related to ACP. For the year 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).

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

 For

 2024

 2023

 Cost
 of Revenue (exclusive of depreciation and amortization):

 Virtual Network Operator

 $
 58,410,842

 $
 83,918,968

 16,779,312

 11,281,722

 15,218

 6,298,651

 Total

 $
 75,205,372

 $
 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

 2024

 2023

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

 Virtual Network Operator

 $
 (14,960,598
)

 $
 34,658,952

 639,776

 59,461

 (3,377
)

 924,078

 Total

 $
 (14,324,199
)

 $
 35,642,491

 The
Company expects to continue the improvement of gross margin in the Comprehensive Platform Service segment during 2025. As we continue to expand
both subsidized and non-subsidized products of the MNVO segment in 2025, we also anticipate gross margins in the MVNO segment will
increase with an aim to return to positive results.

 For

 2024

 2023

 Gross
 Margin:

 Virtual Network Operator

 %

 (34.4

)

 %

 29.2

 3.7

 0.5

 (28.5

)

 12.8

 Total

 %

 (23.5

)

 %

 26.0

 General
and administrative during the years ended December 31, 2024 and 2023 consisted of the following:

 2024

 2023

 Depreciation
 and amortization

 $
 1,165,279

 $
 1,064,099

 Selling,
 general and administration

 26,292,873

 15,713,008

 Total

 $
 27,458,152

 $
 16,777,107

 The
increase in depreciation and amortization costs for 2024 is the result of capitalizing costs associated with software enhancements to
our various software platforms.

 Selling,
general and administrative expenses during the years ended December 31, 2024 and 2023 consisted of the following:

 2024

 2023

 Contractors
 and consultants

 $
 4,303,580

 $
 2,715,605

 Professional
 services

 2,110,510

 1,949,407

 14,605,283

 6,342,955

 Computer
 and internet

 959,222

 858,041

 Advertising
 and marketing

 109,004

 152,851

 Insurance

 1,096,027

 1,249,556

 Other

 3,109,247

 2,444,593

 Total

 $
 26,292,873

 $
 15,713,008

 Selling,
general and administrative costs (S, G & A) increased by $10,579,865 (67.3%). The changes are discussed below:

 Contractors
 and consultants expense increased by $1,587,975 or 58.5% from $2,715,605 in 2023 to $4,303,580 in 2024. The Company previously
 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 and consultants to provide advisory services specifically in the area of investment
 relations to identify opportunities to increase our shareholder value, which costs continued in 2024. Additionally, the company also
 engaged contractors to continue platform enhancements on the Clearline asset acquisition early in 2024 which accounted for an
 increase of over $1,000,000 from the previous year.

 Professional
 services increased $161,103 or 8.3% in 2024 primarily due to an increase in accounting and tax professional fees of $337,374.

 increased from $6,342,955 in 2023 to $14,605,283 in 2024 primarily as a result of stock compensation for the CEO and CFO of
 $6,752,705 per their respective employment agreements as further described in Item 11. Executive Compensation, incorporated herein. There was a non-cash component for $1,602,997 related to the implementation
 of a stock option plan for all employees.

 Computer
 and internet costs increased to $959,222 in 2024 from $858,041 in 2023. A significant portion of the increase was related to the
 continued maintenance and enhancements of the Clearline software platform of $155,000 compared with $0 spend in 2023.

 Advertising
 and marketing costs decreased to $109,004 in 2024 from $152,851 in 2023 primarily as a result of the Company slowing expenditures
 related to Affordable Connectivity Program ("ACP").

 Insurance
 expense decreased to $1,096,027 in 2024 from $1,249,556 in 2023 primarily as a result of improved premium rates for the renewal of
 coverage in 2024.

 Other
 costs increased to $3,109,247 in 2024 from $2,444,593 in 2023 primarily due to the resolution of various taxes associated with the
 ACP.

 Other
(expense) income during the years ended December 31, 2024 and 2023 consisted of the following:

 2024

 2023

 Interest,
 net

 $
 (554,200
)

 $
 (595,975
)

 Gain
 (loss) on equity investment in Centercom

 33,864

 110,203

 Realized
 gains - investments

 13,613

 -

 Dividends,
 interest, and other income – investments

 355,549

 -

 loss – internal use software development costs

 (316,594
)

 -

 loss - goodwill

 (866,782
)

 -

 Loss
 on lease termination - net

 (194,863
)

 -

 Impairment loss - CenterCom

 (498,273
)

 -

 income

 105,395

 -

 Other
 income

 636,868

 -

 Total
 other (expense) income

 $
 (1,285,423
)

 $
 (485,772
)

expense decreased to $554,200 in 2024 from $595,975 in 2023 primarily due to the payoff of various debt instruments in 2024.

 The
equity investment in Centercom, an unconsolidated subsidiary of the Company in which we are a minority owner, increased by $33,864 in
2024 compared to an increase of $110,203 in 2023.

 The
Company invested excess cash in various instruments during 2024, resulting in interest, dividends, and gains resulting in an
aggregate increase of $355,549, compared to $0 in 2023.

 As
a result of shuttering the operations of LogicsIQ, the Company took an aggregate impairment loss of $1,183,376 relating to goodwill
and software development assets.

 Other
income increased by $636,868, mostly related to one-time reduction in accounts payable to CenterCom for invoices deemed not to be payable.

 As
of December 31, 2024, The Company determined that it would no longer utilize the Business Process Outsourcing (BPO) services of CenterCom.
The Company has commenced similar operations internally, eliminating the need for its investment in Centercom. Consequently, an assessment
of the investment was performed to determine whether it should be written off in accordance with U.S. GAAP. As a result, the Company
took an aggregate impairment loss of $498,273.

Transactions for the Years Ended December 31, 2024

 Stock
Issued for Cash - Capital Raise

 In
January 2024, the Company issued 3,080,356 shares of common stock for gross proceeds of $17,249,994 ($5.60/share).

 In
connection with the capital raise, the Company paid cash as direct offering costs totaling $1,395,000, resulting in net proceeds of $15,854,994.

 This
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.

of Warrants - Cash

2024, the Company issued 1,860,308 shares of common stock in connection with the exercise of 1,860,308 warrants for $8,799,257
($4.73/share). See warrant table below.

of Warrants - Cashless

2024, the Company issued 40,238 shares of common stock in connection with the cashless exercise of warrants ($0.001/share). The transaction
had a net effect of $0 on stockholders' equity.

 Stock
Issued for Services

 The
Company issued 47,386 shares of common stock for services rendered, having a fair value of $411,740 ($3.85 - $7.34/share), based upon
the quoted closing trading price.

Stock

July 2024, the Company implemented a share repurchase program. Under the terms of this program, the Company undertook the following:

 Maximum
 dollar amount authorized for repurchase is $5,000,000,

 The
 Company will not repurchase more than 20,000 shares per day,

 The
 Company will not repurchase any shares greater than $5/share,

 Share
 repurchases will only be made to the extent it does not prevent the Company from paying its debts; and

 The
 shares may either be returned to the treasury and authorized for reissuance or cancelled and retired.

 The
Company reacquired 362,620 shares of treasury stock for $631,967, at an average price of $1.74/share.

October 2024, the Company ceased its share repurchase program.

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 arrangements with consultants as called for per their respective agreements.

of Warrants

 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.

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

 In 2024, the Company issued shares based on the following
vesting schedule:

 July

 August

 September

 October

 November

 66,665

 For
the year ended December 31, 2024, 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.

 In
2024, the Company granted an aggregate 44,640 shares of common stock to various members of the Board of Directors, having a fair value
of $149,990 ($3.36/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

 -

 4 th
 anniversary of the effective date (2028)

 LIQUIDITY
AND CAPITAL RESOURCES

 At
December 31, 2024 and 2023, our current assets were $17,870,323 and $33,366,661, respectively, and our current liabilities were 6,059,476
and $12,705,044, respectively, which resulted in a working capital surplus of $11,810,847 and $20,661,617, respectively. The decrease
in current assets is a result of the suspension of the Affordable Connectivity Program, whereby accounts receivable decreased by $6,535,865
and the write-down of the inventory of $6,382,471.

 Total assets at December 31, 2024 and 2023 amounted to $23,976,005 and
$41,925,307, respectively, a decrease of $17,949,302 from 2023 to 2024. The decrease in total assets is a result of the suspension of
the Affordable Connectivity Program and shuttering of the LogicsIQ business segment, whereby accounts receivable decreased by $6,535,865,
the write-down of the inventory of $6,382,471, and the impairment loss of $1,681,649. At December 31, 2024, assets consisted of current
assets of $17,870,323, net property and equipment of $591,088, net intangible assets of $1,472,962, goodwill of $3,300,000, note receivable of $176,851, and operating lease right of use asset of $564,781 and 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.

 At
December 31, 2024, our total liabilities were $8,714,392 compared to total liabilities of $13,521,843 at December 31, 2023. This $4,807,451
decrease was related to the accounts payable and debt repayment during 2024.

 At
December 31, 2024, our total stockholders' surplus was $15,261,613 as compared to $28,403,464 at December 31, 2023. The
$12,643,578 decrease was primarily due to the net loss for the year.

 The
following table sets forth the major sources and uses of cash for the years ended December 31, 2024 and 2023.

 2024

 2023

 Net
 cash provided by or (used in) operating activities

 $
 (21,310,603
)

 $
 10,287,345

 Net
 cash used in investing activities

 (3,004,576
)

 (281,304
)

 Net
 cash provided by financing activities

 22,483,508

 (2,419,635
)

 Net
 change in cash and cash equivalents

 $
 (1,831,671
)

 $
 7,586,406

 Net
cash provided used in 2024, was primarily due to the net loss for the year ended December 31, 2024, compared to the net gain for the
year ended December 31, 2023.

 Net
cash used in investing activities in 2024 was primarily due to the purchase and sale of investments, and the purchase of ClearLine assets
in 2024

 Net
cash provided for financing activities is primarily due to the equity offering in January 2024 and the exercise of warrants during the
year ended December 31, 2024.

 As
a result of net negative cash provided by operating activities and investing activities in 2024, our overall cash decreased in 2024
by $1,831,671, compared to an increase of cash in 2023 primarily driven by net cash provided for by operations of
$10,287,345.

 At
December 31, 2024, the Company had the following material commitments and contingencies.

 Cash
requirements and capital expenditures – Due to the end of the ACP program in 2024 and the reduction in total
revenues and margins, we may not have sufficient resources to continue to fund operations for the next twelve months without
additional funding. We are currently exploring various strategic opportunities; however, we have no commitments at this time and no
known timing as to when any transaction may occur. We will only pursue options that we believe are in the best interest of, and on
the best terms for, the Company.

 Known
trends and uncertainties – The Company continues to explore potential strategic opportunities to acquire other businesses with similar business
operations, or businesses we believe could be potentially symbiotic. While we are currently exploring various strategic opportunities,
we have no commitments at this time and no known timing as to when any opportunities may arise. We will only pursue opportunities that
we believe are in the best interest of, and on the best terms for, the Company.

 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, 2024 and 2023,
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.

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.

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

 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, 2024, 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, 2024. During the year ended December 31,
2024, management identified no weaknesses.

 Pursuant
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, 2024, 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

the year ended December 31, 2024, certain of our officers and directors adopted or terminated Rule 10b5-1 trading arrangements as follows:

 On
 March 14, 2024, Kevin Brian Cox, our President and Chief Executive Officer, adopted a trading plan that is intended to satisfy the conditions
under Rule 10b5-1(c) of the Exchange Act. Mr. Cox's trading plan is equal to the number of shares of the Company's common
stock as reasonably estimated by the designated broker such that the net proceeds from their sale are sufficient to cover the withholding
taxes resulting from the vesting of RSA grants previously issued to Mr. Cox, in amounts and prices determined in accordance with a formula
set forth in the plan. The plan was terminated on December 3, 2024.

 In
the quarter ended December 31, 2024, 250,000 shares were received and vested from RSA grants as provided for in Mr. Cox's employment agreement and 97,380 shares were sold.

 On
 March 14, 2024, Anthony Evers, our Chief Financial Officer, adopted a trading plan that is intended to satisfy the conditions under Rule
10b5-1(c) of the Exchange Act. Mr. Evers' trading plan is equal to the number of shares of the Company's common stock as
reasonably estimated by the designated broker such that the net proceeds from their sale are sufficient to cover the withholding taxes
resulting from the vesting of RSA grants previously issued to Mr. Evers, in amounts and prices determined in accordance with a formula
set forth in the plan. The plan was terminated on December 31, 2024.

 For
the quarter ended December 31, 2024, 199,998 shares were received and vested from RSA grants as provided for in Mr. Evers'
employment agreement and 110,000
shares were sold.

 Except as disclosed above, none of our directors or executive officers
adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended
to satisfy the affirmative defence conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement" (as defined in
Item 408 of Regulation S-K).

 Issuer
Purchases of Equity Securities

 On
August 13, 2024, the Company entered into a share repurchase program with ThinkEquity LLC for up to $ 5,000,000 shares of its common stock.
No shares were repurchased during the three months ending December 31, 2024.

 On
October 1, 2024, the Company decided to terminate the share repurchase program and will no longer be making any reacquisitions.

 ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 Not
applicable.

 PART
III

 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 2025 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+

 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

 10.25

 03/12/2024

 10.26

 Master Services Agreement, dated as of October 3, 2024, between SurgePays, Inc. and TerraCom, Inc.

 10.1

 10/16/2024

 14.1

 Inc. Code of Ethics and Business Conduct

 14.1

 03/24/2022

 19.1

 SurgePays, Inc. Insider Trading Policy

 19.1

 03/12/2024

 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

 97.1

 03/12/2024

 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

 Pursuant
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 25, 2025

 By:

 /s/
 Kevin Brian Cox

 Name:

 Kevin
 Brian Cox

 Title:

 Chief
 Executive Officer

 Pursuant
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)

 Balance Sheets

 F- 4

 Statements of Operations

 Statements of Changes in Stockholders' Equity

 - F-7

 Statements of Cash Flows

 Notes
 to Consolidated Financial Statements

 F-9 -

 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, 2024 and 2023, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years
in the two-year period ended December 31, 2024 and the related notes (collectively referred to as the financial statements). In our opinion,
the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as
of December 31, 2024 and 2023, and the results of its consolidated operations and its consolidated cash flows for each of the years in
the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

 Basis
for Opinion

 These
consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.

 Critical
Audit Matter

 The
critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated
or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the
critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it
relates.

 F- 2

 Sufficiency
of audit evidence over revenue

 1)
 The
 Company generates revenues from the delivery of processing, service and product solutions.
 Revenue is measured based on consideration specified in contracts, and the Company recognizes
 revenue when it satisfies a performance obligation by processing the transaction, which is
 at a point in time. The Company's revenue consists of a significant volume of transactions
 sourced from systems and applications. The processing of such transactions and recording
 of the majority of revenue is system-driven and based on contractual terms. Revenue is recognized
 when the services and products are delivered to the customers and control is transferred,
 which is at a point in time. These revenues are recognized on the gross basis as the company
 is considered a principal in the transaction.

 2)
 The
 Company also has significant revenue from providing services and products under the Affordable
 Connectivity Program and Lifeline program. Revenue is recognized after services and products
 have been delivered to an eligible customer.

 How
the Critical Audit Matters Were Addressed in the Audit

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

 We
obtained and understanding and evaluated management's significant accounting policies around revenue recognition for each significant
line of revenue, including management's assessment of when control of goods and services are transferred to customers.

 For
a sample of revenue transactions, we tested selected transactions by agreeing the amounts of revenue recognized to source documents and
testing the mathematical accuracy of the recorded revenue. We also evaluated the source documents to determine whether terms that may
impact revenue recognition were identified and properly considered by management.

 Goodwill
impairment assessment

 3)
 As
 discussed in note 2 to the consolidate financial statements of the Company, the Company closed
 an asset purchase agreement and is reporting goodwill of $2,500,000 as of December 31, 2024.
 Management reviewed the goodwill for impartment as of December 31,2024. The review of impairment
 for goodwill allows management to first asses qualitative factors to determine whether it
 is necessary to perform the more detailed quantitative goodwill impairment test. Management
 performed the qualitative analysis and determined that goodwill was not impaired and was
 not required to perform the more detailed quantitative goodwill impairment test. Management
 assessment included significant judgment and is subject to various risks and uncertainties.

 How
the Critical Audit Matters Were Addressed in the Audit

 We
evaluated management significant judgment and assumptions that were used in the impairment analysis. The matter required auditor judgment,
subjectivity, and effort in performing procedures.

 /s/
 Rodefer Moss & Co, PLLC

 We
have served as the Company's auditor since 2017

 Johnson
City, Tennessee

 March

 F- 3

Balance Sheets

 Assets

 Current Assets

 Cash and cash equivalents

 $
 11,790,389

 $
 14,622,060

 Restricted cash - held in escrow

 1,000,000

 -

 Accounts receivable - net

 3,000,209

 9,536,074

 1,781,365

 9,046,594

 Prepaids and other

 298,360

 161,933

 Total Current Assets

 17,870,323

 33,366,661

 Property and equipment -
 net

 591,088

 361,841

 Other Assets

 Note receivable

 176,851

 176,851

 Intangibles - net

 1,472,962

 2,126,470

 Internal use software development costs - net

 -

 539,424

 Goodwill

 3,300,000

 1,666,782

 Investment in CenterCom

 -

 464,409

 Operating lease - right of use asset - net

 564,781

 387,869

 Deferred income taxes
 - net

 -

 Total Other Assets

 5,514,594

 8,196,805

 Total
 Assets

 $
 23,976,005

 $
 41,925,307

 Liabilities
 and Stockholders' Equity

 Current Liabilities

 Accounts payable and accrued expenses

 $
 3,929,195

 $
 6,439,120

 Accounts payable and accrued expenses - related
 party

 192,845

 1,048,224

 Accounts payable and accrued expenses

 192,845

 1,048,224

 Accrued income taxes payable

 -

 570,000

 Deferred revenue

 -

 20,000

 Operating lease liability

 248,069

 43,137

 Note payable - related
 party

 1,689,367

 Total Current Liabilities

 6,059,476

 12,705,044

 Long Term Liabilities

 Note payable - related party

 1,866,288

 -

 Notes payable - SBA government

 469,396

 460,523

 Notes payable

 469,396

 460,523

 Operating lease liability

 319,232

 356,276

 Total Long Term Liabilities

 2,654,916

 816,799

 Total
 Liabilities

 8,714,392

 13,521,843

 Stockholders' Equity

 Common stock, $ 0.001 par value, 500,000,000 shares authorized 20,431,549
 shares issued and 20,068,929 shares outstanding, respectively, at December 31, 2024 14,403,261 shares issued and outstanding at December

 20,435

 14,404

 Additional paid-in capital

 76,842,878

 43,421,019

 Treasury stock - at cost ( 362,620 and 0 shares,
 respectively)

)

 -

 Accumulated deficit

 ( 60,915,427
)

 ( 15,186,203
)

 Stockholders' equity

 15,315,919

 28,249,220

 Non-controlling
 interest

 ( 54,306
)

 154,244

 Total
 Stockholders' Equity

 15,261,613

 28,403,464

 Total
 Liabilities and Stockholders' Equity

 $
 23,976,005

 $
 41,925,307

 The accompanying notes are an integral part of these unaudited consolidated financial statements

 F- 4

Statements of Operations

 For

 2024

 2023

 $

 $

 Costs and expenses

 Cost of revenues

 75,205,372

 101,499,341

 General and administrative
 expenses

 27,458,152

 16,777,107

 Total costs and expenses

 102,663,524

 118,276,448

 (loss) from operations

 ( 41,782,351
)

 18,865,384

 Other income (expense)

 Interest expense

 ( 554,200
)

 ( 595,975
)

 Loss on lease termination - net

 ( 194,863
)

 -

 Other income

 636,868

 -

 Interest income

 105,395

 -

 Realized gains - investments

 13,613

 -

 Dividends, interest, and other income - investments

 355,549

 -

 Gain on investment in CenterCom

 33,864

 110,203

 Impairment loss - CenterCom

 ( 498,273
)

 -

 Impairment loss - internal use software development
 costs

 ( 316,594
)

 -

 Impairment loss - goodwill

 ( 866,782
)

 -

 Total
 other income (expense) - net

 ( 1,285,423
)

 ( 485,772
)

 Net income (loss) before
 provision for income taxes

 ( 43,067,774
)

 18,379,612

 Provision
 for income tax benefit (expense)

 ( 2,870,000
)

 2,265,000

 Net income (loss) including
 non-controlling interest

 ( 45,937,774
)

 20,644,612

 Non-controlling
 interest

 ( 208,550
)

 26,709

 Net
 income (loss) available to common stockholders

 $
 ( 45,729,224
)

 $

 Earnings per share - attributable
 to common stockholders

 Basic

 $
 ( 2.39
)

 $
 1.45

 Diluted

 $
 ( 2.39
)

 $
 1.38

 Weighted average number
 of shares outstanding - attributable to common stockholders

 Basic

 19,119,181

 14,258,172

 Diluted

 19,119,181

 14,922,881

 The accompanying notes are an integral part of these unaudited consolidated financial statements

 F- 5

Statements of Changes in Stockholders' Equity

 For
the Year Ended December 31, 2024

 Additional

 Non-

 Total

 Stock

 Paid-in

 Accumulated

 Stock

 Controlling

 Stockholders'

 Amount

 Capital

 Deficit

 Amount

 December 31, 2023

 14,403,261

 $
 14,404

 $
 43,421,019

 $
 ( 15,186,203
)

 $
 -

 $
 -

 $
 154,244

 $
 28,403,464

 Stock issued for cash

 3,080,356

 3,081

 17,246,913

 -

 -

 -

 -

 17,249,994

 Cash paid as direct offering costs

 -

 -

 ( 1,395,000
)

 -

 -

 -

 -

 ( 1,395,000
)

 Exercise of warrants - cash

 1,860,308

 1,861

 8,797,396

 -

 -

 -

 -

 8,799,257

 Exercise of warrants - cashless

 40,238

 ( 41
)

 -

 -

 -

 -

 -

 Stock issued for services

 47,386

 411,692

 -

 -

 -

 -

 411,740

 Recognition of stock based compensation - unvested
 shares - related parties

 1,000,000

 1,000

 6,751,706

 -

 -

 -

 -

 6,752,706

 Recognition of stock-based compensation - related
 party

 -

 -

 6,196

 -

 -

 -

 -

 6,196

 Recognition of stock-based compensation

 -

 -

 1,602,997

 -

 -

 -

 -

 1,602,997

 Treasury shares repurchased (share buy-backs)

 -

 -

 -

 -

 362,620

)

 -

)

 Non-controlling interest

 -

 -

 -

 -

 -

 -

 ( 208,550
)

 ( 208,550
)

 Net loss

 -

 -

 -

 ( 45,729,224
)

 -

 -

 -

 ( 45,729,224
)

 December 31, 2024

 20,431,549

 $
 20,435

 $
 76,842,878

 $
 ( 60,915,427
)

 362,620

 $
)

 $
 ( 54,306
)

 $
 15,261,613

 The
accompanying notes are an integral part of these unaudited consolidated financial statements

 F- 6

Statements of Changes in Stockholders' Equity (Deficit)

 For
the Year Ended December 31, 2023

 Additional

 Non-

 Total

 Stock

 Paid-in

 Accumulated

 Controlling

 Stockholders'

 Amount

 Capital

 Deficit

 December 31, 2022

 14,116,832

 $
 14,117

 $
 40,780,707

 $
 ( 35,804,106
)

 $
 127,535

 $
 5,118,253

 14,116,832

 $
 14,117

 $
 40,780,707

 $
 ( 35,804,106
)

 $
 127,535

 $
 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

 -

 -

 37,176

 -

 -

 37,176

 Exercise of warrants for cash

 43,814

 207,196

 -

 -

 207,240

 Non-controlling interest

 -

 -

 -

 -

 26,709

 26,709

 Net income

 -

 -

 -

 -

 Net income (loss)

 -

 -

 -

 -

 December 31, 2023

 14,403,261

 $
 14,404

 $
 43,421,019

 $
 ( 15,186,203
)

 $
 154,244

 $
 28,403,464

 14,403,261

 $
 14,404

 $
 43,421,019

 $
 ( 15,186,203
)

 $
 154,244

 $
 28,403,464

 The accompanying notes are an integral part of these unaudited consolidated financial statements

 F- 7

Statements of Cash Flows

 2024

 2023

 For

 2024

 2023

 Operating activities

 Net income (loss) - including non-controlling
 interest

 $
 ( 45,937,774
)

 $
 20,644,612

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

 Bad debt expense

 -

 90,009

 Depreciation and amortization

 942,450

 935,039

 Amortization of right-of-use
 assets

 126,970

 43,483

 Amortization of internal
 use software development costs

 222,830

 129,060

 Impairment loss - CenterCom

 498,273

 -

 Impairment loss - internal
 use software development costs

 316,594

 -

 Impairment loss - goodwill

 866,782

 -

 Stock issued for services

 411,740

 1,290,024

 Recognition of stock based
 compensation - unvested shares - related parties

 6,752,706

 529,534

 Recognition of stock-based
 compensation

 1,602,997

 -

 Recognition of share based
 compensation - options

 -

 576,625

 Recognition of share based
 compensation - options - related party

 6,196

 37,176

 Recognition of share based
 compensation - options

 6,196

 37,176

 Realized gain in sale of
 investments

 ( 13,613
)

 -

 Interest expense adjustment
 - SBA loans

 19,750

 -

 Right-of-use asset lease
 payment adjustment true up

 ( 267,347
)

 -

 Gain on equity method investment
 - CenterCom

 ( 33,864
)

 ( 110,203
)

 Cash paid for lease termination

 ( 212,175
)

 -

 Loss on lease termination
 - net

 194,863

 -

 Changes in operating assets and liabilities

 (Increase) decrease in

 Accounts receivable

 6,535,865

 ( 395,718
)

 7,265,229

 2,139,648

 Prepaids and other

 ( 136,427
)

 ( 50,409
)

 Deferred income taxes -
 net

 ( 2,835,000
)

 Increase (decrease) in

 Accounts payable and accrued
 expenses

 ( 2,509,925
)

 654,746

 Accounts payable and accrued
 expenses - related party

 ( 356,388
)

 ( 680,497
)

 Accounts payable and accrued
 expenses

 ( 356,388
)

 ( 680,497
)

 Accrued income taxes payable

 ( 570,000
)

 570,000

 Installment sale liability
 - net

 -

 ( 13,018,184
)

 Deferred revenue

 ( 20,000
)

 ( 223,110
)

 lease liability

 148,665

 ( 39,490
)

 Net
 cash provided by (used in) operating activities

 ( 21,310,603
)

 10,287,345

 Investing activities

 Purchase of property and equipment

 ( 518,189
)

 -

 Purchase of investments - net

 ( 10,159,444
)

 -

 Proceeds from sale of investments

 10,173,057

 -

 Cash paid for acquisition of Clearline Mobile,
 Inc. assets

 ( 2,500,000
)

 -

 Capitalized internal use
 software development costs

 -

 ( 281,304
)

 Net
 cash used in investing activities

 ( 3,004,576
)

 ( 281,304
)

 Financing activities

 Proceeds from stock issued for cash

 17,249,994

 -

 Proceeds from exercise of common stock warrants

 8,799,257

 207,240

 Cash paid as direct offering costs

 ( 1,395,000
)

 -

 Repayments of loans - related party

 ( 1,527,899
)

 ( 1,017,385
)

 Repayments on notes payable

 -

 ( 1,595,167
)

 Repayments on notes payable - SBA government

 ( 10,877
)

 ( 14,323
)

 Treasury shares repurchased (share buy-backs)

)

 -

 Net
 cash provided (used in) by financing activities

 22,483,508

 ( 2,419,635
)

 Net increase (decrease)
in cash, cash equivalents and restricted cash

 ( 1,831,671
)

 7,586,406

 Cash, cash equivalents and restricted cash - beginning of year

 14,622,060

 7,035,654

 Cash, cash equivalents and restricted cash - end of year

 $
 12,790,389

 $
 14,622,060

 Supplemental disclosure
 of cash flow information

 Cash paid for interest

 $
 470,208

 $
 222,326

 Cash paid for income
 tax

 $
 -

 $
 -

 Supplemental disclosure
 of non-cash investing and financing activities

 Reclassification of
 accrued interest - related party to note payable - related party

 $
 498,991

 $
 -

 Exercise of warrants - cashless

 $

 $
 -

 Termination of ROU operating
 lease assets and liabilities

 $
 327,139

 Right-of-use asset obtained
 in exchange for new operating lease liability

 $
 664,288

 $
 -

 The
accompanying notes are an integral part of these unaudited consolidated financial statements

 F- 8

 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
Company and its subsidiaries are organized as follows:

of Subsidiaries

 Name (Active)

 Incorporation
 Date

 State
 of Incorporation

 Segment

 Inc.

 August
 18, 2006

 Corporate
 Parent

 Surge
 Blockchain, LLC

 January
 29, 2009

 ECS
 Prepaid, LLC

 June
 9, 2009

 Missouri

 LogicsIQ,
 Inc.

 October
 2, 2018

 Other
 Corporate Overhead

 Torch
 Wireless

 January
 29, 2019

 Wyoming

 Fintech, Inc.

 August
 22, 2019

 SurgePhone
 Wireless, LLC

 August
 29, 2019

 Injury
 Survey, LLC

 July
 28, 2020

 Other
Corporate Overhead

 All
of the following entities have nominal operations.

 Name (Inactive)

 Incorporation
 Date

 State
 of Incorporation

 Electronic Check Services, Inc.

 May 19, 1999

 Missouri

 Central States Legal Services, Inc.

 August 1, 2003

 Missouri

 KSIX, LLC

 September 14, 2011

 DigitizeIQ, LLC

 July 23, 2014

 Illinois

 KSIX Media, Inc.

 November 5, 2014

 Surge Payments, LLC

 December 17, 2018

 See discussion below regarding the discontinuation of the Company's lead generation
segment.

 F- 9

 Discontinued
Operations – LogicsIQ Segment

 Management's
Decision

December 31, 2024, the Company's management elected to abandon its lead generation segment operations as part of a strategic reassessment
of its business lines. This decision followed a review by the Chief Operating Decision Maker ("CODM", which is our Chief Executive Officer), who had been regularly evaluating
the segment's financial performance and determined that its continued operation was no longer aligned with the Company's
long-term strategic objectives.

 In
accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the Company assessed whether the abandonment
met the criteria for classification as a discontinued operation. ASU 2014-08 provides that a discontinued operation must represent a
strategic shift that has (or will have) a major effect on an entity's operations and financial results. The Company determined
that this threshold was not met for the following reasons:

 and Asset Impact: The lead generation segment contributed 0% of total consolidated revenue and less than 1% of total assets, making
 it an immaterial component of the Company's overall business. The exit does not result in a significant change to revenue streams,
 total assets, or capital allocation.

 Lack
 of Operational Significance: The segment was not integral to the Company's primary business strategy and had been operating
 with minimal investment in technology, personnel, and infrastructure.

 No
 Industry or Geographic Exit: The Company is not exiting a major product line, customer segment, or geographical region. All other
 segments remain unaffected by this decision, and the Company continues to operate in its primary markets with no material shift in
 business focus.

 Strategic
 Realignment Rather Than Transformation: The abandonment reflects a refinement of operational priorities rather than a fundamental
 transformation of the Company's core business model. The Company continues to focus on its core service offerings, which contribute
 the majority of revenue and drive long-term growth.

 Based
on these factors, the Company has concluded that the abandonment does not constitute a strategic shift that has or will have a major
effect on its financial results or operations. As a result, the segment will not be presented as a discontinued operation in the financial
statements.

 F- 10

 Segment
Reporting (ASC 280) Considerations

 Under
ASC 280, Segment Reporting, the lead generation segment was historically identified as a reportable segment, as the CODM regularly reviewed
its financial performance separately from other segments. However, given its diminished financial impact and lack of long-term strategic
significance, the Company has concluded that the segment no longer meets the quantitative or qualitative thresholds for separate segment
reporting under ASC 280-10-50-1. Accordingly, financial data previously presented under the Lead Generation segment will be reclassified
to "Other" in the segment disclosure included in Note 10 to the consolidated financial statements.

 In
line with the amendments introduced by ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, (adopted
January 1, 2024), the Company has evaluated the impact of this change on its segment disclosures. The key considerations are as follows:

 Significant
 Expense Disclosures: The Company has identified that the lead generation segment did not have any significant expenses that were
 regularly provided to the CODM and included in the reported measure of segment profit or loss. Therefore, no additional disclosures
 are required under the new guidance.

 Other
 Segment Items: As the lead generation segment is being reclassified to "Other," for its segment disclosure, the Company
 will disclose the composition of this category, including the nature and type of activities aggregated therein, as required by the
 updated standard.

 Interim
 Reporting: The Company will ensure that all annual disclosures about reportable segments' profit or loss and assets, as mandated
 by ASC 280 and the amendments from ASU 2023-07, are also provided in interim periods going forward.

 Accounting
and Financial Statement Impact

 Since
the lead generation segment is being abandoned rather than sold, it does not qualify as held for sale under ASC 360-10-45-9. The Company
does not expect to recognize any material exit costs, impairment losses, or restructuring charges related to this decision. Any remaining
assets and liabilities associated with the segment will be derecognized as appropriate in accordance with applicable accounting standards.

 F- 11

 Future
Business Operations

 The
lead generation segment did not have any workforce, customers, or existing contracts, and its abandonment will not result in any employee
layoffs, customer transitions, or contract terminations. This decision reflects management's focus on core business areas that
offer higher growth potential and operational efficiency.

 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, 2024, the Company had:

 Net
 loss available to common stockholders of $ 45,729,224; and

 Net
 cash used in operations was $ 21,310,603

 Additionally,
at December 31, 2024, the Company had:

 Accumulated
 deficit of $ 60,915,427

 Stockholders'
 equity of $ 15,261,613; and

 Working
 capital of $ 11,810,847

 We
manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company has
unrestricted cash on hand of $ 11,790,389
at December 31, 2024.

 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. The Company again generated a net loss in 2024.

 There
can be no assurance that profitable operations will be achieved and could 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 ending December 31, 2025, and our current capital structure including equity-based instruments and our obligations
and debts.

February 7, 2024, the Affordable Connectivity Program ("ACP") stopped accepting new applications and enrollments. The program
ceased funding on June 1, 2024. See discussion below regarding revenue recognition.

 F- 12

 The
Company believes it has sufficient cash resources on hand to meet its current obligations for a period that is more than one year from
the issuance date of these financial statements.

 Management's
strategic plans include the following:

 Enhance market visibility and customer reach for SurgePays' direct mobile virtual network operator (MVNO),
linkup Mobile,

 Diversify
 Lifeline revenue streams by expanding into California and other states,

 Sustain platform growth to bolster baseline revenue, and

 Investigate specialized marketing strategies and customer engagement initiatives through our Clearline product offering.

 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 and Asset Acquisitions

 The
Company accounts for acquisitions that qualify as business combinations by applying the acquisition method according to Accounting Standards
Codification ("ASC") 805, Business Combinations ("ASC 805").

 Transaction
costs related to the acquisition of a business are expensed as incurred and excluded from the fair value of consideration transferred.

 The
identifiable assets acquired, liabilities assumed, and noncontrolling interests in an acquired entity are recognized and measured at
their estimated fair values. The excess of the fair value of consideration transferred over the fair values of identifiable assets acquired,
liabilities assumed, and noncontrolling interests in an acquired entity, net of the fair value of any previously held interest in the
acquired entity, is recorded as goodwill. Such valuations require management to make significant estimates and assumptions.

 F- 13

 Purchase
price allocations may be preliminary, and, during the measurement period not to exceed one year from the date of acquisition, changes
in assumptions and estimates that result in adjustments to the fair value of assets acquired and liabilities assumed are recorded in
the period the adjustments are determined.

 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 earnings.

 The
Company evaluates acquisitions of assets and other similar transactions to assess whether the transaction should be accounted for as
a business combination or asset acquisition by first applying a screen test to determine whether substantially all of the fair value
of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If so, the transaction
is accounted for as an asset acquisition. If not, further determination is required as to whether the Company has acquired inputs and
processes that can create outputs that would meet the definition of a business. When applying the screen test, significant judgment is
required to determine whether an acquisition is a business combination or an acquisition of assets.

 Accounting
for asset acquisitions falls under the guidance of Topic 805, Business Combinations, specifically Subtopic 805-50. A cost accumulation
model is used to determine an asset acquisition's cost. Assets acquired are based on their cost, generally allocated to them on
a relative fair value basis. Direct acquisition-related costs are included in the cost of the acquired assets.

 The
distinction between business combinations and asset acquisitions involves judgment, particularly when applying the screen test to determine
the nature of the transaction. Incorrect judgments or changes in decisions in these areas could materially affect the determination of
goodwill, the recognition and measurement of acquired assets and assumed liabilities, and, consequently, our financial position and results
of operations.

 F- 14

 Acquisition
of ClearLine Mobile, Inc assets

 On
January 5, 2024, the Company closed a purchase agreement and acquired ClearLine Mobile, Inc's. ("CLMI") assets
related software development in exchange for $ 2,500,000.

 CLMI
produces a touchscreen display, positioned by the cash register, which is integrated into the SurgePays software platform and markets
SurgePays products 24/7 from a central server. SurgePays can advertise its entire suite of products and services while utilizing the
POS device for transactions.

 Following
the guidance of ASC 805, we performed the screen test to evaluate whether the acquired set is a business or a group of assets. The acquired
group of assets included inputs and a substantive process that together significantly contributed to the ability to create outputs. At
the time of purchase, CLMI had insignificant operations, however, the transaction was accounted for as a business combination in accordance
with ASC 805-50.

 Payments
were paid 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)

 In
connection with this business combination, the Company assumed a right-of-use operating lease and corresponding lease liability of $ 98,638
with a period of two ( 2) years remaining.

 Additionally,
the acquired technology/software having a net carrying amount of $ 0. As a result, the Company determined that it has acquired both tangible
and intangible assets.

 F- 15

 The
table below summarizes the estimated fair value of the assets acquired and the liabilities assumed at the effective acquisition date.

of Estimated Fair Value of Assets Acquired and Liabilities Assumed

 Consideration

 Cash

 $
 2,500,000

 Fair value of consideration transferred

 2,500,000

 Recognized amounts of identifiable assets acquired
 and liabilities assumed:

 Right-of-use
 operating lease

 98,638

 Total
 assets acquired

 98,638

 Right-of-use
 operating lease

 98,638

 Total
 liabilities assumed

 98,638

 Total
 identifiable net assets

 -

 Goodwill

 $
 2,500,000

 At
the time of acquisition, CLMI had nominal revenues and historical losses from operations. As a result, and given the immaterial nature
of this acquisition, the Company elected not to present any pro-forma financial information.

 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 to the Company at any level under SEC Regulation
S-X 3.05 and did not require the presentation of any additional historical audited financial statements.

 At
December 31, 2024 and 2023 goodwill was $ 3,300,000 and $ 1,666,782, respectively.

 At
December 31, 2024, the Company determined that its subsidiary LogicsIQ would be considered a discontinued operation (See Note 1). Prior
to this determination, the Company recorded a goodwill impairment loss of $ 866,782. There were no impairment losses recorded for the
for the year ended December 31, 2023.

 F- 16

 Note
Receivable (Sale of Former Subsidiary)

 On
May 7, 2021, the Company disposed of its former 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 was expected to receive twenty-five ( 25) monthly payments of principal and accrued interest totaling $ 7,461
commencing in June 2023.

 Payments
were scheduled as follows:

of Receivables

 For the Year
 Ended December 31,

 In
 Default

 2025

 186,525
 **

 $
 141,759

 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.

 **
 At December 31, 2024, a
 total of $ 141,759 in payments were in default, which consisted of payments due totaling $ 52,227 related to the year ended December
 31, 2023 and an additional $ 89,532 of payments which were due as of December 31, 2024.

 As
of December 31, 2024, the Company believes the note is collectible. See Note 8 for Contingencies – Legal Matters for additional
discussion.

 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.

 The
Mobile Virtual Network Operator (SurgePhone and Torch Wireless) business segment made up approximately 70 % and 85 % of total consolidated
revenues for the years ended December 31, 2024 and 2023, respectively.

 F- 17

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 98 %
of accounts receivable at December 31, 2024 and December 31, 2023, respectively.

 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, 2024 and 2023, 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 property and equipment and intangible assets, capitalized internal-use software development costs,
related impairment assessments of long lived assets, 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.

 F- 18

February 7, 2024, the Affordable Connectivity Program ("ACP") stopped accepting new applications and enrollments. The program
ceased funding on June 1, 2024. See discussion below regarding revenue recognition.

 At
December 31, 2024, the Company discontinued its lead generation services segment.

 Fair
Value of Financial Instruments

 The
Company accounts for financial instruments in accordance with Financial Accounting Standards Board (FASB) ASC 820, Fair Value Measurements,
which provides a framework for measuring fair value and requires related disclosures. 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.
The Company determines fair value based on its principal market or, if unavailable, the most advantageous market for the specific asset
or liability.

 To
classify and disclose assets and liabilities measured at fair value, the Company utilizes a three-tier fair value hierarchy, which prioritizes
observable inputs over unobservable ones:

 Level
 1 – Quoted market prices (unadjusted) for identical assets or liabilities in active markets.

 Level
 2 – Inputs other than quoted prices in active markets that are observable, either directly or indirectly, for similar assets
 or liabilities.

 Level
 3 – Unobservable inputs with minimal or no market data, requiring the Company to develop its own assumptions.

 Determining
fair value and assigning a measurement within the hierarchy involves judgment. Level 3 valuations, in particular, require greater judgment
and complexity, as they may involve various valuation methods—such as cost, market, or income approaches—applied to management
estimates and assumptions. These assumptions can include price estimates, earnings projections, market factors, or the weighting of different
valuation methods. The Company may also engage external advisors to assist in fair value determinations when appropriate. While management
believes recorded fair values are reasonable, they may not reflect future fair values or net realizable values.

 The
Company's financial instruments, including cash, accounts receivable, note receivable, accounts payable, and accrued expenses (including
related-party amounts), are recorded at historical cost. As of December 31, 2024, and December 31, 2023, the carrying values of these
instruments approximate their fair values due to their short-term nature.

 F- 19

 Additionally,
ASC 825-10, Financial Instruments, allows entities to elect the fair value option, enabling financial assets and liabilities to be measured
at fair value on an instrument-by-instrument basis. This election is irrevocable unless a new election date occurs, and any unrealized
gains or losses would be recognized in earnings at each reporting date. The Company has not elected to apply the fair value option to
any outstanding financial instruments.

 Cash
and Cash Equivalents, Restricted Cash 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.

 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, 2024 and December 31, 2023, respectively, the Company did not experience any losses on cash balances in excess of FDIC insured
limits.

 Additionally, at December 31, 2024, the Company had $ 1,000,000 held in escrow, that was restricted in connection with a potential acquisition.
The restriction lapsed in January 2025, and the $ 1,000,000 was returned to the Company's operating cash account.

 Marketable
Securities - Classification and Valuation

 The
Company may classify its marketable securities as either trading, available-for-sale, or held-to-maturity.

 Trading
securities are recorded at fair value with unrealized gains and losses included in earnings.

 Available-for-sale
securities are recorded at fair value with unrealized gains and losses excluded from earnings and reported in other comprehensive income.

 Held-to-maturity
securities are recorded at amortized cost.

 At
December 31, 2024 and 2023, the Company has classified all of its marketable securities as trading, based upon our intent to sell them
in the near term. Our securities consist of U.S. Treasury and government exchange traded funds.

 At
December 31, 2024 and 2023, the Company's marketable securities were $ 0, respectively.

 F- 20

 Marketable
securities were as follows at December 31, 2024 and 2023, respectively.

of Marketable Securities

 U.S. Treasury
 & Government

 Exchange Traded
 Funds

 Fixed

 Balance - December 31, 2023

 $
 -

 Purchases

 10,000,000

 Sales

 ( 10,173,057
)

 Realized gains

 13,613

 Dividends, interest, and other income

 169,306

 Fees/adjustments

 ( 9,862
)

 Balance - December 31, 2024

 $
 -

of Marketable Securities

 The
Company evaluates its marketable securities for impairment at each reporting period.

 An
impairment is considered to be other-than-temporary if the Company (a) intends to sell the security, (b) is more likely than not to be
required to sell the security before recovery of its amortized cost basis, or (c) does not expect to recover the entire amortized cost
basis of the security.

 If
a decline in fair value is determined to be other-than-temporary, the impairment loss is recognized in earnings. For debt securities,
the amount of the other-than-temporary impairment recognized in earnings depends on the extent to which the security's fair value
is less than its amortized cost and the severity and duration of the decline.

 The
determination of whether a decline is other-than-temporary involves significant judgment and includes an assessment of various factors
including:

 The
 length of time and the extent to which the fair value has been less than the cost basis;

 The
 financial condition and near-term prospects of the issuer, including any specific events that may influence the issuer's operations
 or profitability;

 The
 intent and ability of the Company to hold the security for a period of time sufficient to allow for any anticipated recovery in fair
 value.

 For
the years ended December 31, 2024 and 2023, respectively, the Company did no t record any impairment losses related to its marketable
securities.

 See
Note 7 for additional disclosure of our marketable securities at fair value.

 F- 21

 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 $ 0 and $ 17,525 at December 31, 2024 and 2023, respectively.

 There
was bad debt expense (recovery) of $ 0 for the years ended December 31, 2024 and 2023, 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.

 During the year ended December 31, 2024, and in connection with the cessation of the ACP Program on June 1, 2024, the Company wrote off
inventory totaling $ 6,382,471. This amount has been included as a component of cost of revenues in the accompanying consolidated statements
of operations.

 At
December 31, 2024 and 2023, the Company had inventory of $ 1,781,365 and $ 9,046,594, respectively.

 F- 22

of Long-lived Assets

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, 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 various impairment losses recorded during the year ended December 31, 2024, see below.

 There
were no impairment
losses recorded for the year ended December 31, 2023.

 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.

 F- 23

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 (3) 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.

 F- 24

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

 At
December 31, 2024, the Company determined that there was no future use for its capitalized internal use software development costs based
upon its current and expected future operations. As a result, the Company recorded an impairment loss of $ 316,594.

 For
the year ended December 31, 2023, the Company did no t record any impairment loss.

 For the years ended December 31, 2024 and 2023, the Company expensed $ 1,095,033 and $ 0, respectively, related to our internal use software
development costs.

 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:

 Step
1: Identify the contract(s) with customers

 Step
2: Identify the performance obligations in the contract

 Step
3: Determine the transaction price

 Step
4: Allocate the transaction price to performance obligations

 Step
5: Recognize revenue when the entity satisfies a performance obligation

 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.

 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.

 F- 25

 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.

 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.

 F- 26

 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 (40% investment ownership).

 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. Effective January 1, 2024, the Company no longer provides these services.

 The
total revenue from these services for the years ended December 31, 2024 and 2023, was $ 0 and $ 1,545,397, 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.

December 31, 2024, the Company's management elected to abandon its lead generation segment operations as part of a strategic reassessment
of its business lines. See Note 1.

 Additionally, the segment disclosure for this former segment is now combined as a part of other/corporate overhead.

 F- 27

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.

 The
Company has evaluated revenue recognition and disclosure in accordance with ASC 606-10-37A and has determined the Company is a
principle in the agreements. As a result, we record all revenues at their gross
amounts and the related costs are recorded as costs of revenues in the accompanying consolidated financial statements.

 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, 2024 and 2023, the Company had deferred revenue of $ 0 and $ 20,000, respectively.

 The
following represents the Company's disaggregation of revenues for the years ended December 31, 2024 and 2023:

of Disaggregation of Revenue from Contracts with Customers

 For

 2024

 2023

 %
 of Revenues

 %
 of Revenues

 Mobile Virtual Network Operators

 $
 43,450,244

 71.37
 %

 $
 118,577,920

 86.46
 %

 Comprehensive Platform Services

 17,419,088

 28.61
 %

 11,341,183

 8.27
 %

 11,841

 0.02
 %

 7,222,729

 5.27
 %

 Total Revenues

 $

 %

 $

 %

 The
above disaggregation of revenues includes the following entities:

Virtual Network Operators (SPW and TW),

Platform Services (Surge Fintech and ECS); and

 Other
Corporate Overhead (Surge Blockchain and formerly LogicsIQ and Injury Survey)

 F- 28

December 31, 2024, the Company's management elected to abandon its lead generation segment operations as part of a strategic
reassessment of its business lines. See Note 1. As a result, segment reporting/disaggregation of revenues for lead generation was no
longer required and have now been included as a component of "other corporate overhead." For the years ended December 31, 2024 and 2023,
revenues from this discontinued operation were $ 0
and $ 7,184,283,
respectively.

 Cost
of Revenues

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

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, 2024 and 2023, 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, 2024 and 2023, respectively.

 For
the year ended December 31, 2023, the Company generated net income, however, during the year ended December 31, 2024, the Company has
reflected a net loss. As of December 31, 2024, the loss resulted in the Company being in a three-year cumulative historic loss position.
As a result, the Company recorded a full valuation allowance on its deferred tax assets as of December 31, 2024, resulting in a tax expense
of $ 2,870,000 for the period ended December 31, 2024.

 F- 29

 The
Company currently has an unapplied net operating loss carryforward (deferred tax asset), which have been evaluated for applicability
in offsetting current taxable net income. The Company has determined that the federal net operating loss carryforward is limited to
80% of the current year's net taxable income. Since the Company entered a three-year cumulative loss commencing during the
quarter ended June 30, 2024, and remained in a three-year cumulative loss at December 31, 2024, a full valuation allowance has been
recorded against all net operating loss carryforwards.

 At
December 31, 2024 and 2023, the Company has accrued an income tax liability of $ 0 and $ 570,000, respectively. See Note 12.

 Investment

 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.

 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.

 The
following is a summary of our investment at December 31, 2024 and December 31, 2023:

of Investment

 Balance - December 31, 2022

 $
 354,206

 Gain on investment in
 CenterCom

 110,203

 Balance - December 31, 2023

 464,409

 Gain on investment in
 CenterCom

 33,864

 Impairment loss - CenterCom

 ( 498,273
)

 Balance - December 31, 2024

 $
 -

the years ended December 31, 2024 and 2023, we recognized a gain of $ 33,864 and $ 110,203, respectively.

 F- 30

 As
of December 31, 2024, the Company assessed its investment in CenterCom and determined there was an impairment. Factors leading to this
decision included a change in ownership and large reduction in human capital. As a result, CenterCom was materially impacted and could
no longer continue its operations.

 As
a result, for the years ended December 31, 2024 and 2023, the Company has recorded an impairment loss of $ 498,273 and $ 0, 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 marketing and advertising costs during the years ended December 31, 2024 and 2023, respectively, as follows:

of Marketing and Advertising Costs

 Years
 Ended December 31,

 2024

 2023

 $
 109,004

 $
 152,851

 Stock-Based

 The
Company accounts for stock-based compensation in accordance with ASC 718, "Compensation – Stock Compensation", as amended
by ASU 2018-07 – Improvements to Nonemployee Share-Based Payment Accounting. Under the fair value-based method:

 cost is measured at the grant date based on the fair value of the award.

 The
 cost is recognized over the service period, typically the vesting period.

 This
 guidance applies to transactions where equity instruments are exchanged for goods or services and also addresses liabilities settled
 in equity instruments.

 For
equity instruments granted to non-employees, the Company applies the fair value method, using the Black-Scholes option pricing model
to measure the fair value of stock options.

 The
fair value of stock-based compensation is determined either:

 At
 the grant date, or

 At
 the measurement date, when performance obligations are fulfilled.

 F- 31

 Assumptions
Used in Fair Value Determination

 When
using the Black-Scholes model, the Company considers the following key assumptions, in accordance with ASU 2017-09 – Compensation
– Stock Compensation (Topic 718): Scope of Modification Accounting:

 price

 dividend yield

 stock price volatility

 Risk-free
 interest rate

 life of the option

 Stock

 The
Company may issue warrants to purchase shares of its common stock in connection with financing transactions (debt or equity), consulting
agreements, and collaboration arrangements.

 Classification:
 Warrants are classified as equity awards when they are standalone instruments that are neither puttable nor mandatorily redeemable,
 as per ASC 815-40 – Derivatives and Hedging: Contracts in Entity's Own Equity.

 Valuation:
 The fair value of compensatory warrants is determined using the Black-Scholes option pricing model at the measurement date.

 Derivative
 Liabilities: If a warrant meets the definition of a derivative liability, fair value is determined using a binomial pricing model,
 in accordance with ASC 815-40.

 Accounting
Treatment

 Warrants issued in conjunction with common
 stock are recorded at fair value as a reduction to additional paid-in capital of the issued stock, in accordance with ASC 718 and
 ASC 815.

 Warrants issued for services are recorded
 at fair value and expensed either:

 Over
 the requisite service period, or

 Immediately
 at issuance if no service period is required.

 F- 32

 Basic
and Diluted Earnings (Loss) per Share

 The
Company computes earnings (loss) per share in accordance with ASC 260-10-45, Earnings Per Share, as amended by ASU 2020-06, Accounting
for Convertible Instruments and Contracts in an Entity's Own Equity.

 Basic
 earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding
 during the reporting period.

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

 Potentially
Dilutive Securities

 Potentially
dilutive common shares include:

 Contingently
 issuable shares

 stock issuable upon the exercise of stock options and warrants, calculated using the treasury stock method in accordance with ASC
 260-10-55

 Convertible
 debt instruments, if applicable

 These
securities may be dilutive in the future, but in periods where the Company reports a net loss, diluted loss per share is equal to basic
loss per share because the inclusion of potential common stock equivalents would be anti-dilutive.

Potentially Dilutive Equity Securities

 The
following potentially dilutive equity securities were outstanding as of December 31, 2024, and 2023:

of Diluted Net Income (Loss) Per Share

 96,000

 5,574,253

 Stock options

 2,220,684

 116,174

 Total common stock equivalents

 2,316,684

 5,690,427

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

 F- 33

 Sufficiency
of Authorized Shares

 As
of December 31, 2024, the Company has 500,000,000 authorized shares of common stock, which is sufficient to accommodate any potential
exercises of common stock equivalents.

 The
following table shows the computation of basic and diluted earnings per share for the years ended December 31, 2024 and 2023:

of Earnings per Share Basic and Diluted

 Year Ended

 Year Ended

 Numerator

 Net income
 (loss) available to common stockholders

 $
 ( 45,729,224
)

 $

 Denominator

 Weighted average shares outstanding - basic

 19,119,181

 14,258,172

 Effect
 of dilutive securities

 -

 664,709

 Weighted average shares
 outstanding - diluted

 19,119,181

 14,922,881

 Earnings (loss) per share - basic

 $
 ( 2.39
)

 $
 1.45

 Earnings (loss) per share - diluted

 $
 ( 2.39
)

 $
 1.38

the year ended December 31, 2024, the Company reacquired 362,620 shares of treasury stock for $ 631,967. These shares are excluded from
the denominator in computing basic and diluted earnings (loss) per share, as these shares are not considered outstanding.

Stock

 The
Company accounts for treasury stock under the cost method, which records treasury stock at the purchase price and presents it as a reduction
in stockholders' equity. Under this method, the purchase, sale, issuance, or retirement of treasury stock does not impact the income
statement. Gains or losses on the reissuance of treasury stock are reflected as adjustments to additional paid-in capital. In cases where
additional paid-in capital is insufficient to cover a loss, the remaining balance is charged to retained earnings.

stock is initially recorded at cost on the date of repurchase. If treasury shares are subsequently reissued, they are removed from treasury
stock at the cost at which they were originally acquired. Any excess of the reissuance price over cost is credited to additional paid-in
capital, while any deficiency is charged to additional paid-in capital to the extent of previously recorded credits, with any remaining
deficiency charged to retained earnings.

 The
Company periodically assesses the need to retain treasury shares and may retire shares if they are no longer deemed necessary for future
use, resulting in a reduction of issued shares and a corresponding adjustment to retained earnings.

 F- 34

 Related
Parties

 The
Company identifies and discloses related party relationships and transactions in accordance with ASC 850, "Related Party Disclosures",
and follows guidance set forth by the SEC under Regulation S-X, Rule 4-08(k) regarding related party disclosures.

 A
party is considered related to the Company if it meets any of the following criteria:

 Directly
 or indirectly controls, is controlled by, or is under common control with the Company.

 Principal
 owners, including any entity or individual that holds a significant ownership interest in the Company.

 and key personnel, including officers, directors, and executives.

 Immediate
 family members of principal owners and key management personnel.

 Entities
 with significant influence, where one party can exert control or influence over the management or operating policies of another party
 to the extent that one of the transacting parties may not be fully pursuing its own separate economic interests.

 The
Company follows the SEC's Regulation S-K, Item 404(a), which requires the disclosure of related party transactions exceeding a
materiality threshold and details on the nature of the relationship, transaction terms, and amounts involved.

the years ended December 31, 2024 and 2023, respectively, the Company incurred expenses with a related party (annual rental
agreement) in the normal course of business as follows:

of Related Party Expenses

 Related
 Party

 Carddawg Investments,
 Inc.

 166,356

 166,356

 Total

 $
 166,356

 $
 166,356

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

 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.

 F- 35

 Recent
Accounting Standards

 The
Financial Accounting Standards Board (FASB) establishes changes to accounting principles through Accounting Standards Updates (ASUs),
which amend the FASB Codification. The Company evaluates the applicability and impact of all newly issued ASUs on its consolidated financial
position, results of operations, stockholders' equity, and cash flows.

has assessed all recent accounting pronouncements issued through the date these financial statements were available for issuance. Except
as described below, no newly issued but not yet effective accounting pronouncements are expected to have a material impact on the Company's
consolidated financial statements.

 Recently
Adopted Accounting Standards

 ASU
 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures

 Issued:
 March 2022

 Date: January 1, 2023

 Summary:
 ASU 2022-02 eliminates the troubled debt restructuring (TDR) accounting guidance under ASC 310, Receivables, and introduces additional
 disclosure requirements for gross write-offs by year of origination. The update also modifies the credit loss model under ASC 326,
 requiring enhanced disclosures related to loan refinancings and restructurings for borrowers experiencing financial difficulties.

 Impact: The Company adopted ASU 2022-02 on January 1, 2023, and the adoption did not have a material impact on the Company's
 consolidated financial statements.

 ASU
 2023-01, Leases (Topic 842): Common Control Arrangements

 Issued:
 March 2023

 Date: For fiscal years beginning after December 15, 2023

 Summary:
 This ASU clarifies leasehold improvements accounting for entities under common control and requires leasehold improvements to be
 amortized over the useful life of the improvements rather than the lease term.

 Impact: The Company adopted ASU 2023-01 on January 1, 2024, and the adoption did not have a material impact on the Company's
 consolidated financial statements.

 F- 36

 ASU
 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

 Issued:
 November 2023

 Date: For fiscal years beginning after December 15, 2023

 Summary:
 Enhances segment reporting disclosures, requiring more information about significant segment expenses.

 Impact: The Company adopted ASU 2023-07 on January 1, 2024, and the adoption did not have a material impact on the Company's
 consolidated financial statements.

 Recently
Issued Accounting Standards (Not Yet Adopted)

 ASU
 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures

 Issued:
 December 2023

 Date: For fiscal years beginning after December 15, 2024

 Summary:
 Expands disclosure requirements related to income taxes, including greater detail on income tax rate reconciliations and disaggregation
 of tax expense components.

 Impact: The Company is currently assessing the impact but does not anticipate a material effect on its financial statements.

 Other
Recent Updates

 Various
other ASUs have been issued that primarily contain technical corrections or industry-specific guidance. These updates are not expected
to have a material impact on the Company's 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.

 F- 37

 Note
3 – Property and Equipment

 Property
and equipment consisted of the following:

of Property and Equipment

 Estimated Useful

 Type

 Lives

 Computer equipment and software

 $
 1,135,178

 $
 1,006,286

 3 - 5

 Leasehold improvements

 306,311

 -

 Furniture and fixtures

 165,738

 82,752

 5 - 7

 Property and Equipment - gross

 1,607,227

 1,089,038

 Less: accumulated depreciation/amortization

 ( 1,016,139
)

 ( 727,197
)

 Property and equipment
 - net

 $
 591,088

 $
 361,841

 Depreciation
and amortization expense for the years ended December 31, 2024 and 2023 was $ 942,450 and $ 935,039, 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

 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

 Intangibles - gross

 5,753,520

 5,753,520

 Less: accumulated amortization

 ( 4,280,558
)

 ( 3,627,050
)

 Intangibles - net

 $
 1,472,962

 $
 2,126,470

 F- 38

 Amortization
expense for the years ended December 31, 2024 and 2023 was as follows:

of Amortization Expense

 $
 653,508

 $
 653,507

 Estimated
amortization expense for each of the succeeding years is as follows:

of Estimated Amortization Expenses

 For
 the Years Ended December 31:

 2025

 653,508

 2026

 653,508

 2027

 165,946

 Total

 $
 1,472,962

 Note
5 – Internal Use Software Development Costs

Use Software Development Costs consisted of the following:

of Internal Use Software Development Costs

 Estimated
 Useful

 Type

 Life

 use software development costs

 $
 668,484

 $
 668,484

 Less:
 accumulated amortization

 ( 351,890
)

 ( 129,060
)

 Less:
 impairment loss

 ( 316,594
)

 -

 Use Software Development Costs - net

 $
 -

 $
 539,424

 Costs
incurred for Internal Use Software Development Costs

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

 At
December 31, 2024, the Company determined that there was no future use for its capitalized internal use software development costs based
upon its current and expected future operations. As a result, the Company recorded an impairment loss of $ 316,594 and removed the gross
amount of its capitalized costs totaling $ 668,484. See Note 1.

 F- 39

 NOTES

 The
following is a summary of our capitalized internal use software development costs at December 31, 2024 and December 31, 2023:

of Capitalized Internal Use Software Development Costs

 $
 387,180

 Capitalized
 costs

 281,304

 668,484

 loss

 ( 668,484
)

 $
 -

 For
the years ended December 31, 2024 and 2023, amortization of internal software development costs was $ 222,830 and $ 129,060, respectively.

 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, 2024 and 2023, respectively:

 Notes
Payable – SBA government

 Economic
Injury Disaster Loan ("EIDL")

2020, 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 were used for working capital purposes.

 Installment
payments, including principal and interest, are due monthly (beginning twelve (12) months from the date of the promissory note) in amounts
ranging from $ 74 - $ 731 /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.

 F- 40

 NOTES

 Schedule of Notes Payable

 EIDL

 EIDL

 Terms

 SBA

 SBA

 Total

 Issuance
 dates of SBA loans

 May
 2020

 July
 2020

 Term

 Years

 Years

 Maturity
 date

 May
 2050

 July
 2050

 rate

 3.75 %

 3.75 %

 Collateral

 $
 145,922

 $
 328,924

 $
 474,846

 ( 3,928
)

 ( 10,395
)

 ( 14,323
)

 141,994

 318,529

 460,523

 expense adjustment - SBA loans

 5,487

 14,263

 19,750

 ( 3,532
)

 ( 7,345
)

 ( 10,877
)

 $
 143,949

 $
 325,447

 $
 469,396

 Notes
Payable – Related Parties

of Notes - Payable Related Parties

 The
following is a summary of the Company's Notes Payable - Related Parties:

 Total

 $
 -

 $
 5,134,563

 $
 467,385

 $
 5,601,948

 -

 ( 550,000
)

 ( 467,385
)

 ( 1,017,385
)

 -

 -

 Reclassification
 of principal into one single note

 ( 4,584,563
)

 -

 -

 Reclassification
 of accrued interest payable into one single note

 498,991

 -

 -

 498,991

 ( 1,527,899
)

 -

 -

 ( 1,527,899
)

 $

 $
 -

 $
 -

 $

 F- 41

 NOTES

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

 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 was due December 31, 2024. The Chief Executive Officer waived any events of default as of December 31, 2023.

 On
March 12, 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 % (with a default interest rate of 15 %)
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 repaid in full by December 2026.

 Activity was 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.
The note bore interest at 10 % and was unsecured.

 The
following is a detail of the Company's Notes Payable - Related Parties:

of Notes Payable - Related Parties

 Notes
 Payable - Related Parties

 Note
 Holder

 Issue
 Date

 Maturity
 Date

 Rate

 Default
 Interest Rate

 Collateral

 Note
 #1

 31, 2026

 10.00
 %

 15.00
 %

 None

 $

 $
 -

 Note
 #2

 31, 2022

 10.00
 %

 0.00
 %

 None

 -

 Short
 Term

 1,689,367

 Long
 Term

 $
 1,866,288

 $
 -

 F- 42

 NOTES

 Notes
Payable

of Notes Payable

 Terms

 Notes
 Payable

 Notes
 Payable

 Note
 Payable

 Total

 Issuance
 dates of notes

 April/May
 2022

 March
 2022

 2022

 Maturity
 date

 October/November
 2022

 March
 2023

 2025

 rate

 19 %

 19 %

 1 %

 Default
 interest rate

 26 %

 26 %

 0 %

 Collateral

 issued as debt discount/issue costs

 36,000

 15,000

 N/A

 1,100,000

 400,000

 95,167

 1,595,167

 ( 1,100,000
)

 ( 400,000
)

 ( 95,167
)

 ( 1,595,167
)

 $
 -

 $
 -

 $
 -

 $
 -

 - These notes were
issued with 36,000, three ( 3) year warrants, which were previously reflected as debt issue costs and were amortized over the life of
the debt. These notes were fully repaid in 2023.

 - These notes were
issued with 15,000, three ( 3) year warrants, which were previously reflected as debt issue costs and were amortized over the life of
the debt. Additionally, in 2022, the Company issued an additional 12,000, three ( 3) year warrants, which were treated as interest expense
in connection with extending the maturity date for notes totaling $ 400,000 to March 2023. In 2023, the Company repaid $ 400,000 in notes
and related accrued interest of $ 36,204 (aggregate $ 436,204).

 – 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.

 F- 43

 NOTES

 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

 For
 the Year Ended December 31,

 Notes
 Payable - Related Parties

 Notes
 Payable - SBA Government

 Total

 2025

 1,689,367

 11,043

 1,700,410

 2026

 1,866,288

 11,461

 1,877,749

 2027

 -

 11,902

 11,902

 2028

 -

 12,308

 12,308

 2029

 -

 12,820

 12,820

 Thereafter

 -

 409,862

 409,862

 Total

 $

 $
 469,396

 $
 4,025,051

 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 financial assets and liabilities that were measured at fair value on a recurring basis at December 31, 2024
and December 31, 2023, respectively.

 Note
8 – Commitments and Contingencies

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- 44

 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.

 In
2024, in connection with our purchase of CLMI, we acquired a right-of-use operating lease and related lease liability for a building
having a fair value of $ 98,638.

 F- 45

 NOTES

 Lease
Termination and Loss on Right-of-Use Asset

August 31, 2024, the Company entered into an agreement to terminate two (2) of its operating leases prior to the expiration of the lease
term. The early termination resulted in the derecognition of these Right-of-Use (ROU) assets and the corresponding lease liabilities
associated with these leases.

 In
connection with the termination, the Company made a buyout payment of $ 212,175 to the lessor to settle all remaining lease obligations.

 The
carrying amounts of the lease liability and ROU asset as of the termination date were as follows:

 Right-of-Use
 Asset (ROU) carrying amount: $ 309,826

 Lease
 Liability: $ 327,138

 As
a result of the termination, the Company recognized a loss of $ 194,863 which is reported in the Company's consolidated statements
of operations under the line item "Other expenses" for the years ended December 31, 2024.

 The
loss was calculated as follows:

of Loss

 ROU
 Asset

 309,826

 Cash
 paid to execute lease termination

 212,175

 ROU
 Liability

 ( 327,138
)

 Loss
 on lease termination

 194,863

 The
termination of these leases resulted in the complete derecognition of these ROU assets and the corresponding lease liabilities. The Company
does not expect any future obligations or payments related to these lease agreements following the settlement.

 On
October 1, 2024, the Company signed a lease for 2,293 square feet of office space in San Salvador. The lease term is 32
months, and expires
May 2027, and the total monthly payment is $ 18,958,
including base rent, estimated operating expenses and sales tax. This space houses our business process outsourcing teams, consisting of customer service, programming, call-center
and operations personnel.

 The
lease is subject to a 3 % annual increase. An initial Right of Use ("ROU") asset of $ 565,650 will be recognized as a non-cash
asset addition.

 At
December 31, 2024 and 2023, respectively, the Company had no financing leases as defined in ASC 842, "Leases."

 F- 46

 NOTES

 The
tables below present information regarding the Company's operating lease assets and liabilities at December 31, 2024 and 2023,
respectively:

of Operating Lease Assets and Liabilities

 Assets

 lease - right-of-use asset - non-current

 $
 564,781

 $
 387,869

 Liabilities

 lease liability

 $
 567,301

 $
 399,413

 Weighted-average
 remaining lease term (years)

 2.29

 6.50

 Weighted-average
 discount rate

 %

 %

 The
components of lease expense were as follows:

of Lease Expense

 Year
 Ended

 Year
 Ended

 lease costs

 Amortization
 of right-of-use operating lease asset

 $
 126,970

 $
 43,483

 Lease
 liability expense in connection with obligation repayment

 25,639

 20,804

 Total
 operating lease costs

 $
 152,609

 $
 64,287

 Supplemental
 cash flow information related to operating leases was as follows:

 cash outflows from operating lease (obligation payment)

 $
 148,665

 $
 39,490

 Right-of-use
 asset obtained in exchange for new operating lease liability

 $
 664,288

 $
 -

 F- 47

 NOTES

 Future
minimum lease payments for the years ended December 31:

of Future Minimum Payments

 Year
 Ended December 31,

 2025

 $
 281,956

 2026

 236,078

 2027

 100,563

 Total
 undiscounted cash flows

 618,597

 Less:
 amount representing interest

 51,296

 Present
 value of operating lease liabilities

 567,301

 Less:
 current portion of operating lease liabilities

 248,069

 Long-term
 operating lease liabilities

 $
 319,232

 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,

 b.
 For
 the year ended December 31, 2024 – at least $ 510,000; and

 c.
 For
 the year ended December 31, 2025 - subject to Board approval

 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- 48

 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 Executive 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, and all other years throughout the term of the employment
 agreement - $ 870,000.

 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, 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

 ii.
 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

 F- 49

 NOTES

 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,

 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

 See
Note 9 regarding the vesting provisions of these shares.

 F- 50

 NOTES

 Contingencies
– Legal Matters

 In
the normal course of business, the Company may be subject to litigation, claims, and legal proceedings. The Company evaluates legal contingencies
in accordance with FASB ASC 450-20-50, "Contingencies", which requires recognition of a liability if an unfavorable outcome
is both probable and can be reasonably estimated.

 When
a legal matter arises, the Company:

 Assesses
 the merits of the case, including available defences.

 Evaluates
 its potential exposure and possible legal or settlement strategies.

 Determines
 the likelihood of an unfavorable outcome based on available information.

 Establishes
 an accrual if a loss is both probable and reasonably estimable.

 As
of December 31, 2024, based on management's review and consultation with legal counsel, the Company is not aware of any contingent
liabilities that require accrual or disclosure in the consolidated financial statements.

 Surge
Holdings – Juno Litigation

 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 Court dismissed the case with
the agreement of the parties at a case management conference on September 12, 2024.

 True
Wireless and SurgePays – Litigation

 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 ("Defendants"), and makes other allegations related to SurgePays' consulting work with Jonathan
Coffman, formerly a True Wireless employee. Blue Skies alleged 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. Defendants filed various motions with the Court demonstrating
Oklahoma state law does not recognize non-compete agreements and non-solicitation agreements in the manner alleged by Plaintiffs, and
the Court granted these motions, finding the non-solicitation and non-competition clauses in the Stock Purchase Agreement void as a matter
of Oklahoma law. The matter continues in the discovery process with other dispositive motions pending. 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 currently set for trial in
January 2025.

 F- 51

 NOTES

 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 responded by filing 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. Surge Pays elected to dismiss its
complaint without prejudice, and is in the process of re-filing the matter in the District Court of Oklahoma County, Oklahoma.

 Mike
Fina Litigation

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
filed a Motion for Summary Judgment seeking the same relief as the Motion to Dismiss, which was granted by the Court. All claims against
all parties have been adjudicated by the Court. SurgePays filed a Motion for New Trial, which is set on February 20, 2025. It is SurgePays'
intent to appeal the Court's dismissal of Fina, Blue Skies, True Wireless, Government Consulting Solutions, and Misty Garrett if
its Motion for New Trial is not granted by the Court. At this stage, no attempts at settlement have been made.

 F- 52

 NOTES

 Aliotta
and Vasquesz v SurgePays – Litigation

 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. A Confidential Settlement Agreement and Release of Claims has been entered into in April 2024 and a Dismissal
Order was entered by the Court on April 30, 2024.

 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. A Confidential Settlement
Agreement and Release of Claims has been entered into in April 2024 and a Dismissal Order has been entered by the Court.

– Ambess Litigation

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

 F- 53

 NOTES

 Note
9 – Stockholders' Equity

 At
December 31, 2024, the Company had three (3) classes of stock:

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

 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- 54

 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.

January 1, 2025, in accordance with the Plan, we increased the available amount of shares by 10 % of the common stock outstanding on December
31, 2024, approximating an additional 2,007,000 shares of common stock. After this increase, total shares authorized and available to
be issued under the Plan approximated 6,907,000 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, 2024, the Company had sufficient authorized shares to settle any possible awards that vested or stock options
eligible for conversion.

 F- 55

 NOTES

Transactions for the Years Ended December 31, 2024

 Stock
Issued for Cash - Capital Raise

 The
Company issued 3,080,356 shares of common stock for gross proceeds of $ 17,249,994 ($ 5.60 /share).

 In
connection with the capital raise, the Company paid cash as direct offering costs totaling $ 1,395,000, resulting in net proceeds of $ 15,854,994.

 This
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.

of Warrants - Cash

2024, the Company issued 1,860,308 shares of common stock in connection with the exercise of 1,860,308 warrants for $ 8,799,257 ($ 4.73 /share).
See warrant table below.

of Warrants - Cashless

2024, the Company issued 40,238 shares of common stock in connection with the cashless exercise of warrants ($ 0.001 /share). The transaction
had a net effect of $ 0 on stockholders' equity. See warrant table below.

 Stock
Issued for Services

 The
Company issued 47,386 shares of common stock for services rendered, having a fair value of $ 411,740 ($ 3.85 - $ 7.34 /share), based upon
the quoted closing trading price.

 See
separate discussion below for the issuance and related vesting of common stock granted to the Company's officers and directors.

 F- 56

 NOTES

Stock

July 2024, the Company implemented a share repurchase program. Under the terms of this program, the Company undertook the following:

 Maximum
 dollar amount authorized for repurchase is $ 5,000,000,

 The
 Company will not repurchase more than 20,000 shares per day,

 The
 Company will not repurchase any shares greater than $ 5 /share,

 Share
 repurchases will only be made to the extent it does not prevent the Company from paying its
 debts; and

 The
 shares may either be returned to the treasury and authorized for reissuance or cancelled
 and retired.

 The
Company reacquired 362,620 shares of treasury stock for $ 631,967, at an average price of $ 1.74 /share.

October 2024, the Company ceased its share repurchase program.

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.

of Warrants - Cash

 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 (Officer and Directors) – and related Vesting

 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 ratably over these vesting periods. All
shares are expected to vest in accordance with the terms of the agreement.

 F- 57

 NOTES

 For
the years ended December 31, 2024 and 2023, the Company recognized stock compensation expense of $ 2,148,681
 and $ 0,
respectively, related to vesting.

 Board
Directors

 2024
Grant

 In
2024, the Company granted an aggregate 44,640 shares of common stock to various members of the Board of Directors, having a fair value
of $ 149,990 ($ 3.36 /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

 -
 4 th
 anniversary of the effective date (2028)

 2023
Grant

 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 employment agreement.

 For
the years ended December 31, 2024 and 2023, the Company recognized stock compensation expense of $ 132,025 and $ 0, respectively, related
to vesting.

 Chief
Executive Officer

 In
2024, the Company granted common stock to its Chief Executive Officer ( 500,000 shares – see Note 8), having a fair value of $ 3,800,000
($ 7.60 /share), based upon the quoted closing trading price.

 F- 58

 NOTES

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

 For
the years ended December 31, 2024 and 2023, the Company recognized stock compensation expense of $ 3,800,000 and $ 0, respectively, related
to vesting.

of Human Resources and Legal Services

 In
2024, the Company granted 100,000 shares of common stock to its Director of Human Resources and Legal Services, having a fair value of
$ 672,000 ($ 6.72 /share), based upon the quoted closing trading price.

 The
shares will vest ratably over the period July 2024 – December 2024. The Company records stock compensation expense ratably over
these vesting periods. All shares are expected to vest in accordance with the terms of the agreement.

 For
the years ended December 31, 2024 and 2023, the Company recognized stock compensation expense of $ 672,000 and $ 0, respectively, related
to vesting.

 For
the years ended December 31, 2024 and 2023, the Company recognized total stock compensation expense of $ 6,752,706 and $ 0 related to vesting.

 The
following is a summary of the Company's non-vested shares at December 31, 2024 and 2023.

of Non-vested Shares Related Parties

 Non-Vested

 Number
 of Shares

 Grant
 Date Fair Value

 -

 $
 -

 695,000

 5.24

 -

 -

 -

 -

 695,000

 $
 5.24

 644,640

 $
 7.60

 ( 1,000,000
)

 6.55

 -

 -

 339,640

 $
 5.30

 Unrecognized

 $
 973,253

 average period (years)

 3.72

 F- 59

 NOTES

 The
following is a detail of the common stock granted, which is subject to the vesting provisions noted above at December 31, 2024 and December
31, 2023, respectively.

of Stock Granted

 of

 CEO

 CFO

 Directors

 Human
 Resources/Legal

 Total

 -

 -

 -

 -

 -

 -

 600,000

 95,000

 -

 695,000

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 600,000

 95,000

 -

 695,000

 500,000

 -

 44,640

 100,000

 644,640

 ( 500,000
)

 ( 400,000
)

 -

 ( 100,000
)

 ( 1,000,000
)

 -

 -

 -

 -

 -

 -

 200,000

 139,640

 -

 339,640

 Unrecognized

 $
 -

 $
 479,077

 $
 494,176

 $
 -

 $
 973,253

 average period (years)

 -

 1.00

 2.72

 -

 3.72

 F- 60

 NOTES

 Stock
Options

 Stock
option transactions for the years ended December 31, 2024 and 2023 are summarized as follows:

of Stock Option Transactions

 Remaining

 Aggregate

 Grant

 Number
 of

 Contractual

 Intrinsic

 Date

 Stock
 Options

 Options

 Price

 Term

 Value

 Fair
 Value

 17,004

 $
 16.00

 4.16

 $
 -

 and Exercisable - December 31, 2022

 6,801

 $
 16.00

 4.16

 $
 -

 and non-exercisable - December 31, 2022

 10,203

 $
 16.00

 4.16

 $
 -

 104,272

 $
 6.45

 $
 5.53

 Exercised

 -

 $
 -

 -

 $
 -

 121,276

 $
 7.79

 6.47

 $
 -

 and Exercisable - December 31, 2023

 116,174

 $
 7.43

 6.61

 $
 -

 and non-exercisable - December 31, 2023

 5,101

 $
 16.00

 3.16

 $
 -

 1,054,603

 $
 1.78

 Exercised

 -

 $
 -

 ( 9,798
)

 $
 6.45

 2,220,684

 $
 2.09

 6.92

 $
 -

 and Exercisable - December 31, 2024

 2,220,684

 $
 2.09

 6.92

 $
 -

 and non-exercisable - December 31, 2024

 -

 $
 -

 -

 $
 -

 Years
Ended December 31, 2024

 Stock
Options - Related Party – Chief Financial Officer

 The
remaining 5,101 stock options vested, and the related expense was $ 6,196.

 Stock
Options – Chief Executive Officer, Chief Financial Officer and Employees

 The
Company granted an aggregate of 1,054,603, fully vested, seven ( 7) year stock options to the Company's Chief Executive Officer
 ( 248,424), Chief Financial Officer ( 157,335) and various employees ( 648,844) for services rendered, having a fair value of $ 1,602,997.
Of the total expense recognized, $ 616,754 related to the officers, and $ 986,243 related to the employees. These options have an exercise
price of $ 1.78 per share.

 F- 61

 NOTES

 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

 %

 dividends

 %

 Risk
 free interest rate

 4.48
 %

 Stock-based
compensation expense for the years ended December 31, 2024 and 2023 was as follows:

of Stock Based Compensation Expense

 Year
 Ended December 31,

 2024

 2023

 $
 1,609,193

 $
 613,801

 Year
Ended December 31, 2023

 Stock
Options - Related Party – Chief Financial Officer

 5,101
stock options vested, and the related expense was $ 37,196.

 Stock
Options - Employees

 The
Company granted 104,272, fully vested, 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

 %

 dividends

 %

 Risk
 free interest rate

 3.88
 %

 F- 62

 NOTES

 Warrant
activity for the years ended December 31, 2024 and 2023 are summarized as follows:

of Warrants Activity

 Remaining

 Aggregate

 Number
 of

 Contractual

 Intrinsic

 Price

 Term

 Value

 5,681,392

 $
 5.05

 1.85

 $
 10,026,387

 and Exercisable - December 31, 2022

 5,681,392

 $
 5.05

 1.85

 $
 10,026,387

 -

 $
 -

 0.00

 $
 -

 -

 $
 -

 Exercised

 ( 43,814
)

 $
 4.73

 ( 63,325
)

 $
 26.39

 5,574,253

 $
 4.81

 0.86

 $
 9,348,348

 and Exercisable - December 31, 2023

 5,574,253

 $
 4.81

 0.86

 $
 9,348,348

 -

 $
 -

 -

 $
 -

 -

 $
 -

 Exercised

 ( 1,953,308
)

 $
 4.73

 ( 3,524,945
)

 $
 4.86

 96,000

 $
 4.73

 0.37

 $
 -

 and Exercisable - December 31, 2024

 96,000

 $
 4.73

 0.37

 $
 -

 and non-exercisable - December 31, 2024

 -

 $
 -

 -

 $
 -

 Note
10 – Segment Information

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- 63

 NOTES

 Segment
information for the Company's operations for the years ended December 31, 2024 and 2023, is as follows:

of Operating Segments

 2024

 2023

 For

 2024

 2023

 $
 43,450,244

 $
 118,577,920

 17,419,088

 11,341,183

 11,841

 7,222,729

 Total

 $

 $

 Cost
 of revenues

 $
 58,410,842

 $
 83,918,968

 16,779,312

 11,281,722

 15,218

 6,298,651

 Total

 $
 75,205,372

 $
 101,499,341

 expenses

 $
 1,204,818

 $
 427,493

 3,132,457

 1,799,469

 23,120,877

 14,550,145

 Total

 $
 27,458,152

 $
 16,777,107

 (loss) from operations

 $
 ( 16,165,416
)

 $
 34,231,459

 ( 2,492,681
)

 ( 1,740,008
)

 ( 23,124,254
)

 ( 13,626,067
)

 Total

 $
 ( 41,782,351
)

 $
 18,865,384

 F- 64

 NOTES

 Segment
information for the Company's assets and liabilities at December 31, 2024 and December 31, 2023, are as follows:

 Total
 Assets

 $
 8,472,349

 $
 32,502,760

 4,884,817

 2,584,245

 10,618,839

 6,838,302

 Total

 $
 23,976,005

 $
 41,925,307

 Total
 Liabilities

 $
 1,505,400

 $
 2,426,964

 103,612

 155,295

 7,105,380

 10,040,099

 Total

 $
 8,714,392

 $
 13,521,843

 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- 65

 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.

 F- 66

 NOTES

 Covenants

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

 1.
 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, the Company recorded an installment sale liability of $ 0.

the year ended December 31, 2023, the Company paid fees of $ 491,536. These amounts were included as a component of cost of goods sold.

 The
liability was repaid in full in 2023 and the agreement was cancelled.

 Note
12 – Income Taxes

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

of Income Taxes and Effective Income Tax Rate

 Federal

 Current

 $
 -

 $
 570,000

 ( 2,835,000
)

 Total
 provision (benefit)

 $

 $
 ( 2,265,000
)

 State

 Current

 $
 35,000

 $
 -

 -

 -

 Total
 provision (benefit)

 $
 35,000

 $
 -

 F- 67

 NOTES

 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, 2024 and 2023, respectively, is approximately as follows:

of Components of Income Tax Expense (Benefit)

 Federal
 income tax expense (benefit) - 19.64 %

 $
 ( 9,044,000
)

 $
 3,848,000

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

 ( 1,489,000
)

 923,000

 Non-deductible
 items

 1,392,000

 174,000

 Other

 163,000

 -

 Subtotal

 ( 8,978,000
)

 4,945,000

 Change
 in valuation allowance

 11,848,000

 ( 7,210,000
)

 tax expense (benefit)

 $
 2,870,000

 $
 ( 2,265,000
)

 tax rate

 - 6.7
 %

 - 12.4
 %

 Deferred Tax Assets and Liabilities

 As
of December 31, 2024 and 2023, respectively, the significant components of deferred tax assets and liabilities are approximately as follows:

of Deferred Tax Assets and Liabilities

 Tax Assets

 Reserve
 for uncollectible accounts

 $
 -

 $
 5,000

 Investment - Centercom

 45,000

 -

 Stock
 based compensation

 204,000

 -

 Lease liabilities

 144,000

 -

 Intangible assets

 37,000

 -

 Goodwill

 15,000

 -

 Net
 operating loss carryforwards

 12,425,000

 3,844,000

 Total
 deferred tax assets

 12,870,000

 3,849,000

 Less:
 valuation allowance

 ( 12,638,000
)

 ( 790,000
)

 Net
 deferred tax assets

 232,000

 3,059,000

 Tax Liabilities

 Depreciation

 89,000

 224,000

 Right-of-use assets

 143,000

 -

 Net
 deferred tax liabilities

 232,000

 224,000

 income taxes - net

 $
 -

 $

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 a result of historic losses, the Company has recorded a full valuation allowance as of December 31,
2024.

 F- 68

 NOTES

 As
of December 31, 2024, the Company had federal and state net operating loss carryforwards of approximately $ 49,000,000 and $ 44,000,000,
respectively. The federal net operating losses carry forward indefinitely and accordingly have 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 it is probable that the losses will be utilized before their expiration.

the years ended December 31, 2024, the valuation allowance increased by approximately $ 11,848,000. 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, 2024, all federal NOL carryforwards that were generated after 2017 may
only be used to offset 80% of taxable income and are carried forward indefinitely.

 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 files corporate income tax returns in the United States and several state 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, 2024 and 2023, respectively, there are no
unrecognized tax benefits, and there were no accruals for interest related to unrecognized tax benefits or tax penalties.

 F- 69