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.

Note Receivable (Sale of Former Subsidiary) and Related Impairment

On May 7, 2021, the Company disposed of its former subsidiary True Wireless, Inc. In connection with the sale, the Company received an unsecured promissory note receivable from Blue Skies Connections, LLC in the original principal amount of $176,851, bearing interest at 0.6% per annum, with a default interest rate of 10%. The note was payable in twenty-five (25) monthly installments of principal and accrued interest of $7,461, commencing June 2023.

On July 12, 2023, the Company provided Notice of Default to Blue Skies Connections, LLC for failure to make required payments, and accelerated the full outstanding balance in accordance with the terms of the note. The note was placed on non-accrual status upon default in July 2023, and no interest income (including default interest at 10%) has been recognized since that date due to uncertainty of collection.

During the year ended December 31, 2025, the Company determined that the note was uncollectible and recognized an impairment loss of $176,851, representing the full carrying amount of the note receivable. This charge is included in other expense - net in the accompanying consolidated statements of operations for the year ended December 31, 2025.

See Note 8 for additional discussion of related legal proceedings.

The Note Receivable was as follows:

 Schedule of Note Receivables 

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

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 at June 30, 2026 and December 31, 2025 include the following:

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Fair Value of Financial Instruments

The Company accounts for financial instruments in accordance with Accounting Standards Codification (ASC) 820, Fair Value Measurements, which defines fair value 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. ASC 820 establishes a three-tier hierarchy that prioritizes observable inputs over unobservable inputs:

The Company’s financial instruments include cash, accounts receivable, accounts payable, and accrued expenses, including related-party amounts. As of June 30, 2026 and December 31, 2025, the carrying values of these instruments approximate their fair values due to their short-term nature.

See Note 6 for the Company’s derivative liabilities, which are measured at fair value on a recurring basis using Level 3 inputs.

Accounts Receivable and Amounts Under Regulatory Review

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.

The Company measures an allowance for credit losses in accordance with ASC 326, Financial Instruments - Credit Losses, using the current expected credit loss model. The allowance is measured on a collective basis for receivables that share similar risk characteristics, and individually where a receivable no longer shares those characteristics, and reflects historical loss experience, current conditions and reasonable and supportable forecasts of future conditions over the remaining collection period. Accounts determined to be uncollectible are written off against the allowance when that determination is made. Credit loss expense is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations.

Accounts receivable that are not expected to be collected within twelve months of the balance sheet date are classified as non-current. A non-current receivable that does not bear interest is measured at the present value of the amount management expects to collect, determined using the yield on United States Treasury securities of a maturity comparable to the expected period to collection. The difference between the face amount of the receivable and its present value is recorded as a discount against the receivable, with the corresponding charge recognized in other income (expense) in the period in which the receivable is reclassified. The discount is subsequently accreted to income over the expected collection period using the effective interest method. The expected collection period and the discount rate are reassessed at each reporting date, and the effect of a change in either estimate is recognized prospectively.

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

At June 30, 2026 and December 31, 2025, the allowance for credit losses was $0, and no credit loss expense or recoveries were recorded during the three and six months ended June 30, 2026 and 2025.

A subsidiary of the Company derives substantially all of its revenue from programs administered by the Universal Service Administrative Company under the oversight of the Federal Communications Commission. Reimbursements under those programs are ordinarily received within approximately thirty (30) days following submission of the monthly reimbursement report. In November 2025, the program administrator commenced an audit of the subsidiary’s participation in one of those programs, and a related regulatory review was opened in March 2026. Pending completion of those proceedings, reimbursements aggregating $3,613,561 have been withheld from payment.

Management has concluded that the withheld amounts remain collectible in full, and accordingly no allowance for credit losses has been recorded against them. There is no prescribed timetable for completion of the audit and the related review, and neither proceeding had been resolved as of the date these unaudited consolidated financial statements were issued. Because collection is not expected within twelve months of the balance sheet date, the withheld amounts have been reclassified from current accounts receivable to non-current accounts receivable.

The withheld amounts do not bear interest. The non-current receivable was therefore measured at its present value on initial recognition, determined by discounting the $3,613,561 face amount over an estimated collection period of thirty-six (36) months at a discount rate of 4.15%, which represents the yield on United States Treasury securities of comparable maturity at the measurement date. The resulting discount of $415,067 was charged to other income (expense) and is presented as loss on present value measurement of long-term accounts receivable.

The discount is accreted to income over the expected collection period using the effective interest method. Accretion of $132,727 was recognized during the three and six months ended June 30, 2026 and is presented as accretion of discount on accounts receivable within other income (expense) in the accompanying consolidated statements of operations. At June 30, 2026, the face amount of the non-current receivable was $3,613,561, the unamortized discount was $282,340 and the carrying amount was $3,331,221.

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Accounts receivable consisted of the following:

Schedule of Accounts Receivables 

The estimated collection period and the discount rate are significant estimates. An extension of the estimated collection period would increase the discount recognized and extend the period over which it is accreted, and a shortening would have the opposite effect. The amounts ultimately collected may differ from management’s current estimate, and the timing of collection is not within the Company’s control.

Accordingly, the entire withheld balance is classified as non-current and is presented separately from current accounts receivable, net of the unamortized discount, within non-current assets in the accompanying consolidated balance sheet at a carrying amount of $3,331,221 at June 30, 2026.

Impairment of Long-lived Assets

Management 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 ASC 360-10-35-15, Impairment or Disposal of Long-Lived Assets. Factors considered in determining whether a potential impairment exists include, but are not limited to:

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 loss is measured as the amount by which the carrying amount of the assets exceeds their fair value.

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

There were no impairment losses on long-lived assets for the three and six months ended June 30, 2026 and 2025, respectively.

Derivative Liabilities

The Company evaluates financial instruments that contain characteristics of both liabilities and equity in accordance with FASB ASC 480, Distinguishing Liabilities from Equity, and FASB ASC 815, Derivatives and Hedging.

Classification of Freestanding Instruments

Freestanding financial instruments that are indexed to the Company’s own common stock are evaluated under ASC 815-40 to determine whether they qualify for equity classification. An instrument that is not indexed to the Company’s own common stock, or that does not satisfy the additional conditions for equity classification, is classified as a liability and measured at fair value. Common stock purchase warrants issued in connection with certain convertible notes payable contain a provision requiring settlement in cash at the holder’s election upon specified fundamental transactions. Those warrants therefore do not satisfy the conditions for equity classification and are accounted for as derivative liabilities.

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Embedded Conversion Features

The Company evaluates conversion features embedded in its convertible notes payable under ASC 815-15-25-1 to determine whether a feature must be separated from the host contract. A feature is separated only when each of the following conditions is met:

Where all three conditions are met, the feature is separated and accounted for as a derivative liability measured at fair value. Where they are not, the note is accounted for as a single instrument. The evaluation is performed at issuance based on the terms of the instrument in effect at that date. Where separation is precluded at issuance solely because a contingency specified in the instrument has not occurred, the conditions are reassessed on the date that contingency occurs, in accordance with ASC 815-15-25-4, and a feature that meets all three conditions on that date is separated on that date and measured at its fair value.

Measurement

Derivative liabilities are measured at fair value on the commitment date and are remeasured at fair value at each subsequent reporting date, with changes in fair value recognized in the consolidated statements of operations as change in fair value of derivative liabilities. The Company estimates fair value using the Black-Scholes-Merton option pricing model. Because the valuation depends on significant unobservable inputs, including expected volatility and expected term, derivative liabilities are classified within Level 3 of the fair value hierarchy under ASC 820.

Initial Recognition and Derivative Expense

When a conversion feature is separated in connection with the issuance of a convertible note payable, the feature is recorded at fair value on the commitment date and a corresponding debt discount is recorded against the host instrument. Debt discount, comprising original issue discount, capitalized guaranteed interest, the fair value of warrants and of commitment shares of common stock, debt issuance costs and the fair value of any separated conversion feature, is limited in the aggregate to the proceeds received. To the extent the initial fair value of the derivative liability, together with other debt discounts, exceeds the proceeds received, the excess is recognized immediately as day one derivative expense in the consolidated statements of operations on the commitment date.

Where a conversion feature is separated after the issuance of the convertible note payable because a contingency specified in the instrument has occurred, the feature is recorded at its fair value on the date of separation. The allocation of proceeds between the host contract and an embedded derivative under ASC 815-15-30-2 is performed at the inception of the hybrid instrument. Because the host instrument is already outstanding on the date of a later separation and no proceeds remain to be allocated, no debt discount arises and the fair value of the separated feature is recognized in the consolidated statements of operations as derivative expense on the date of separation.

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Conversion and Settlement

When a convertible note payable containing a separated conversion feature is converted into shares of common stock in accordance with the original terms of the instrument, the Company:

No gain or loss is recognized on a conversion effected under the original terms of the instrument. The Company applies conversion accounting and recognizes the unamortized debt discount allocated to the converted portion in interest expense on the date of conversion. When a warrant classified as a derivative liability is exercised, the liability is remeasured to fair value immediately before exercise and the resulting carrying amount is reclassified to additional paid-in capital.

Reassessment and Reclassification

The Company reassesses the classification of its equity-linked instruments at each reporting date. An instrument previously classified within stockholders’ equity that no longer satisfies the conditions for equity classification is reclassified to a liability and measured at fair value on the date of reclassification, with the difference between that fair value and the amount previously carried in equity recorded as an adjustment to stockholders’ equity. Changes in fair value after the date of reclassification are recognized in earnings. An instrument previously classified as a liability that subsequently satisfies the conditions for equity classification is remeasured to fair value on the date of reclassification, with the change recognized in earnings, and the resulting fair value is reclassified to stockholders’ equity.

Derivative Liability Balances

As of June 30, 2026, the Company had derivative liabilities of $1,107,421, comprising $127,114 attributable to common stock purchase warrants and $980,307 attributable to separated conversion features. The Company had no derivative liabilities as of December 31, 2025.

See Notes 5, 6 and 7 for additional information.

Debt Modifications and Extinguishments

When the terms of a debt instrument are amended, the Company first evaluates whether the amendment constitutes a troubled debt restructuring. A troubled debt restructuring occurs when the Company is experiencing financial difficulties and the lender grants a concession that it would not otherwise have considered. In assessing whether it is experiencing financial difficulty, the Company considers all relevant facts and circumstances, including whether it is in default on its debt obligations, whether substantial doubt exists regarding its ability to continue as a going concern, whether its securities are subject to delisting, whether projected cash flows are sufficient to service the debt in accordance with its existing contractual terms through maturity, and whether, absent the modification, the Company could obtain from sources other than the existing lender at market terms available to a nontroubled borrower.

If the Company is experiencing financial difficulty, it evaluates whether the lender has granted a consession, a lender is deemed to have granted a concession when the effective interest rate of the restructured debt, after giving effect to all terms of the restructuring, is lower than the effective interest rate of the debt immediately before the restructuring. The restructured effective interest rate is determined by projecting the cash flows under the amended terms and solving for the rate that equates the present value of those cash flows with the carrying amount of the debt immediately before the restructuring. When debt has been restructured more than once within a relatively short period, the Company considers the successive restructurings in accordance with the applicable lookback guidance, including comparison of the effective interest rate under the latest terms with the effective interest rate immediately preceding the earlier restructuring. 

A troubled debt restructuring effected solely through a modification of terms is not accounted for as an extinguishment. The Company compares the total future cash payments specified by the amended terms, on an undiscounted basis, with the carrying amount of the debt at the restructuring date. Total future cash payments include amounts designated as principal or interest, accrued interest that remains payable, and amounts contingently payable, assuming such contingent amounts will be paid. If the carrying amount exceeds total undiscounted future cash payments, the carrying amount is reduced to the amount of those payments and a gain on restructuring is recognized. If total undiscounted future cash payments are greater than or equal to the carrying amount, no gain is recognized and the carrying amount is not adjusted. In that circumstance, a new effective interest rate is determined that equates the present value of the future cash payments specified by the amended terms, excluding contingently payable amounts, with the carrying amount of the debt, and that effective interest rate is applied and amortized prospectively.

An amendment that is not a troubled debt restructuring is evaluated under the debt modification and extinguishment guidance. For term debt, an amendment is generally accounted for as an extinguishment when the present value of the cash flows under the amended terms is at least 10% different from the present value of the remaining cash flows under the existing terms, with both sets of cash flows evaluated using the effective interest rate of the original debt for accounting purposes. Cash flows under the amended terms include amounts paid by the Company to the lender, less amounts received from the lender as part of the modification. If the debt has been modified or exchanged within the preceding year without being deemed substantially different, the Company considers the terms that existed one year before the current transaction when applying the substantially-different-terms test.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when control of promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company applies the following five-step model:

Contract consideration is fixed and determinable at contract inception, and the Company’s contracts do not contain multiple performance obligations. The Company does not offer returns, refunds, or warranties, and no arrangements are cancellable. Amounts recognized under the federal programs described below are subject to administrative review and, where a review results in a determination that a reimbursement was not properly payable, to recovery by the program administrator. No reduction of revenue has been recorded in respect of any such review. See Note 8.

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Mobile Virtual Network Operators

Torch Wireless is licensed to provide subsidized mobile broadband services through the Lifeline program to qualifying low-income customers. The Company’s performance obligation is satisfied as mobile broadband services are provided to eligible subscribers.

Revenue is recognized in the month services are provided to Lifeline subscribers who remain active as of the last day of the month.

At month-end, the Company determines the number of eligible active subscribers based on internal usage data and subscriber eligibility status. The Company then submits a report to the Universal Service Administrative Company (“USAC”), which administers the Lifeline reimbursement program on behalf of the federal government. Upon submission of this report, the related accounts receivable is recorded. Payment is typically received by the 28th day of the following month.

Point-of-Sale and Prepaid Services

Revenues are generated through the sale of telecommunication products, including mobile phones, wireless top-up refills, and other mobile-related products through the Company’s online web portal. The performance obligation is satisfied at the point of sale, at which time the web portal initiates an automated clearing house (“ACH”) transaction and revenue is recognized. The Company has determined it is the principal in these arrangements, as it takes control of the products prior to transferring them to the customer, and accordingly records revenue on a gross basis with related costs recorded as cost of revenues.

Contract Liabilities - Deferred Revenue

Contract liabilities represent customer deposits received prior to the satisfaction of the related performance obligation. Upon completion of the performance obligation, the liability is relieved and revenue is recognized.

At June 30, 2026 and December 31, 2025, deferred revenue was $0.

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

The following represents the Company’s disaggregation of revenues for the six months ended June 30, 2026 and 2025:

 Schedule of Disaggregation of Revenue from Contracts with Customers

The above disaggregation of revenues includes the following entities:

Mobile Virtual Network Operators (SPW and TW),

Point-of-Sale and Prepaid Services (Surge Fintech and ECS); and

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

Income Taxes

Accounting Policy

The Company accounts for income taxes using the asset and liability method prescribed by ASC 740, Income Taxes. 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 expected to be in effect in the years in which the differences are expected to reverse. 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 records a valuation allowance against deferred tax assets when, 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.

For interim periods, income tax expense or benefit is determined using an estimated annual effective tax rate applied to year to date pre-tax income or loss, adjusted for items recognized discretely in the period, in accordance with ASC 740-270.

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Uncertain Tax Positions

The Company follows the provisions of ASC 740 with respect to uncertainty in income taxes. Tax positions are recognized in the financial statements when it is more likely than not that the position will be sustained upon examination by the taxing authorities.

At June 30, 2026 and December 31, 2025, the Company had no uncertain tax positions that qualify for recognition or disclosure in the financial statements. The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No such interest or penalties were recorded for the six months ended June 30, 2026 and 2025.

The Company’s federal and state income tax returns for the tax years ended December 31, 2022 through December 31, 2025 remain subject to examination by the respective taxing authorities.

Valuation Allowance and Net Operating Loss Carryforwards

The Company has federal and state net operating loss carryforwards. Net operating losses generated in tax years beginning after December 31, 2017 may be carried forward indefinitely but may not offset more than 80% of taxable income in any year. Losses generated in earlier tax years are not subject to that limitation and expire at various dates.

The Company has incurred cumulative losses in recent years, which is significant negative evidence that is objectively verifiable and difficult to overcome. Based on the weight of available evidence, the Company has concluded that it is more likely than not that its deferred tax assets will not be realized, and a full valuation allowance has been recorded against net deferred tax assets at June 30, 2026 and December 31, 2025.

Interim Provision

No income tax expense or benefit was recorded for the three and six months ended June 30, 2026 and 2025. The effective tax rate differs from the federal statutory rate of 21% primarily as a result of the full valuation allowance recorded against deferred tax assets and items not deductible for income tax purposes.

Limitation on Utilization of Carryforwards

Utilization of net operating loss carryforwards may be subject to an annual limitation under Section 382 of the Internal Revenue Code upon a cumulative change in ownership of more than 50% over a three-year testing period. The Company has not completed a study to determine whether such an ownership change has occurred. Any resulting limitation would not affect the consolidated financial statements because a full valuation allowance is recorded against the related deferred tax assets.

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation. Compensation cost is measured at the grant date fair value of the award and recognized on a straight-line basis over the requisite service period. Awards granted to non-employees are accounted for in substantially the same manner as awards granted to employees, with fair value determined on the grant date. All awards outstanding during the periods presented are equity classified.

The fair value of restricted stock awards is measured using the closing price of the Company’s common stock on the grant date.

Fair Value Estimation

The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model. The model incorporates the following key assumptions:

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Forfeitures and Expense Classification

The Company has elected the practical expedient under ASU 2016-09 to account for forfeitures as they occur rather than estimating them in advance. This election is applied consistently to all stock-based awards. Stock-based compensation expense is classified in the consolidated statements of operations as a component of general and administrative expenses.

Basic and Diluted Earnings (Loss) per Share

Computation

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 (loss) per share includes the impact of potentially dilutive securities and is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding plus the weighted-average number of common stock equivalents and other potentially dilutive securities during the period.

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Treasury Stock

Treasury shares are excluded from the denominator in computing both basic and diluted earnings (loss) per share because they are not considered outstanding.

During the year ended December 31, 2025, the Company reacquired 333,333 shares of treasury stock for $999,999 ($3 per share) in connection with a third-party convertible debt lender arrangement (see Note 5).

Potentially dilutive common shares consist of the following:

For the three months ended June 30, 2026, all potentially dilutive securities were antidilutive and were excluded from the computation of diluted earnings per share. The interest added back on the convertible notes payable, divided by the shares issuable on their assumed conversion, exceeded basic earnings per share for the period, and the assumed proceeds under the treasury stock method exceeded the average market price of the common stock for each outstanding stock option, warrant and non-vested restricted share.

For the six months ended June 30, 2026, the Company reported a net loss. All potentially dilutive securities were therefore antidilutive and diluted loss per share is equal to basic loss per share.

Each period is evaluated independently. A security that is antidilutive in one period may be dilutive in another, and these securities may be dilutive in future periods.

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

The following potentially dilutive equity securities were outstanding as of June 30, 2026 and 2025:

 Schedule of Diluted Net Income (Loss) Per Share

Warrants and stock options included as common stock equivalents represent those that are fully vested and exercisable. Non-vested restricted shares issued to directors are presented separately and are not vested. See Note 9.

Sufficiency of Authorized Shares

As of June 30, 2026 and December 31, 2025, the Company had 500,000,000 shares of common stock authorized, which was sufficient to accommodate any potential exercises of common stock equivalents.

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:

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.

During the six months ended June 30, 2026 and 2025, respectively, the Company incurred expenses with a related party (annual rental agreement) in the normal course of business as follows:

 Schedule of Related Party Expenses 

1 - 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 5 for debt transactions with our Chief Executive Officer.

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

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.