Summary: SurgePays, Inc. (NASDAQ: SURG)

Initial Disclosure: After extensive research, we have taken a short position in SurgePays, Inc. This report represents our opinion, and we encourage every reader to do their own due diligence. Please see our full disclaimer at the bottom of the report. 


SurgePays current CEO has an extensive history of accusations of government program abuse for his own financial gain. We believe SurgePays and its management are misleading investors about the growth of their SurgePays FinTech network, understating their business risks, and potentially violating multiple FCC regulations. 

Introduction and Basics of the Business

SurgePays (NASDAQ: SURG) is a technology and telecom company focused on the underbanked and underserved community. Its most significant and fastest-growing business is SurgePhone Wireless. SurgePhone Wireless is a telecom provider focused on providing free tablets and data services to eligible customers as a part of the Federal Communications Commission’s (FCC) Affordable Connectivity Program (ACP). The ACP reimburses SurgePhone Wireless $30 monthly for the service and $100 for a tablet device per household. 

In 2022, SurgePays earned $121.5 million in revenue, with 72% ($88.3 million) coming from their wireless communications division, SurgePhone Wireless. This division and its affiliate, Torch Wireless, experienced an impressive growth of 1112% because of an increase in subscribers from zero to over 200,000 in just over a year. Recently released disbursement data from the ACP reveals that SurgePays is now among the top ACP providers, joining the ranks of companies such as Dish Wireless, Comcast, AT&T, T-Mobile, Verizon, and Charter Communications.1

During this rapid revenue growth, SurgePay’s stock has also climbed significantly. Since the beginning of 2022, SURG has risen over 200%. It currently has a market cap of around $100M.

The key competitive advantage, according to CEO Kevin Brian Cox, is the company's “proprietary” fintech platform that “empowers clerks at over 8,000 convenience stores to provide a suite of prepaid wireless and financial products to underbanked customers.”2 SurgePays claims this customer acquisition channel will allow SurgePays Wireless to scale nationwide and provide signup, verification, and approval for the ACP. In contrast, competitors depend entirely on setting up outdoor tents in low-income neighborhoods.

Part 1: Red Flags in Cox’s Background

Kevin Brian Cox is the founder and current CEO. Mr. Cox’s corporate bio states he is an “accomplished entrepreneur growing best-in-class companies for over 19 years, including building a company of over 1,300 employees. He began his career in telecom in 2004 when he founded his first prepaid telephone company (CLEC), which, through organic growth and acquisition, became the largest prepaid home phone company in the country before being sold in 2009.”3

Our research shows that Mr. Cox has a history of accusations of abusing FCC subsidy programs, money laundering and is inflating his past accomplishments. 

In 2010, AT&T filed a request for emergency relief and complaint to The Florida Public Commission against Cox-controlled companies LifeConnex and American Dial Tone.4

Mr. Cox-owned Associated Telecommunications Management Services, LLC (ATMS) owned LifeConnex and American Dial Tone, and AT&T Florida accused them of “Cycloning” customers between sister companies to claim duplicate subsidies and overpayment from the FCC’s Universal Service Administrative Company (USAC), failing to provide accurate information to regulators, and customer complaints regarding improper disconnects, slamming, etc. 

In 2014, SurgePays CEO Kevin Brian Cox was indicted by the United States Justice Department for defrauding the FCC Lifeline Program for $32M.5

The Justice Department charged Mr. Cox and his co-conspirators with one count of conspiracy to commit wire fraud and 15 substantive counts of wire fraud, false claims, and money laundering. According to the indictment, Mr. Cox and his co-conspirators used ATMS and its subsidiaries to submit artificially inflated dollar amount claims by misrepresenting their number of verified qualifying customers to the FCC's low-income Lifeline program.

Additionally, they allegedly misrepresented the total number of lines for verified customers to AT&T and other telephone companies for which they were entitled to submit for reimbursement from the Lifeline program. Through this scheme, they obtained more than $32M from September 2009 to March 2011.6

With this money, Mr. Cox and his co-conspirators funded personal business ventures and lavish lifestyles, including luxury automobiles, yachts, and private jet airplanes (see pictures below).

List of extravagant purchases from the indictment:

The Department of Justice ultimately dropped the charges after the prosecuting lawyer resigned to run for Hillsborough County District Attorney.7

Kevin Brian Cox owned, True Wireless, was fined a $5.5M penalty by The FCC for Lifeline violations.8

This penalty is separate from ‌the federal indictment. The filing from the FCC states:

 Based on the record evidence developed in this investigation, we conclude that True Wireless apparently willfully and repeatedly violated Sections 54.407, 54.409, and 54.41037 of the rules by concurrently requesting Lifeline support reimbursement for 955 individual intra-company duplicate lines. Based on the facts and circumstances before us, we therefore conclude that True Wireless is apparently liable for forfeiture penalties totaling $5,501,285.

True Wireless was a subsidiary of SurgePays until 2021. 

In 2016, the Attorney General’s Office of El Salvador accused Kevin Brian Cox of money laundering.9

As a part of ATMS and True Wireless’s businesses, they worked with a call center, Benson Communications, based in El Salvador. This call center provided both companies' customer support and back office functions and became a partner of Cox-owned Ture Wireless. “According to the Prosecutor's Office, between 2010 and 2014, from the account of True Wireless, Cox transferred more than $34 million to Benson Communications, a company registered in El Salvador. During that time, Cox deposited $2 million to the call center from his personal account...The Prosecutor's Office requested the Fourth Peace Court of San Salvador to invalidate four accounts (of Benson Communications and three implicated) in January of this year.”

Currently, SurgePays is a 40% owner in an El Salvadoran call center, Centercom Global BPO.

Cox’s claims of building the US's largest prepaid home phone company and selling it are misleading. 

Cox founded BLC Management LLC d/b/a Angles Communications Solution in 2004. He stated he built this business to become the US's largest prepaid home phone company and sold it in 2009. This company was acquired, and a filing was submitted to the FCC outlining the acquisition. This filing shows that Angles Communications only provided services in six states (Alabama, Kentucky, Louisiana, Mississippi, North Carolina, and Tennessee). These states collectively represent only 10.4% of the total US population. Additionally, Angles Communications was sold to Associated Telecom Management Services(ATMS), the Cox-owned company that was part of the 2014 Federal indictment.10

In summary, Mr.Cox is the CEO of a company that operates in an almost identical model to companies that he previously ran that were accused of wire fraud, money laundering, and abuse of government programs. We believe that investors are being misled about Mr. Cox’s previous experience and are unaware of earlier accusations from multiple US government and foreign government entities. 

Part 2: The Growth Deception

Starting in 2019, SurgePays focused on expanding its network of stores using the SurgePays FinTech platform. SurgePays management believes that this network is their primary competitive advantage, and growing this network will facilitate the expansion of all their business units, especially SurgePhone Wireless. 

Our research shows multiple SurgePays press releases between 2019-2023, highlighting partnerships that would expand store count to over 50,000 stores. However, filings with the SEC show SurgePays store count on their network has declined 18.3% from 9,800 in 2019 to 8,000 today.

SurgePays management is misleading investors about the partnerships they claim drive store count expansion. After investigating these partnerships, we found that a vast majority had minimal impact on SurgePays FinTech Platform network expansion or had nothing to do with the SurgePays FinTech Platform network. Below is a summary of the press releases and our findings:

Date: Feb 28th, 2019

Headline: Surge Holdings Partners With AATAC To Place SurgePays Blockchain Portal Into 40,000 Retail Locations11

Store Count from filings: 0

Theoretical Future Store Count: 40,000+

Mr. Cox’s first press release about retail store expansion came in early 2019 when he signed a partnership with the Asian American Trade Association Council (AATAC). This organization is a convenience store trade association with 80,000 U.S. and Puerto Rico locations. Mr. Cox announced a partnership with AATAC and claimed that the two parties agreed to place SurgePays FinTech software in up to 40,000 convenience stores by the end of 2019. Cox outlines his goal of onboarding 3,000 to 5,000 stores a month onto the SurgePays network.

After investigating this partnership, our team located the agreement between AATAC and SurgePays as a part of a legal proceeding that involved both parties.12 This agreement is between AATAC, SurgePays, and two 3rd party companies, Contigo and PastTime Foods. According to lawsuit documentation, AATAC's D.R.I.P. program would place SurgePays merchandise in AATAC’s member stores. However, SurgePays agreed to an initial trial launch that would provide one month's inventory of products to up to 1,525 locations for Phase 1. According to the D.R.I.P agreement, one month's stock equals 6 SurgePays Phones (see screenshot below). There is no language regarding installing and deploying SurgePays FinTech software in any stores. 

In the legal proceedings, AATAC claimed that SurgePay’s phones were defective and ultimately recalled. Because SurgePays delivered “unmerchantable” products, SurgePays was forced to remove all phones from AATAC stores, and the test ended. 

Date: September 30th, 2019

Headline: Surge Holdings Announces Asset Purchase Resulting in the Addition of 9,800 Retail Locations and an Expected $48.7 Million of Annualized Revenue13

Store Count from Filings: 9,800

Theoretical Store Count: 49,800+

The first mention of the number of stores in the network in official documentation comes in SurgePays 2019 Annual report when SurgePays mentions the purchase of the ECS business from GBT Technologies, Inc. Described as a “proprietary FinTech software platform” ECS provides “prepaid wireless load and top-ups, check cashing and wireless SIM activation to convenience stores and bodegas nationwide. Since 2008, ECS has grown to a network of over 9,800 retail locations and 160 independent sales organizations (“ISO”) processing over 18,000 transactions per day. Surge will integrate the ECS software with its SurgePays Network in order to offer both wholesale products from third-party manufacturers, as well as Surge products, including the SurgePays Reloadable Debit Card, SurgePhone Wireless and SIM Starter Kits.”

These 9,800 stores will become the base of the SurgePays network of stores in all regulatory filings. Our investigation has found zero information about these stores. SurgePays has not provided information on their geography, sales per store, ACP signups per store, etc. By SurgePays 2020 Annual Report, they reduced their store count from 9,800 to 8,000.14

Date: July 20th, 2021

Headline: SurgePays, Inc. Acquires Commander Communication, a Provider of Prepaid Wireless Payment Products to Approximately 500 Convenience Stores15

Store Count from Filings: 8,000 (-1,800)

Theoretical Store Count: 49,800+

SurgePays announced the acquisition of Commander Communications, a “private provider of prepaid wireless payment and top-up services that are offered to retail customers through its customer base of approximately 500 convenience stores located primarily in Louisiana.”

Our team has yet to find records of this acquisition ever happening. There is no SEC filing, no mention of Commander in SurgePays quarterly, annual filings, investor presentations, or earnings calls. Also, SurgePays FinTech platform store count did not increase by 500 after this acquisition.  

Date: February 16th, 2023

Headline: SurgePays Announces Distribution Agreement with Capital Candy Co.16

Store Count from Filings: 8,000 (-1,800)

Theoretical Store Count: 52,800+

In this release, President of SurgePays FinTech, Jeremy Gies, said, “This agreement is a great opportunity for SurgePays to expand our footprint into an area of the country with few stores transacting on the SurgePays network. With our capability to enroll new ACP customers at the store counter, we are especially looking forward to the revenue potential both companies can benefit from this collaboration.”

Our team spoke with a representative of Capital Candy about the partnership. They stated that while their customers can use SurgePays suite of offerings on their own, Capital Candy Co. primarily works with SurgePays prepaid gift cards business, not SurgePays FinTech or SurgePhone Wireless. 

Overall, from early 2019 to the present, SurgePays CEO has highlighted partnerships as the next wave of expansion to 50,000+ stores. In reality, these partnerships appear have nothing to do with the SurgePays FinTech Platform, and the SurgePays network store count has declined. As recently as the Q1 2023 earnings call, Mr. Cox stated, “We are utilizing this great ACP program as the enticing catalyst to build what is now over 25,000 stores to be on-boarded with a staging target of less than 12 months.” We believe that Mr. Cox continues to mislead investors about the growth of the SurgePays network and history shows that SurgePays will fail to achieve their goal of 25,000 new stores on the network.

Part 3: Political Risk 

Former subsidiary True Wireless provided phone service to low-income individuals through the FCC’s Lifeline program. The risk section of SurgePays 2020 Annual Letter includes a section titled “Changes to the federal Lifeline Assistance Program could negatively impact the growth of our True Wireless business and its profitability.” This section continues:

In 2012, the FCC adopted reforms to the Low Income program to increase program effectiveness and efficiencies. More stringent eligibility and certification requirements have made it more difficult for Lifeline service providers to sign-up and retain Lifeline subscribers. Some regulators and legislators have questioned the structure of the current program, and the FCC is continuing to review and implement measures to improve the program, including enforcement action involving alleged rule violations, and the roll-out of the National Lifeline Accountability Database. Changes in the Lifeline program as a result of the ongoing FCC proceeding or new legislation, or potential enforcement action, could negatively impact growth of True Wireless and/or the profitability of True Wireless.17

In fact, the enforcement action for rules violations described in the excerpt above involved True Wireless’s 2014 FCC fine of $5.5M. These regulations and enforcement actions appear to affect True Wireless. According to filings, True Wireless's revenue fell from $12.7M in 2018 to $2.3M in 2020, an 81.88% decline.

SurgePays 2021 and 2022 annual report does not include a section about the almost identical risks that True Wireless faced. We believe there is an immediate political risk with US Senators actively questioning the ACP and the ACP program potentially running out of funding by 2024. 


On January 18th, 2023,  the Government Accountability and Oversight (GAO) office released a report that highlighted several instances of fraud within the ACP Program. The report highlights multiple cases of fraud within the ACP program, including over 1,000 individuals registered to the same Benefit Qualifying Person, duplicate entries (see below), and P.O. Boxes or commercial mailboxes as addresses. 

As a part of this investigation by the GAO, they made recommendations to prevent fraud within the ACP further. The suggestions are primarily around increasing rules and regulations to prevent fraud. These recommendations are similar to what they implemented with the Lifeline program. 

Immediately following the report, Senators John Thune and Ted Cruz released a statement18 saying, “The results of GAO’s findings reveal that the FCC’s ACP is subject to massive waste, fraud, and abuse of taxpayer dollars. We find it incredibly concerning that the FCC has failed to establish a process that regularly assesses fraud risks within the ACP. It is incumbent upon the Senate Commerce Committee, which has jurisdiction over the FCC, to have an oversight hearing to address GAO’s report and hold the FCC accountable to American taxpayers.” Additionally, Senator Thune launched a nationwide broadband oversight effort to hold these agencies accountable and ensure that previously authorized broadband funding is being used in the most efficient way possible to protect taxpayer dollars.

In response to the report from the GAO and statements from Senators John Thune and Ted Cruz, the FCC started a review of current policies and procedures and engaged in multiple enforcement actions against providers abusing the ACP. One of these enforcement actions was a fine of $62M to Q Link Wireless.19 Q Link Wireless is also a top 10 ACP provider and top Lifeline provider that is similar to SurgePays. The FCC accused Q Link of overcharging the ACP program for devices whose market value was much less than what was charged to the ACP. This violated FCC guidelines. Similarly to SurgePays, Q Link has had additional engagements with law enforcement. In 2021, the FBI, IRS, US Post Office, and Sheriff raided Q Link’s offices. The reason for the raid was undisclosed, but news reports state that the action was part of a two-year investigation and is believed to involve suspected fraud of the Lifeline program. 

Finally, there are large questions about the continued funding of the ACP. A recent report forecasted that ACP funding will run out by mid-2024.20 The ACP was approved with bipartisan support in 2021 but some Republican members of Congress are already objecting. Republicans are asking if the ACP should be further restricted to households that are completely “unconnected” and not acting as a subsidy to individuals already paying for broadband. 

We believe there is a large amount of political risk to the ACP and therefore SurgePays. If there are increases in regulations, decreases in the number of eligible subscribers, or a large cut in funding SurgePays revenue could decline materially.  

Part 4: Rules and Regulations

The amount of ACP (and its predecessor, the Emergency Broadband Benefit Program (EBB)) disbursements made by USAC per provider was recently disclosed as a part of the FCC’s response to statements by Senators Ted Cruz and John Thune21. SurgePays is in the top 25 providers for EBB distributions and if you combine SurgePays and Torch Wireless (affiliate), SurgePays would be in the top 15 for the ACP. Over the life of the ACP (and EBB), SurgePays received over $104M (through Feb 2023). This amount of disbursement puts SurgePays in a similar category as telecom giants: AT&T, Comecast, T-Mobile, Verizon, etc.

We believe that SurgePays rapid ACP revenue growth was fueled by potential violations of FCC regulations around agent registration and compensation. If found in violation of these rules, SurgePays could be fined over $100M.

Rules regulating the ACP state the FCC “requires all participating providers to have their agents and other enrollment representatives registered with the Representative Accountability Database (RAD), as is currently required for the Lifeline and EBB Programs, as a way to minimize waste, fraud, and abuse… A participating provider shall require that enrollment representatives register with the Administrator before the enrollment representative can provide information directly or indirectly to the National Lifeline Accountability Database or the National Verifier.”22

An enrollment representative is defined as “an employee, agent, contractor, or subcontractor, acting on behalf of a participating provider or third-party entity, who directly or indirectly provides information to the Administrator for the purpose of eligibility verification, enrollment, subscriber personal information updates, benefit transfers, or de-enrollment”.23

We inquired with SurgePays Investor Relations on whether the individuals in the stores or the individuals running the pop-up registration tents are considered enrollment agents and therefore registered with RAD. They responded, “Stores on the network are not registered with the accountability database as they don’t actually sign anyone up. The stores simply provide a link to SurgePays and information about the ACP. The SurgePays team, which is registered, signs up/qualifies the person/householder.”24

However, Mr. Cox stated something contrary in SurgePays Q3 2022, earning calls. “We believe we've only scratched the surface of the (ACP) program and there's significant room for growth, which is why we're so excited about being able to do enrollments and activations over our SurgePays' software platform inside convenience stores…Our platform enables the clerk at these stores to take prepaid wireless payments and can now initiate ACP customer enrollments at the checkout counter…We have created a way for the clerk to quickly enter the data we need at the time of purchase for our compliance team to work directly with the customer to enroll and activate them. The store owner is compensated for helping his customers gain access to this valuable benefit.”

These statements show that individuals in the field (stores or pop-up tents) are providing indirect information to Surgepays representatives for eligibility verification, enrollment, and subscriber personal information updates and therefore should be considered enrollment representatives and required to register with the RAD.

Additionally, rules regulating the ACP state the following on agent compensation:

A participating provider shall not offer or provide to enrollment representatives, their direct supervisors, or entities that operate on behalf of the participating provider, any form of compensation that is—

(1) Based on the number of consumers or households that apply for or are enrolled in the Affordable Connectivity Program with the participating provider;

(2) Based on revenues that the participating provider has received or expects to receive in connection with the Affordable Connectivity Program, including payments for connected devices;

(3) Based on the participating provider permitting the retention of cash payments received from the subscriber as part of the required contribution for a connected device;

(4) Shifted, characterized or otherwise classified as compensation paid in connection with other services, business operations, or unrelated to Affordable Connectivity Program activities that is based on Affordable Connectivity Program applications, enrollments, or revenues.25

Surgepays is paying commissions per sign-up to the ACP based on transcripts from their earnings calls and filings with the Securities Exchange Commission (SEC). In SurgePays Q1 2023 earnings call Mr. Cox stated “When we're paying folks out there in tents that go out and set up the pop up tents, that's their only source of income. They're traveling hotels, gas, and their only source of income is doing the ACP program. So at the end of the day, those people require a much higher, you know, let's call it a spiff, a bounty, the payment for that….Now we're paying the store $10 to $12 as opposed to paying someone in the field $50.” Also, their Q3‘22 10-Q26 says "Cost of revenues for the nine months ended September 30, 2022, increased by $ 53,649,241 from the same period ended September 30, 2021, as a result of the purchases of devices ($25,590,039), data usage expenses ($13,024,793) and commission paid ($13,176,925) for the ACP program. Anecdotally, SurgePays changed the language in their Q1 2023 10-Q from “commissions for the ACP Program” to “marketing services for ACP program.”

We inquired with SurgePays Investor Relations if they violate these rules and why the change in terminology in their filings. They stated, “the expense labeled as commission paid and marketing services paid are the same buckets of expenses. When USAC issued their guidelines that you couldn’t pay commissions, the company changed the accounting line item…The company can confirm all policies and procedures are vetted and compliant.” 

Our view is that changing accounting nomenclature from “commissions” to “marketing” is the exact definition of compensation that is “Shifted, characterized or otherwise classified as compensation paid in connection with other services, business operations, or unrelated to Affordable Connectivity Program activities that is based on Affordable Connectivity Program applications, enrollments, or revenues.”

We believe SurgePays is potentially in violation of agent registrations and compensation rules. Surgepays will claim the individuals running the registration tents and signing up customers in the stores are simply providing marketing and are not doing any enrollment activities, therefore do not have to comply with the rules. We disagree and Mr. Cox’s statements in earnings calls and filing with the SEC show that these individuals are enrollment representatives or entities that operate on behalf of SurgePays and are subject to the rules governing ACP registration and compensation.

In fact, we have a first hand account of potential FCC violations from Mississippi Public Service Commissioner, Brandon Presley. In January of 2022, Commissioner Presley sent a letter to the FCC Inspector General asking for a Cease and Desist against SurgePays for blatant violations of FCC guidelines that govern the ACP.27 Commissioner Presley’s letter to the FCC Inspector General outlining what he saw is below: 

Yesterday, I was in Amory, Mississippi and saw a tent in a shopping center parking lot advertising "Free Service+Tablet" with a long line of customers. Because of the PSC's jurisdiction over designating Eligible Telecommunications Carriers for participation in the Lifeline program and the apparent transient nature of this event, I stopped to ask some questions. I first approached a lady who was walking away with a tablet. I asked her who was this company and she said, "I don't know, they just told me to get my Medicaid card and I would get this free tablet." I asked if she had any documents from the company and she did not. I continued to stand in line with around ten customers and watched several interact with representatives of this company who (a) did not even disclose who they were with, (b) did not articulate any of the required information in the Affordable Connectivity Program ("ACP") related to consumer protection, choice or nature of service and (c) were obtaining personal information and noting certain things in a spiral bound notebook. I should stress that these interactions were taking around two minutes each. It appeared the sales agents were solely looking at the qualifying documents, using the ACP portal and handing out these tablets in an obvious rush to the next person in line. I've truly never seen anything like it before in my twenty plus years in public life. Once my time in line came, I asked what company they were with and the lady said they were with "Surge" and were giving away "free internet and tablets" for a $10 connection fee. I should add here that no one was getting a receipt for their $10, which I confirmed later with another consumer. I explained who I was and why I was questioning their practices, gave her and her colleague a business card and asked them to have their supervisor contact me and conveyed that their actions were in possible violation of consumer protections standards set out by the FCC. I further explained that I would be reporting this to you. I also asked for a simple business card, which they did not have. These ladies stated that they were from Oklahoma and were just giving away the tablets. After posting on social media that consumers should beware of this business practice and this particular carrier, I received dozens of messages stating that this same carrier had been set up, with a tent, in many more cities in Mississippi. I also received a call from a constituent from my hometown who stated that they had received the tablet, never were told anything about the service, the price or anything related to the terms and conditions and knew of, at least, one case where a household received more than one device and enrollment by simply going from one town to the next. I am highly concerned about the waste, fraud and abuse of federal dollars aimed at helping bridge the digital divide that is possible with this business practice which is solely driven by apparent exploitation of unassuming citizens. I am also extremely worried about consumers being snookered by Surge. Consumers who are given ZERO information about who or what they are signing up with are highly likely to exceed data plans and be stuck with high bills all because they were lured to a tent in a shopping center because of the promise of a free tablet. I personally witnessed these sales agents in action and can attest that they in NO WAY informed consumers of anything. Their entire business operations consisted of a tent with a banner advertising free tablets (photo included) anchored by cat litter containers, a table, two chairs, two spiral bound notebooks and a plastic container filled with tablets. By way of this letter, I am asking you to please take immediate, appropriate action to have Surge cease and desist operations until your office can properly investigate this matter. Because the ACP does not allow state commissions jurisdiction in these matters, I am turning to you for help. These practices, that I personally witnessed, are prime for waste, fraud and abuse of the ACP. I will also be forwarding a copy of this letter to the Mississippi Attorney General in the event these instances rise to a violation of the Mississippi Consumer Protection Act. I am available to discuss further by way of email at or by phone at 1- 800-637-7722.

This letter to the FCC from Commissioner Presley was never mentioned by SurgePays management. 

If found in violation, SurgePays could face a large fine. Section 503(b) of the Communications Act of 1934 (Communications Act) authorizes the Commission to impose a forfeiture against any entity that “willfully or repeatedly fail[s] to comply with any of the provisions of [the Communications Act].” Under this ruling, the FCC can assess a forfeiture against SurgePays of up to $237,268.00 for each day of a continuing violation.28 These rules have been in effect for the ACP since January 14, 2022. That means that SurgePays has potentially been in violation for 523 days (if we don't count any potential violations of the EBB). At $237,268 per day, that equates to a potential $124M dollar fine for SurgePays or a $248M fine if levied across both violations (agent registration and commission).

If required to abide by these rules, SurgePay's business model implodes. Unable to provide commissions, SurgePays network value proposition is invalidated and SurgePays would be required to hire enrollment agents on a non-commission basis in order to grow subscriber count. The addition of payroll overhead would almost certainly decimate any hopes of profitability. 

Summary and Questions for SurgePays Management and the FCC

Overall, we believe that SurgePays management is misleading investors and operating a business violating FCC regulations. The CEO has a history of alleged abuses of FCC programs, he continues to mislead investors about the expansion of the SurgePays network and potentially violates multiple FCC regulations regarding payment and registration of agents subscribing customers onto the ACP. 

Below are our questions for SurgePays management:

Below are the questions we have for the FCC:

Disclosure: We Are Short Shares of SurgePays, Inc (NASDAQ: SURG)

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1. FCC Response to Senators Cruz and Thune

2.SurgePays Q1 23 Earnings Announcement

3. Management - SurgePays IR

4.  Complaint about ATMS to FL  

5.Three Men Charged with Allegedly Defrauding the FCC of Approximately $32 Million | United States Department of Justice

6.  Kevin Brian Cox Indictment Document

7.Federal case fizzled as prosecutor left to seek Hillsborough office

8.  $5.5M Penalty Proposed Against True Wireless for Lifeline Violations | Federal Communications Commission

9. Empresa y extranjero señalados de lavar $221,536 de EUA - La Prensa Gráfica

10.  FCC Filing Acquisition of Angles Communication

11. Surge Holdings Partners With AATAC To Place SurgePays Blockchain Portal Into 40,000 Retail Locations

12. DRIP Agreement between SurgePays and AATAC

13. Surge Holdings Announces Asset Purchase Resulting in the

14. SurgePays 2020 10-K

15.  SurgePays Acquires Commander Communications

16.  SurgePays announces distribution agreement with Capital Candy

17.  SurgePays 2020 10-K

18. Thune, Cruz Statement on the FCC’s Mismanagement of a Taxpayer-Funded Broadband Subsidy Program - Press Releases

19. FCC Adopts Q Link Notice of Apparent Liability for EBB Violations

20.  When Will Affordable Connectivity Program Funding Run Out? — The Vernonburg Group


22.  47 CFR 54.1807(a)

23.  47 CFR 54.1800(k)

24.  SurgePays IR Email

25. 47 CFR 54.1807(b)

26.  SurgePays Q3 2022 10-Q


28.  47 CFR 1.80(b)(2)