SurgePays, Inc. (SURG) Earnings Call Transcript & Summary
July 21, 2020
Earnings Call Speaker Segments
Stuart Smith
attendeeAll right. Welcome to the July 2020 Surge Holdings shareholder update call. Before we begin, I want you to listen to this legal disclaimer for the call. Now of course, you can find this legal disclaimer by visiting any press release or financial filing using the ticker symbol SURG. This call may contain information that constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking terminology such as believes, expects, may, will, should, anticipates, plans or similar expressions or the negative of these terms and similar expressions are intended to identify forward-looking statements. Any such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from any future results described by the forward-looking statements. Risk Factors that could contribute to such differences include those matters more fully disclosed in the company's reports filed with the U.S. Securities and Exchange Commission. The forward-looking information provided here in this call represents the company's estimates as of the date of this call, and subsequent events and developments may cause the company's estimates to change. The company specifically disclaims any obligation to update the forward-looking information in the future. Therefore, this forward-looking information should not be relied upon as representing the company's estimates or its future financial performance as of any date subsequent to the date of this call. Now with that, I'd like to welcome the Chief Executive Officer of Surge Holdings, Inc., Brian Cox. Brian, welcome and thank you for calling in and taking the time to address these questions from your shareholders.
Kevin Cox
executiveThanks, Stuart. Good to hear from you again. I'm glad to be back on and looking forward to taking your questions and moving on forward.
Stuart Smith
attendeeVery good. Well, let's jump right into those questions. 2019 was the build year and it looked like Surge turned the corner in March. How much did COVID affect the business? And what adjustments did you have to make?
Kevin Cox
executiveStuart, that's a good question. I get that a lot. To answer that question, I think I need to break it up by divisions of the company because it impacted a couple of the subsidiaries differently. If you look at our company, we've got the Media division, the FinTech division and the Telecommunications division. On the Media division, the -- remember, the goal of that company is to develop leads and qualify the leads for mass tort lawsuits. Now hedge funds normally finance these law firms, these huge firms, and they go out and do these marketing campaigns to bring in these leads and then they take their actual cases such as with Roundup and some of the other pharmaceutical companies that you see on TV, some of these late night commercials. Well, the hedge funds kind of stinged up the purse a little bit in the second quarter because like us and everybody in the -- I guess in the world, we're all watching our TV wondering what's going on. And we would kind of, hey, the main thing is the people we care about and our family. So the cool thing about that was, though, all of these guys were used to roll in, making money and they were in a good group. So during that time, they were sitting on their hands, it just created more of a pent-up desire to catch back up when things loosened up, which now things are loosening up. And so there was a period in the second quarter on the media company where obviously the sales went down because also our ability to reach people dropped off a little bit because it wasn't funded by the hedge funds, and we're not going to drive leads for free. The good news is we expect that monthly to get back quickly. We're already seeing a drastic increase in sales, and we look to have that back above the $3 million a month, where the media company was before COVID hit, here probably in the next 45, 60 days. On the FinTech and communicate -- excuse me, the telecom side, I'll group those together, because those are really interlocked. Those are the products that serve the underbanked, underserved, overlooked market that we've talked about many times before. These were essential products. As far as the existing customers and existing stores, we didn't see a big change. The impact on us was our salespeople, the human contact. Our salespeople, you go out, you pull doors, you interact with folks. There's got to be that to add more stores, to upsell more products. It's very difficult to be a sales guy over the phone when you're dealing with corner stores or bodegas or high-traffic markets because these people are not sitting behind a desk answering phone calls. They've got customers in front of them. It just doesn't work that way. You've got to be able to go call on those doors. There's 2 sides to this coin. We didn't grow the base a lot. We didn't add a lot of stores during the second quarter. But these salespeople, these independent sales people, they get paid by what they produce. So just like the hedge funds, they've been sitting on their hands, growing restless. And now that they're back out there, we're seeing stores being added daily because they're trying to catch back up to achieve their same level of income they had in their minds that they wanted to conquer for 2020. So if I had to look at it from a crystal ball, I'd say the second quarter took a hit just like almost everybody out there, but we fully expect to rebound back and don't think that I'm not putting out incentives and promotions out there, especially for the salespeople in the FinTech and Telecom side to bounce back quickly from that.
Stuart Smith
attendeeAll right. Well, Surge Logic seems to be very profitable as a subsidiary, but it doesn't have to do with the core business of Surge and the underbanked. What is this company? And how does it fit into the big picture?
Kevin Cox
executiveThe media subsidiary, we always got to remember that was the legacy company when we merged in the software and telecommunications companies and then changed the name from Ksix to Surge. Our original thoughts were debating whether to just sell off that subsidiary. It was doing about $125,000 a month. We weren't quite sure what to do. We jumped in, we analyzed and we saw an opportunity. The opportunity was using the resources that we already had both in the state side and down at our operations center at Centrecom. And by taking the software development team and creating our own software intake platform, and our ability to now manage our own leads on our own platform and then take -- hiring almost 40 people at Centrecom to qualify these leads and give these mass tort law firms better, more qualified -- a bundle of leads, so to speak, it jacked the revenue up from that $125,000 to $3 million a month. So yes, it doesn't have anything to do with the underbanked. Right now, we operate it as a siloed subsidiary, really Surge Holdings is the true holding company. We debate this all the time. Right now, it's spitting off profit to the holdings company. It's helping fund our other operations. I do believe down that the road, there'll be a moment where there will be a spin-off opportunity that would make a whole lot of sense for Surge Logic, especially with it being in the Media division, and it being a premier, one of the top lead generating companies for mass tort law firms on the Internet in the country. I do think that that's a possibility. But right now, we're going to keep juicing it and putting money behind it and see how much money we can make and help fund the growth of the FinTech and Telecom side.
Stuart Smith
attendeeBrian, I'm remiss at not saying this at the outset of our phone call, but I do want to make shareholders aware that we did get all of your questions. Many of you may have sent in questions that were similar or just nuanced, slightly different. So if you don't hear your question asked today, please feel free to continue to e-mail your questions to myself and the company. My information is available in this press release. But with that being said, let's move on to the announcements. There's been a few announcements about LocoRabbit. Can you explain the business and how it fits into the big picture for Surge?
Kevin Cox
executiveSure. I'll tell you, Stuart, it's hard for me not to smile when you start talking about LocoRabbit. This is a -- this one, it's special for me and I'm excited about. I get to return to my roots a little bit. I get to roll up my sleeves and be involved. This is kind of how I made my way, starting a prepaid wireless company from zero and then growing it. The really cool thing is it's like anything else. Once you've already conquered something before, the second time is always so much easier because you have a cheat sheet. When we acquired ECS which, for those who don't know, ECS is a company that has thousands and thousands of corner stores on its network, and it provides the ability for those stores to do prepaid wireless transactions for every carrier out there. So there's about 20,000 transactions a day. When we acquired that and now I had the ability to look at these analytics to see what other companies were doing, to see not what they're selling, but what are people buying. What are they actually paying for? What do customers want? What do they desire? Where are the needs? And then also, where is the low-lying fruit? There's no reason to go head-to-head with a $1 billion company. What are the other products out there where we can sneak in and get market share just by being smart? So the ECS acquisition allowed us to kind of rejigger a few things and push this wireless -- prepaid wireless brand, our own brand, out there and we used it in 2 different ways. Obviously, we're adding it to the ECS stores and other stores that we already had on SurgePays. But really, it's a tip-of-the-spear product that we -- our salespeople can go in and offer to that convenience store owner, that chain, that large distribution company, they may be selling all kinds of products to convenience stores, bodegas, tiendas, all these community markets. It's a real product. And because we own the entire part of the food chain, we own the wireless side of it, we own the transaction side of it from the software all the way to the handset, we're able to pay the store owner just a little bit more to take payment, a little bit more to make the sale. We're able to pay the salesperson just a little bit more to make the sale and still hit our numbers. So this is going to be a really cool product for us. As a matter of fact, I just saw this morning where we've got a PO that just went across to a company, bringing in some brand-new basic phones that will be able to retail the store, hang on a peg cook, retail for $39.99, where the customer can literally just buy the basic phone, walk out and use it to talk, also got a 5-inch Android that they'll be able to do same thing. It's already activated. They'll be able to walk right out and use it right away. So there's some really cool things. And I think that sometimes -- especially our shareholders, if you've got money to invest in the stock, the chances are your banks made this by rule. So a lot of people don't realize that there's 100 million prepaid wireless customers out there, 100 million in the United States. And this is -- these are the types of products that they buy. And if we have a LocoRabbit prepaid wireless product and it's a competitive product, for example, unlimited talk, unlimited text, 3 gigs of data for $35 even out the door, not all the taxes and extra, just even, that's it. It's a great product and it helps people out. It's a value-based product that -- it drives customers, it drives retention and a very, very profitable product for us.
Stuart Smith
attendeeWell, very good. Let's jump on to the next question. Please give us an update on the rollout of the store in the Surge Marketplace. What is the pace of SurgePays and products being integrated into stores? And how does this work with the ECS platform? Don't those do similar functions?
Kevin Cox
executiveYes, they do. And this is a very astute question. Once we -- like I said, we acquired ECS, we looked under the hood, so to speak. We made the decision to combine these 2 softwares. Now that's a CEO-level statement that's not -- you obviously don't combine softwares, but you merge the best of each thing together. So while one may have had a great web interface for the stores that have computers and Internet, which we find a lot more out west, in the West Coast and the Western areas region, the -- a lot of the stores in the Southeast and the Midwest have reprogrammed credit card terminals that sit on the countertop that do all the transactions for the prepaid loads and top-ups and what have you. So for the last 6 months, we've had the developers on both sides merging the best of those 2, and this is going to be rebranded into the ECS marketplace. We want to use the ECS brand that's been around for years and years and years, done over $600 million in business. It's a known name. The folks over there have done a great job building that brand name over 10 years. We want to use that brand, merge it together and let that be the forward-facing fintech software platform that we take our products out to market on. So I believe, if I'm not mistaken, the -- even the front-facing website is going to be unveiled next week. And this did get pushed back -- you asked about the COVID, obviously, got pushed back a little bit, but these are the things that we want our sales guys going out there and bringing this to the new stores, expanding our network and then going back to their existing same stores and upselling them other products that we have to offer.
Stuart Smith
attendeeAll right. Very good. Let's stick with ECS. With the ECS acquisition, Surge got thousands of stores and sales reps. What is the current priority in adding more stores or increasing sales per store?
Kevin Cox
executiveThat's an age-old sales management question, and I'll answer that in 2 parts. We're always -- I mean, my first answer is I'm going to say both. I'm a conquer man. I want to kick the wall down and go. I think we can do both. I think that it depends on the market and depends on the salesperson. And I'll explain. If we're bringing on new salespeople, bringing them in and train them, obviously, they don't have existing -- an existing store base. So they're starting from scratch. They're starting from 0. That's bringing on stores, and you usually lead with 1 or 2 products. You get them on, get them trained and then you come back. You build a rapport, build a relationship. You go back in, put a few posters up, put some stickers out on the gas pumps, shake their hand, buy an energy drink or water and you do business with them and go down the road. Well, if I'm a gentleman -- take, for example, let's say, I'm in Nashville, and I've got 300 stores, that's about the capacity that one person can cover on a month or every 60-day basis. So my goal as a salesperson is not necessarily going to be to bring on new stores, my goal is going to see how I can squeeze more juice out of the stores I've got. So I go back and I see them, say hello to everybody that I know and have done business with for years, and I go and show them other products, ask them to trust me and put them on the shelf. So I think it's by region and by salesperson. But from a -- let's say, from a C-level at Surge, we're absolutely doing both. And even outside of ECS, and keep in mind now, ECS are doing 20,000 transactions a day. Outside of that, we're taking these transactions and even by region, knowing what products sell better per region because the same thing that sells in Memphis is not going to be the same thing that may sell in L.A. or New York City. So -- and I'll give you even better example with us having a bilingual operation center, products that sell in the Rio Grande Valley of Texas are not the same that are going to sell in Northern Ohio. It's just different in regional, so we can target and provide our salespeople with the best tools possible to go out and not only -- because keep in mind now, it's not just bringing on the store, signing up the store is great. But all you did is board a store. We want customers to be able to buy products. We want to activate LocoRabbit phones. We want to do top-ups for all the other guys out there, TracFone, Boost, MetroPCS, and then we want to sell other products to the stores. But if the customer doesn't buy the product from a store, the store doesn't buy it from us. So there's definitely a food chain there. But the -- like I said, the easy political answer would be, say, both. But hopefully, I've provided you with kind of the background of how that works. You do go at it two-pronged. There's -- it's a 1-2 punch, chicken and the egg.
Stuart Smith
attendeeAll right. Very good. Here's the next question. Does Surge plan to have any of its own products to sell into the marketplace other than wireless?
Kevin Cox
executiveYes, absolutely. Absolutely. I think you need both. They'll be no different than Walmart or any other retailer. I think you need both. You need the brand name products out there that enable you to get stores on your network. I mean, obviously, people walking through the corner store, the convenience store, the gas station, they're going to have Boost. They're going to have TracFone. They're going to have all the big boys. So you got to be able to provide those products. You got to be able to provide other various products out there, anything from bag snacks to, gosh, we're seeing candy, all types of other products and then more recently, the masks, hand sanitizers and these products that are becoming hot products because of the day and age we live in. I think that from a strategic standpoint, we don't chase the white elephant or hunt for whales. I think the opportunities come up as you're doing business when you find the sweet spots I talked about before, the low-lying fruit or you come across a company that may be a regional manufacturer that either runs out or has hit a plateau or run across hard times and there's an opportunity for an acquisition. But LocoRabbit is a great example of our own brand that we control top to bottom, that we can roll out, that we can leverage. And I want to use that word very carefully, leverage. If there are products that we can leverage to increase market share to entice stores to come on because we're the exclusive provider of that, that's also why we've got a couple of CBD products that are in development right now. We're approaching that very methodical because of the glut of CBD products that hit the market. We're seeing what actually sells. What do customers come back and buy? What works? We've got a couple that we really like that we look forward to rolling out in the third quarter, but it's going to be methodical products we make money on. We're not going to chase our tail and do things that are outside the realm of what we know. So I think as the product makes sense and we can leverage it to make more money, then absolutely, we'll add more products that we own. And I do think that everything has a stage, life stages. I think once we get that store count up in the 50,000, 60,000, 80,000, 90,000, you also encounter a lot more opportunities as you're out there hustling in the market. And I think that will enable us to find some of these maybe hidden gem companies that just don't have distribution where we can either partner or acquire them.
Stuart Smith
attendeeWell, let's change gears a little bit with this next question. What is the plan to move the company to the NASDAQ stock market? And will your plan require stock dilution and/or a reverse split? Follow-up questions to that are what are hurdles or what hurdles are left before Surge before it can be listed on NASDAQ? And is there any time line in place?
Kevin Cox
executiveYes, we did change pace here a little bit. That's fine. This seems like my life, back-to-back calls where you're jumping from one thing to another. So no problem at all. And I'm going to do my best to work through this. There was quite a few questions there. Obviously, Stuart, we did this whole thing to get to NASDAQ, to get to a major exchange. Being on the OTC was never the goal of doing this. This is an area where we put our team together, we learn the ropes. I've used the phrase before we learned how to hit a curve ball in AA and then when we're ready to go to the majors we go. So to dive right in, look, I've had investor -- investment banker term sheets on my desk for 2 years. We could have pulled the trigger sooner if we want to. We made a Board decision to go when we could kick the saloon doors open and make the biggest impact at the right time. Now bluntly, I'm not going to take credit for knowing that the day and age we're living in right now, there would be so much focus on the underserved and the underbanked, but I would propose that the timing now compared to the products and services we offer being presented a year ago to the, let's just call it, the stock market world, I think the timing is absolutely phenomenal. There's an awareness on every channel on TV of the folks that are -- that lower 35% of the income bracket out there now, it's all over the place. You can't avoid it. So you have a fintech company that can come along that provides valuable products that these customers need, and it provides products to these community markets that are the economic heartbeat of all of these neighborhoods, whether they be Hispanic, black or white, it doesn't matter. They're all the same. They've all got these corner stores, community markets, bodegas, tiendas, mercados. They all depend on it. They go -- they don't drive to Walmart, drive to the mall or drive all over town. They go to these places and get their needs taken care of. You've got a company that comes in that cannot only provide this distribution platform to provide these stores with these products, but they also own their own wireless company that's popping at the seams and growing, and they have the ability to -- I mean, when you ask me, what can you grow to? Well, I mean, geez, I mean, you got 1 million of these stores out there on every corner and there's thousands of products per store. I don't see that there is a cap that we could hit. So that's our story now. We had the $15 million in revenue. When I first started getting these sheets on my desk that these folks that were courting us to take us to NASDAQ. Now we're over $55 million. I mean we're in a different category. So I do think we made the right choice. As a matter of fact, I believe the question asked, what is our outlook? Where are my thoughts going? My thoughts, I want to go as fast as possible. My next call out to you, Stuart, is with our firm that we hired in New York City to get us there. I mean we're fully engaged with Lucosky Brookman. Look them up, that's what they do for a living. Most of our paperwork is done. We've already engaged NASDAQ. We have a gentleman there who is working through our application. The -- as far as the criteria for what we need, we need a couple of more independent Board members that we'll bring on at the right time, right before we uplist. And then from a shareholders' equity standpoint, there would be a raise at the time of uplist. That's where the investment bankers come in. And we thought -- there's a question about dilution. Obviously, to minimize dilution, you take care of as much debt as you can through whatever you can do before that raise on the uplist, in my opinion, and then you minimize the money you need before NASDAQ. And if you -- gross money, merger acquisition money is after NASDAQ, once it's a lot different access to capital at that point. So I believe you'd asked a question about the dilution. Look, every decision we make, our -- the people on our Board and the guys that actually run our company on a day-to-day basis, they're the largest shareholders in the company. And I assure you, I know all of them personally. They're folks of names, and they did this ultimately for the stock value. They did it for the big-picture play. This is not something they're doing just cashing a paycheck, which I think is unique right now with a lot of the companies out there the way that we approach this. I mean there's not just some money guy that back a couple of dudes to come in and run a company. We started this and built it from the ground up with the intention of doing this. So everything that we do is going to be methodical and surgical in an attempt to minimize the dilution, which is also why when we do acquisitions, the diligence that goes into that -- look, every time you raise a dime, you issue stock. Obviously, there's dilution. But the goal is to outrun that dilution by the value you bring. If you issue a couple of million shares to acquire a company, how much money is that company going to make your overall holding company and does the value of your overall consolidated company outrun the cost of issuing those shares. Don't think for a minute that these are not things we talk about on a daily and nightly basis. These are things we all factor in. And to kind of get to the point, we're going to do what we have to do to get there. We're going to try to maximize shareholder value at every step of the way. And I'll say from my perspective. I mean people that have followed me for a while have heard me say, look, right now, I'm the largest shareholder. Why in the world would I ever make a decision that would affect me, my family, the people I care about in a negative financial manner? It doesn't make sense. I don't work 16, 18 hours a day along with our -- the rest of our guys on our team to somehow do something that impacts me negative. We're going to do it at the right time, which we feel is now, and we're taking those steps. So we look to aggressively move forward. And look, if it's third quarter, fourth quarter, great. There's things that are outside of our control when it comes to that. But we're going to do the things that we need to do on our side of the fence to get there this year.
Stuart Smith
attendeeWell, let's stay on this topic then. Let's talk a little bit more about corporate moves. Here's the question. Surge recently announced canceling 2.4 million shares and removing $4 million in debt. Can you tell us a little bit more about that and the impact it has on the company?
Kevin Cox
executiveYes. This was -- hey, that was a really exciting move for us. We worked really hard on that. The $4 million in debt was what came from the acquisition of ECS. We bought ECS for $5 million in stock -- excuse me, $5 million. So there was a $4 million promissory note on our books. Well, the negative impact on our balance sheet was a negative $4 million to shareholders' equity. Obviously, that was a big hurdle to getting to NASDAQ. To get to NASDAQ, we need to have $5 million to the positive. Well, this one thing right here was $4 million to the negative. That's a challenge. So by converting that to stock at and above market, I mean, we converted at $0.50 a share. So we got a premium on the conversion, and we were able to take $4 million in debt, wipe it off our balance sheet, so that was a really, really big deal for us. We're very happy we were able to do that. And to be blunt with you, that was a big -- you've got a little internal checklist. That was one of the big checks, and that was something that we needed to take care of. That was a little bit out of our control because obviously, there was an agreement with the other side, came to an agreement, so now it's back to the things that we can focus on internally moving forward. So that's another reason why, hey, man, I shifted gears. I learned how to drive on an old Ford truck. So I use shifting gears a lot, because I had one that missed third gear. So I'm very well versed on how to drive a stick shift, and that allowed us to shift gears and hit the gas.
Stuart Smith
attendeeAll right. Let's, well, change once again. Do you pay attention to the various stock message boards? Some of these seems slanderous towards you and the company. What are your thoughts? And is there anything that you can do about it?
Kevin Cox
executiveStuart, when I first, I guess, sort of became the CEO of the public company 3 years ago, I would check into these things, and I thought that I had this puritanical approach that if I did what we needed to do and told people what we were doing, that everybody would love and they would understand. And I got hit in the face with a bat pretty hard to be honest with you. I mean, it was -- I used to read those years ago. And I would sit there and look at things that were absolutely not true about our company, completely just lies about me or people on our team and I'd get angry about it. Once I fully understood the dynamic here, look, there's people out there and even these message boards, a lot of these message boards are based on servers overseas. They're not regulated. It's like the National Enquirer in the grocery aisle. There's people out there, why they say the things they do? I don't know. I don't care. I haven't looked at it in years. I have people that will ask me things randomly every now and then based on something that they read. But whether it's people that are being paid to bash a stock because there's people shorting a stock or people are intentionally just saying crazy stuff to try to create fear so someone dump stock and they pick it up cheaper and then just sell it on the way back up because one of the unique things that I've learned about Surge, how we're differentiated a little bit from a normal OTC company, people know that we're fully committed to doing what we say we're going to do. We're not just hyping or pumping a company, get a little money out of it and then move to the next thing like a locust. We're actually committed to doing what we say we're going to do. And they know that we're not going to allow something to stay low so that they can bang the stock down, buy some cheap stock and then, look, they make a little money. It is what it is. But as far as those actual message boards go, look, I mean, I asked the question 2 years ago, is there a way to fight? Is there a way to assume they're just saying like stuff that's not true. And I always told no, don't worry about it. Worry about growing your company, doing what you need to do. And furthermore, there's moderators in these -- most of these message boards. And I'm fair game. You can say whatever you want to about the CEO or the company, so they could say I'm an alien. And there's no fact check. There's no follow up or anything like that on that. So they can say whatever they want to about me or the company. And at the end of the day, I've had people ask me because they get pissed off because they're big fans of us so they know what we're doing. Some of our key team members and just tell them, look, don't respond to these guys. The worst thing you can do is respond because now you've engaged and you create the analytics where it shows that message board is -- has a higher propensity to be something someone will be looking for if they're looking for Surge stock. So the best thing people could do is not buy the National Enquirer in the aisle. Guess what? It's not on the aisle anymore. It's not on the checkout anymore. The same with these things. I mean I -- again, it is a little bit of a head scratcher, but no, I mean I'm more focused on what we're doing as a company. And hey, you know what, Stuart, now that I think about it, hey, look, we have VP-level people in our company that have no idea the LOIs, the -- that some of the mergers and acquisitions, some of the things we're doing that are on my desk or Anthony Nuzzo's desk or Tony Evers' desk or Carter Matzinger, they have no idea. Many of our people in our own team at the VP operational level find out about deals or what we're doing when they're prepping the press release. We are a very tight-knit company that has organizational structure. There is no way that I think people -- sometimes when they see a stock fluctuate, they think there's something out there that they don't know about. Somebody knows something I don't know. So there's a little bit of moment in time where you can create panic and fear by feeding them something. That's why a lot of that garbage on TV exists as well. Well, look, I can assure you if it's not -- if you go to our website and it is not on there, if you go to our social media and it's not on there. I can assure you that whatever you're reading, it's not factual. We don't leak information. We're a very professional organization. And so the best thing that I could say as far as is there anything we can do? Not really. No. I mean it's the same people who do the same thing to a lot of other companies. We don't get caught up in it. I would just look at it as if there's dips, those are opportunities like I do in my own personal portfolio with other stocks. If there's dips, that's opportunities to buy. Just because somebody buys or sells something in the market, it normally is not related to anything going on in the company when you're on the OTC. Now at the next level, hey, I'm looking forward to being on NASDAQ and having our share price more represented by what we do, the critique of what we do. Did we execute? Hey, put the scoreboard up and turn the lights on that I want to be valued based on our ability to perform and execute. So that's another reason why when people ask me, why do you want to get the NASDAQ so quick? I'm like we want to get there. We're being properly evaluated as a company with our market cap and the sectors we're in and the valuations. The hard work and energy and the ability to execute is more better represented than the shareholder value.
Stuart Smith
attendeeOkay. Well, let's get some clarity now. The next question says this. Please provide some clarity as to the big picture for Surge. In a nutshell, how would I be able to give an elevator pitch to someone I'm meeting for the first time?
Kevin Cox
executiveThe elevator pitch is tough for a holding company. Obviously, it's a holding company. But the way that I would approach it -- this will be a short quick answer since you asked about the elevator pitch. So hey, look, Surge Holdings got a great management team. It's got a history of executing. They've got 3 channels, 3 divisions of their company: Media, Telecom and FinTech. The FinTech division, that serves -- it provides products and services platform to the underbanked. This is the tip of the spear, the flagship as they're moving forward as they march to NASDAQ. In this day and age, we feel like this is a great opportunity. I mean that would be my flag. And speaking of that, just the management team alone has done over $1.2 billion in sales in their own -- in the private companies before taking their companies public under the Surge Holdings banner. So that would be my -- look, the more that I'm out there and the more -- look, I must have gained a lot of wisdom over the last 3 years. I look at things completely different than what I did when I was just buying stocks. There's so many things that go on in a public company that I had no idea about. And I never truly valued the team as much as I do now. And now I see how important it is for the CFO, the President and CEO, the VP level of the operations, do they have the ability to scale? All the things that we've built, I think we answered those questions, and we did take the long route to do things right so that we will prepare ourselves to be able to grow properly and, hey, quickly if need be, with the operations center and we can scale quickly without ever hitting a plateau.
Stuart Smith
attendeeAll right. Well, I saved this for the last question since it talks about the outlook. What is the outlook for the balance of 2020? What can we expect next in terms of any acquisitions or direction for Surge?
Kevin Cox
executiveAlways a loaded question is looking forward. But -- so I don't -- I'll answer it. Just I mean, you know me, so hopefully by now, you spent enough time with me to know I'm a pretty straight shooter, just kind of go from the hip here. What I'm looking forward to is the pop from that pent-up frustration that we referenced, I think it was in your first question, whether it be on the media side, whether it be salespeople that are hustling to achieve their overall years, their same net pay. The people are looking. It's just -- it's a really hot time right now for products. Everybody is looking for something to get that edge up where it's like the market -- I don't mean the stock market, but the market in general, it's uncomfortable. People want to move. They want to go. They want to sell. They want to go and gain ground. So we're -- since we're -- look, at my core, I'm a sales guy, and that's how I got my start 20 years ago. So I'm -- and the sales guys, it's product, timing, opportunity. Well, we've got all 3 right now. So I'm really excited about the third quarter. I'm excited to see -- I mean you show me a product like LocoRabbit where I know that at 30,000 subscribers, where basically the profit from just 30,000 subscribers, what it does to the company. And the fact that even in my own private companies, we used to activate 30,000 subscribers a month. I mean when I look at numbers like that, when I look at the numbers, when Carter Matzinger and I huddle up and he shows me what he's expecting and anticipating for the third quarter and beyond, and I know the profit margins of Surge Logic, that's super exciting. When I see -- when I have chains that are national chains and these huge distribution companies reaching out to us for information on LocoRabbit. Now keep in mind, if you're a huge distribution company, bringing a software platform may not make sense because you're really bringing in a competitor, but the actual product, LocoRabbit, that they can use to offer their 30,000, 40,000, 50,000 stores that they're providing products to, that's a huge, huge deal for us. Now we've got instead of hundreds of salespeople, thousands of salespeople. And then look, we're evaluating acquisitions, absolutely. We're debating whether to do an acquisition at the time of uplist. Does it make sense just to go and then start acquiring after? But yes, I mean those are things we did. So I'm not going to look at it, say, from a 2020 standpoint as much as I am in Q3. Normally, I do look down the road 6 to 9 months, but where we are right now, I've taken my -- let's say, I've put my binoculars down and I put my ball cap on, rolled my sleeves up and jumped in with some of the divisions chair because I have done this before. Our team has done this before, and I'm able to provide leadership on the battlefield as opposed to back on the hill somewhere. So -- and look, only I like to fight. I love the fact that we can jump in and there's no excuses. If we fail, it's because we didn't execute. And I've got a team that doesn't fail and a team that does execute. I'm excited about having Tony Evers, our new CFO, on. This week, we're naming Tony the CEO of the company. This will allow our President -- it will free him up a little bit more to help me on some of the forward-thinking, forward-pushing ideas and growth modeling that we're going to be doing. So I'm very, very excited, very -- I wish I had a crystal ball. I don't want to fast-forward time because I'm old enough now to know how precious time is. But I do wish I had a crystal ball to see where we are in 6 months. And I'm going to do everything in my power to get us to where I want us to be in 6 months. How about that?
Stuart Smith
attendeeThat sounds good to me, Brian. And as I mentioned, that was our final question. I want to thank you for taking the time to respond to all of these questions. Thanks, Brian.
Kevin Cox
executiveHey Stuart, I enjoyed it and look forward to next time.
Stuart Smith
attendeeAll right. For Brian Cox, the CEO for Surge Holdings, this is Stuart Smith saying thanks so much for listening.
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