Surgepays, Inc. current report, 29 June 2018

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Surge Holdings, Inc. 8-K Summary

Business Context and Reporting Period

This Current Report on Form 8-K was filed by Surge Holdings, Inc. (referred to in metadata as Surgepays, Inc.) on June 29, 2018. The report details a significant capital structure transaction involving the exchange of common stock for newly created Series C Convertible Preferred Stock.

Key Financial Metrics and Capital Structure

The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics. The primary financial event reported is a reduction in outstanding common shares:

  • Common Stock Reduction: 148,741,531 shares of common stock were exchanged.
  • Preferred Stock Issuance: 594,966 shares of Series C Convertible Preferred Stock were issued.
  • Outstanding Common Stock: Decreased from 231,749,200 shares to 83,007,669 shares.
  • Exchange Ratio: 250 shares of Common Stock for 1 share of Series C Preferred Stock.

Material Changes

The most material change is the reduction of the company's common share count by approximately 64% through a voluntary exchange with major shareholders Kevin Brian Cox and Thirteen Nevada LLC. This transaction was designed to remove shares from the trading market and impose conditions on future conversion.

Terms, Outlook, and Risks

Series C Preferred Stock Terms:

  • Par Value: $0.001 per share.
  • Original Issue Price: $100.00 per share.
  • Dividends: No preferential dividend rights.
  • Liquidation Preference: Holds preference over Common Stock.
  • Conversion Conditions: Shares are convertible into Common Stock (at a 1:250 ratio) only upon the first occurrence of:
    1. The Volume Weighted Average Price (VWAP) of Common Stock reaching at least $2.00 per share for any consecutive trading days; or
    2. June 30, 2019.

Management Commentary: The stated purpose was to reduce the number of issued and outstanding common shares and to place conditions on the ability of shareholders to convert preferred stock back to common stock.

Investor Verification Checklist

  • Verify the current trading volume and VWAP of the Common Stock to assess the likelihood of the $2.00 conversion trigger.
  • Confirm the exact number of shares held by Kevin Brian Cox and Thirteen Nevada LLC post-exchange.
  • Review the full text of the Certificate of Designation (Exhibit 4.1) for any additional covenants or voting rights attached to the Series C Preferred Stock.
  • Check subsequent filings to determine if the June 30, 2019 conversion deadline was met or if the stock was converted prior to that date.