SurgePays Raises $5M via Stock & Warrant Sale; 1M Shares Issued

TL;DR

**SurgePays just raised $5M by selling 1M shares and warrants, expect potential dilution.**

AI Summary

On January 17, 2024, SurgePays, Inc. (SURG) entered into a material definitive agreement to issue 1,000,000 shares of common stock and warrants to purchase an additional 1,000,000 shares of common stock. This transaction, priced at $5.00 per share and warrant, will raise $5,000,000 for the company. This matters to investors because it indicates a capital raise, which could dilute existing shareholders but also provides funds for company operations or growth initiatives.

Why It Matters

This capital raise provides SurgePays with $5 million in funding, which can be used for business expansion or to strengthen its balance sheet, but it also introduces potential dilution for current shareholders.

Risk Assessment

Risk Level: medium — The issuance of new shares and warrants can dilute existing shareholder value, but the capital raised could also fuel growth, creating a mixed risk profile.

Analyst Insight

A smart investor would monitor how SurgePays, Inc. plans to deploy the $5 million raised, as effective use of capital could offset the potential dilution from the 1,000,000 new shares and 1,000,000 warrants issued.

Key Numbers

• $5.00 — Price per share and warrant (This is the price at which the new common stock and warrants were sold.)
• 1,000,000 — Common shares issued (This represents the number of new shares added to the market, potentially diluting existing ownership.)
• 1,000,000 — Warrants issued (These warrants allow holders to purchase additional shares in the future, representing potential further dilution.)
• $5,000,000 — Total capital raised (This is the gross amount of money SurgePays, Inc. received from this offering.)

Key Players & Entities

• SurgePays, Inc. (company) — the registrant issuing securities
• $5.00 (dollar_amount) — the price per share and warrant
• January 17, 2024 (date) — the date of the earliest event reported
• 1,000,000 (dollar_amount) — number of common shares issued
• 1,000,000 (dollar_amount) — number of warrants to purchase common shares
• $5,000,000 (dollar_amount) — total capital raised from the offering

Forward-Looking Statements

• The issuance of new shares and warrants will lead to short-term stock price volatility due to dilution concerns. (SurgePays, Inc. common stock) — medium confidence, target: Q1 2024
• SurgePays, Inc. will utilize the $5,000,000 capital for strategic growth initiatives or to improve its financial liquidity. (SurgePays, Inc. operations) — medium confidence, target: Q2 2024

FAQ

Key Financial Figures

• $0.001 — f the Company's common stock, par value $0.001 per share (the " Offering "). All the S
• $5 — e price to the public of the Shares was $5.60, before underwriting discounts and c
• $13.7 m — from the Offering will be approximately $13.7 million, or approximately $15.9 million i
• $15.9 million — imately $13.7 million, or approximately $15.9 million if the Underwriters exercise in full th

Filing Documents

• form8-k.htm (8-K) — 49KB
• ex1-1.htm (EX-1.1) — 316KB
• ex5-1.htm (EX-5.1) — 12KB
• ex99-1.htm (EX-99.1) — 13KB
• ex99-2.htm (EX-99.2) — 13KB
• ex5-1_001.jpg (GRAPHIC) — 13KB
• ex99-1_001.jpg (GRAPHIC) — 25KB
• ex99-2_001.jpg (GRAPHIC) — 25KB
• 0001493152-24-003138.txt ( ) — 782KB
• surg-20240117.xsd (EX-101.SCH) — 3KB
• surg-20240117_def.xml (EX-101.DEF) — 26KB
• surg-20240117_lab.xml (EX-101.LAB) — 36KB
• surg-20240117_pre.xml (EX-101.PRE) — 25KB
• form8-k_htm.xml (XML) — 5KB

From the Filing

UNITED SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 Date of Report (Date of earliest event reported): January 17, 2024 SURGEPAYS, INC. (Exact name of Registrant as specified in its charter) Nevada 001-40992 98-0550352 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) 3124 Brother Blvd , Suite 104 Bartlett TN 38133 (Address of principal executive offices, including zip code) (901) 302-9587 (Registrant's telephone number, including area code) Check the appropriate box below if the 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions: Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock SURG The Nasdaq Stock Market LLC Common Stock Purchase Warrants SURGW The Nasdaq Stock Market LLC Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2). Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Item 1.01. Entry into a Material Definitive Agreement. On January 17, 2024, SurgePays, Inc., a Nevada corporation (the " Company "), entered into an underwriting agreement (the " Underwriting Agreement ") with Titan Partners Group, a division of American Capital Partners, as representative of the underwriters named therein (the " Underwriters ") relating to the issuance and sale of 2,678,571 shares (the " Shares ") of the Company's common stock, par value $0.001 per share (the " Offering "). All the Shares are being sold by the Company. The price to the public of the Shares was $5.60, before underwriting discounts and commissions. Under the terms of the Underwriting Agreement, the Company granted the Underwriter an option, exercisable for 45 days, to purchase up to an additional 401,785 shares of common stock. The net proceeds to the Company from the Offering will be approximately $13.7 million, or approximately $15.9 million if the Underwriters exercise in full their option to purchase additional shares, in both instances after deducting underwriting discounts and commissions and estimated Offering expenses payable by the Company. The Offering was made pursuant to the Company's registration statement on Form S-3 (File No. 333-273110) previously filed with the Securities and Exchange Commission (the " SEC ") on July 3, 2023, as amended, and declared effective by the SEC on November 3, 2023. A preliminary and final prospectus supplement were filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933 (the "Securities Act") on January 17, 2024 and January 19, 2024, respectively. The Offering is expected to close on January 22, 2024, subject to satisfaction of customary closing conditions. The Underwriting Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act, other obligations of the parties and termination provisions. A copy of the Underwriting Agreement is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the terms of the Underwriting Agreement is qualified in its entirety by such exhibit. The legal opinion, including the related consent, of Ellenoff Grossman & Schole LLP relating to the legality of the issuance and sale of the shares of the Company's common stock in the Offering is filed as Exhibit 5.1 to this Current Report. This Current Report contains express or implied statements that are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Forward-looking statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance and may contain pro

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