Item
2.01 Completion of Acquisition or Disposition of Assets.
On
April 11, 2018, Surge Holdings, Inc., a Nevada corporation, True Wireless, Inc., an Oklahoma corporation (“TW”) and
TW Acquisition Corporation, a newly formed Nevada corporation (hereafter “Acquisition Sub”), completed the merger
contemplated by the Agreement and Plan of Reorganization (hereafter the “Merger Agreement”) entered into as of April
11, 2018 by and among the Company, TW and Acquisition Sub.
Pursuant
to the terms of the Merger Agreement, TW merged into Acquisition Sub in a transaction where TW was the surviving company and become
a wholly-owned subsidiary of the Company. The transaction was structured as a tax-free reverse triangular merger. In addition
to the 12,000,000 shares of Company Common Stock and $500,000 cash which has been previously paid to the shareholders of TW, at
the Closing of the merger transaction, the shareholders of TW received the following as additional merger consideration:
●
152,555,416 shares of newly-issued Company Common Stock, which will give the shareholders of TW, on a proforma basis, a 69.5%
interest in the Company’s total Common Shares.
●
An additional number of shares of Company Common Stock, if any, necessary to vest 69.5% of the aggregate issued and outstanding
Common Stock in the shareholders of TW at the Closing.
●
A Promissory Note in the original face amount of $3,000,000, bearing interest at 3% per annum maturing on December 31,
2018.
●
3,000,000 shares of newly-issued Company Series A Preferred Stock
The
Company’s investment in TW consists of the following:
|
|
Shares
|
|
|
Amount
|
|
Consideration
paid prior to Closing:
|
|
|
|
|
|
|
|
|
Cash
paid
|
|
|
|
|
|
$
|
500,000
|
|
Common
stock issued
|
|
|
12,000,000
|
|
|
|
1,200,000
|
|
Total
consideration paid
|
|
|
12,000,000
|
|
|
$
|
1,700,000
|
|
Consideration
paid at Closing:
|
|
|
|
|
|
|
|
|
Common
stock to be issued at closing
|
|
|
152,707,516
|
|
|
$
|
60,683,006
|
|
Series
A Preferred Stock to be issued at closing
|
|
|
3,000,000
|
|
|
|
120,000
|
|
Note
payable due December 31, 2018
|
|
|
|
|
|
|
1,500,000
|
|
Total
consideration to be paid
|
|
|
|
|
|
$
|
62,303,006
|
|
|
|
|
|
|
|
|
|
|
Total
consideration
|
|
|
|
|
|
$
|
64,003,006
|
|
Following
the Closing, TW’s financial statements as of the Closing will be consolidated with the Consolidated Financial Statements
of the Company
The
foregoing summary of the transactions contemplated by the Merger Agreement does not purport to be complete and is subject to,
and qualified in its entirety by, the full text of the Merger Agreement, which is attached as Exhibit 2.1 to this Form 8-K filed
with the Securities and Exchange Commission, which is incorporated herein by reference.