Item 1.01 Entry into a Material Definitive Agreement.

On September 30, 2019, Surge Holdings, Inc., a Nevada corporation (“Buyer” or the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with GBT Technologies Inc., a Nevada corporation (“Seller”).

Under the Purchase Agreement, the Company has purchased substantially all of the assets, and specified liabilities, of the Seller’s ECS Prepaid business, Electronic Check Services business, and the Central State Legal Services business (collectively the “Business”). The Purchase Agreement provides that the Company assumed Seller’s liabilities incurred after the effective date of the Purchase Agreement, but only to the extent such obligations and liabilities were not caused by or related to any action or inaction by Seller prior to the effective date of the Purchase Agreement. The Purchase Agreement provides, among other things, that on the terms and subject to the conditions set forth therein, the Company acquired substantially all of the assets related to the Business for total consideration of five million dollars ($5,000,000). The Purchase Agreement provides that the consideration is to be paid by the Company through the issuance of a convertible promissory note in the amount of four million dollars ($4,000,000) to the Seller (the “Note”), and through the issuance of three million three hundred thirty-three thousand three hundred thirty-three (3,333,333) restricted shares of the Company’s common stock to the Seller (the “Shares”).

The Note has an effective date of September 27, 2019 and has a term of eighteen (18) months until the maturity date. The Note shall not bear interest and shall be convertible at the option of the Seller starting from the sixth month anniversary of the effective date. The conversion price of the Note shall equal the volume weighted average price of the Company’s common stock on the trading market which the common stock is then trading over the previous twenty (20) days prior to the conversion date, provided that the conversion price shall never be lower than $0.10 or higher than $0.70. The Note provides that the Company retains the right to prepay all or any portion of the principal without any prepayment penalty. In addition, in connection with the issuance of the Note, the Seller agreed that, for the eighteen (18) months following the effective date, Seller will not dispose of the Shares or shares issued as a result of the conversion of the Note, in an amount greater than seven and one-half percent (7.5%) of the trading volume of the Company’s shares of common stock during the previous month.

The foregoing description of the Purchase Agreement and the Note and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Purchase Agreement and the Note, a copy of which will be filed as an exhibit to Surge Holdings, Inc.’s Quarterly Report on Form 10-Q covering the fiscal quarter ending September 30, 2019.