On October 7, 2019, Surge Holdings, Inc., a Nevada corporation (the “Company”), entered into a Securities Purchase Agreement (the “Agreement”), severally and not jointly, with BHP Capital NY Inc., a New York Corporation (“BHP”), Armada Capital Partners LLC, a Delaware limited liability company (“Armada”), and Jefferson Street Capital LLC, a New Jersey limited liability company (“Jefferson”), (“Buyer” or collectively the “Buyers”). In connection with the Agreement, the Company issued three (3) notes, one to each Buyer, and three (3) warrants to purchase the Company’s common stock, one to each Buyer. The aggregate purchase price of the notes is $375,000 and the aggregate principal amount of the notes is $405,000.

Securities Purchase Agreement

Pursuant to the Agreement, each of the Buyers purchased from the Company, for a purchase price of $125,000 (“Purchase Price”), a Convertible Promissory Note, in the principal amount of $135,000 (a “Note”). The purchase of each Note was accompanied by the Company’s issuance of a warrant to purchase 125,000 shares of the Company’s common stock to each Buyer. On October 7, 2019 (the “Closing Date”), each Buyer delivered the Purchase Price to the Company as payment for each Note.

Convertible Promissory Notes

Each Note became effective as of the Closing Date, and are due and payable on April 7, 2021 (the “Maturity Date”). The Notes entitle the Buyers to 8% interest per annum (the “Interest Rate”). Upon an Event of Default (as defined in the Notes), the Notes entitle the Buyers to interest at the rate of 18% per annum. The Notes may be converted into shares of the Company’s common stock at a conversion price equal to 0.75 (representing a 25% discount) multiplied by the lesser of (i) the lowest one day volume weighted average price (“VWAP”) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date, and (ii) the lowest one day VWAP for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Issue Date. The Buyers may not convert the Notes to the extent that such conversion would result in beneficial ownership by the Buyers and/or its affiliates of more than 4.99% of the issued and outstanding common stock of the Company. The Company has the right to prepay the Notes beginning on the Issue Date and ending on the date which one hundred eighty (180) calendar days following the Issue Date at an amount equal to 1.18 multiplied by the amount that the Company is prepaying. After 180 calendar days from the Issue Date, the Company shall have no further right of prepayment.

In the event of a default, without demand, presentment or notice, the Note shall become immediately due and payable.

Warrants to Purchase Common Stock

The Warrants to purchase shares of the Company’s common stock (the “Warrants”), were issued by the Company on October 7, 2019 to the Buyers in connection with the Agreement. The Warrants entitle the Buyers, respectively, to exercise purchase rights represented by the Warrants up to 125,000 shares per Warrant. The Warrants permit the Buyers to exercise the purchase rights at any time on or after October 7, 2019 through October 7, 2022. Each Warrant contains an exercise price per share of $0.80, subject to adjustment, and also contains a provision permitting the cashless exercise of such exercise rights as defined therein. The Company has maintained the right to redeem each Warrant in full at any time following payment in full of the amounts owing under each respective Note.

The foregoing description of the Securities Purchase Agreement, the Convertible Promissory Notes and the Warrants to Purchase Common Stock and the transaction 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 Securities Purchase Agreement, Convertible Promissory Notes and Warrants to Purchase Common Stock, a copy of which will be filed as an exhibit to this Current Report on Form 8-K.