UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐ |
Preliminary
Proxy Statement |
|
|
☐ |
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
|
|
☒ |
Definitive
Proxy Statement |
|
|
☐ |
Definitive
Additional Materials |
|
|
☐ |
Soliciting
Material under §240.14a-12 |
SurgePays,
Inc.
(Name
of Registrant as Specified In Its Charter)
N/A
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
☒ |
No
fee required |
|
|
☐ |
Fee
paid previously with preliminary materials: |
|
|
☐ |
Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
SURGEPAYS,
INC.
August
15, 2023
Dear
Fellow SurgePays Stockholders:
We
invite you to attend the 2023 Annual Meeting of Stockholders (the “Annual Meeting”) of SurgePays, Inc. (“SurgePays”
or the “Company”), to be held on September 28, 2023 at 12:00 p.m. Central Time virtually by means of remote communication
and can be accessed by visiting www.virtualshareholdermeeting.com/SURG2023 where you will be able to listen to the meeting live, submit
questions and vote online. You will not be ablet to attend the meeting in person.
The
Notice of the Annual Meeting and Proxy Statement accompanying this letter provide information concerning matters to be considered and
acted upon at the meeting. Immediately following the meeting, a report on our operations will be presented, including a question-and-answer
and discussion period. Our 2022 results are presented in detail in our Annual Report.
Your
vote is very important. We encourage you to read the Proxy Statement and vote your shares as soon as possible. Whether or not you
plan to attend, you can be sure your shares are represented at the Annual Meeting by promptly submitting your vote by the Internet, by
telephone or, if you request a paper copy of the proxy materials and receive a proxy card, by mail.
On
behalf of the Board of Directors, thank you for your continued confidence and investment in SurgePays.
/s/
Kevin Brian Cox |
|
Kevin
Brian Cox
Chairman
of the Board of Directors |
|
SURGEPAYS,
INC.
3124
Brother Blvd, Suite 104,
Bartlett,
TN, 38133
Telephone:
901-302-9587
NOTICE
OF 2023 ANNUAL MEETING OF STOCKHOLDERS
To
Be Held on September 28, 2023
To
the Stockholders of SurgePays, Inc.
The
2023 Annual Meeting of Stockholders (the “Annual Meeting”) of SurgePays, Inc., a Nevada corporation (“SurgePays,”
the “Company,” “us,” “our,” or “we”), will be held on September 28, 2023 at 12:00 p.m.
Central Time September 28, 2023 at 12:00 p.m. Central Time virtually by means of remote communication and can be accessed by visiting
www.virtualshareholdermeeting.com/SURG2023 where you will be able to listen to the meeting live, submit questions and vote online. You
will not be ablet to attend the meeting in person. The purpose of the Annual Meeting is to consider and act upon the following matters:
1. |
To
elect five (5) members of the Board of Directors to serve until the 2024 annual meeting of stockholders. |
|
|
2. |
To
ratify the selection of Rodefer Moss & Co, PLLC as the Company’s independent registered public accounting firm for the
fiscal year ending December 31, 2023. |
Our
Board of Directors has fixed August 1, 2023 as the record date (the “Record Date”) for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting and at any adjournment or postponement of the meeting. Only stockholders of
record of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at the close of business on
the Record Date will be entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof.
All
stockholders are cordially invited to attend the Annual Meeting, which will be conducted solely online and can be attended by visiting
www.virtualshareholdermeeting.com/SURG2023. We are providing proxy material access to our stockholders via the Internet at www.proxyvote.com.
Please give the proxy materials your careful attention. The Notice of Internet Availability of Proxy Materials (the “Notice”)
and proxy card will be mailed to shareholders on or about August 16, 2023.
For
your convenience, record holders of our Common Stock have FOUR methods of voting:
VOTE
BY INTERNET - www.proxyvote.com or scan the QR Barcode on your proxy card. Use the Internet to transmit your voting instructions
and for electronic delivery of information. Vote by 11:59 P.M. ET on September 27, 2023. Have your proxy card in hand when you access
the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE
BY PHONE - 1-800-690-6903. Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on September
27, 2023. Have your proxy card in hand when you call and then follow the instructions.
VOTE
BY MAIL. Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
VOTE
AT THE MEETING. Attend and vote virtually at the Annual Meeting.
NOTE
FOR STREET-NAME HOLDERS. If you hold your shares through a broker, bank or other nominee, you must instruct your nominee how to vote
the shares held in your account. The nominee will give you the Notice or voting instruction form. If you do not provide voting instructions,
we expect that your nominee will be permitted to vote only on Proposal 2.
|
BY
ORDER OF THE BOARD OF DIRECTORS |
|
|
August
15, 2023 |
/s/
Kevin Brian Cox |
|
Kevin
Brian Cox
Chairman
of the Board of Directors |
Whether
or not you expect to attend the Annual Meeting virtually, we urge you to vote your shares via proxy at your earliest convenience. This
will ensure the presence of a quorum at the Annual Meeting. Promptly voting your shares will save SurgePays the expenses and extra work
of additional solicitation. Submitting your proxy now will not prevent you from voting your shares at the Annual Meeting if you desire
to do so, as your proxy is revocable at your option. Your vote is important, so please act today!
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON SEPTEMBER 28, 2023
The
Notice of the Annual Meeting and Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com.
Your
vote is important. We encourage you to review all of the important information contained in the proxy materials before voting.
SURGEPAYS,
INC.
3124
BROTHER BLVD, SUITE 104,
BARTLETT,
TN, 38133
TELEPHONE:
901-302-9587
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
TO
BE HELD ON THURSDAY, SEPTEMBER 28, 2023
TABLE
OF CONTENTS
ABOUT
SURGEPAYS, INC.
SurgePays,
Inc., incorporated in Nevada on August 18, 2006, is a technology and telecom company focused on the underbanked and underserved communities.
SurgePhone and Torch Wireless provide subsidized mobile broadband to over 250,000 low-income subscribers nationwide. SurgePays fintech
platform empowers clerks at thousands of convenience stores to provide a suite of prepaid wireless and financial products to underbanked
customers.
SurgePhone
Wireless and Torch Wireless
SurgePhone
and Torch, wholly owned subsidiaries of SurgePays, are mobile virtual network operators (MVNO) licensed by the Federal Communications
Commission (the “FCC”) to provide subsidized access to quality internet through mobile broadband services to consumers qualifying
under the federal guidelines of the Affordable Connectivity Program (the “ACP”). The ACP (the successor program, as of March
1, 2022 to the Emergency Broadband Benefit program) provides SurgePhone and Torch up to a $100 reimbursement for the cost of each tablet
device distributed and a $30 per customer, per month subsidy for mobile broadband (internet connectivity) services. SurgePhone and Torch
combined are licensed to offer subsidized mobile broadband to all fifty states.
SurgePays
Fintech (ECS Business)
We
refer to the collective operations of ECS Prepaid, LLC, a Missouri limited liability company, Electronic Check Services, Inc., a Missouri
corporation, and Central States Legal Services, Inc., a Missouri corporation, as “Surge Fintech.” This was previously referred
to as the “ECS Business.”
Surge
Fintech has been a financial technology tech and wireless top-up platform for over 15 years. Through a series of transactions between
October 2019 and January 2020, we acquired the ECS Business primarily for the favorable ACH banking relationship and a fintech transactions
platform processing over 20,000 transactions a day at approximately 8,000 independently owned convenience stores. The platform serves
as the proven backbone for wireless top-up transactions and wireless product aggregation for the SurgePays nationwide network.
Surge
Blockchain
Surge
Blockchain Software is a back-office marketplace (accessed through the SurgePays fintech portal for convenience stores) offering wholesale
consumable goods direct to convenience stores who are transacting on the SurgePays Fintech platform. The wholesale e-commerce platform
is easily accessed through the secure app interface – similar to a website. We believe what makes this sales platform unique is
that it also offers the merchant the ability to order wholesale consumable goods at a significant discount from traditional distributors
with one touch ease. We are able to sell products at a significant discount by using on demand Direct Store Delivery (DSD). Our platform
is connected directly to manufactures, who ship products direct to the store while cutting out the middleman. The goal of the SurgePays
Portal is to leverage the competitive advantage and efficiencies of e-commerce to provide as many commonly sold consumable products as
possible to convenience stores, corner markets, bodegas, and supermarkets while increasing profit margins for these stores.
LogicsIQ,
Inc.
LogicsIQ,
Inc. is a lead generation and case management solutions company primarily serving law firms in the mass tort industry. LogicsIQ’s
CRM “Intake Logics” facilitates the entire life cycle of converting a lead into a signed retainer client integrated into
the law firms case management software. Our proven strategy of delivering cost-effective retained cases to our attorney and law firm
clients means those clients are better able to manage their media and advertising budgets and reach targeted audiences more quickly and
effectively when utilizing our proprietary data driven analytics dashboards. Our ability to deliver transparent results through our integrated
Business Intelligence (B.I.) dashboards has bolstered our reputation as an industry leader in the mass tort client acquisition field.
ShockWave
CRM™
SurgePays
acquired the Software as a Service (SaaS) Customer Relationship Management (CRM) and Billing System software platform “MVNO Cloud
Services” on June 7, 2022. Payment for the software consisted of $300,000 in cash, of which $100,000 was paid in June 2022, and
the remaining $200,000 in July 2022. Additionally, the Company issued 85,000 shares of Common Stock having a fair value of $411,400 ($4.84/share),
based upon the quoted closing trading price. SurgePays has rebranded the software as ShockWave CRM.
ShockWave
is an end-to-end cloud-based SaaS offering an Omnichannel CRM, billing system and carrier integrations specific to the telecommunication
and broadband industry. Some of these services include sales agent management, device and SIM inventory management, order processing
and provisioning, retail Point of Service (POS) activations and payments, customer service management, retention tools, billing, and
payments.
Centercom
Since
2019, we have owned a 40% equity interest in Centercom Global, S.A. de C.V. (“Centercom”). Centercom is a bilingual operations
center providing the Company with sales support, customer service, IT infrastructure design, graphic media, database programming, software
development, revenue assurance, lead generation, and other various operational back-office services. Centercom is based in El Salvador.
QUESTIONS
AND ANSWERS ABOUT THIS PROXY STATEMENT AND VOTING
Why
am I receiving these materials?
We
have sent you these proxy materials because our Board of Directors (the “Board”) is soliciting your proxy to vote at the
Annual Meeting of Shareholders. According to our records, you were a shareholder of the Company as of the end of business on August 1,
2023.
You
are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend
the Annual Meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card or vote via telephone
or over the Internet.
Why
did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
In
accordance with rules adopted by the U.S. Securities and Exchange Commission, or “SEC,” we may furnish proxy materials, including
this Proxy Statement and our Annual Report on Form 10-K, to our stockholders by providing access to such documents on the Internet instead
of mailing printed copies. Most stockholders will not receive printed copies of the proxy materials unless they request them. Instead,
the Notice of Internet Availability of Proxy Materials (the “Notice”), which was mailed to the holders of our common stock,
par value $0.001 per share (the “Common Stock”), will instruct you as to how you may access and review all of the proxy materials
on the Internet. The Notice also instructs you as to how you may submit your proxy on the Internet. If you would like to receive a paper
or email copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice.
The
Notice of the Annual Meeting and Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com.
To
access the materials, you must enter the control number included on your Notice.
The
Notice is being made available to you by the Company in connection with its solicitation of proxies for use at the 2023 Annual Meeting
of Shareholders of the Company (the “Annual Meeting”) to be held at 12:00 p.m. Central Time on Thursday, September 28, 2023
and/or any adjournments or postponements thereof. The Notice was first given or sent to shareholders on or about August 16, 2023. This
Proxy Statement gives you information on these proposals so that you can make an informed decision.
What
is a proxy?
A
proxy is the legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone
as your proxy in a written document, that document is also called a proxy or a proxy card.
What
is a proxy card?
By
completing a proxy card, as more fully described herein, you are designating Kevin Brian Cox, our Chief Executive Officer and Anthony
Evers, our Chief Financial Officer, as your proxies for the Annual Meeting and you are authorizing them to vote your shares at the Annual
Meeting as you have instructed them on the proxy card. This way, your shares will be voted whether or not you attend the Annual Meeting.
Even if you plan to attend the Annual Meeting, we urge you to vote in one of the ways described below so that your vote will be counted
even if you are unable or decide not to attend the Annual Meeting.
What
is a proxy statement?
A
proxy statement is a document that we are required by regulations of the U.S. Securities and Exchange Commission, or “SEC,”
to give you when we ask you to sign a proxy card designating Messrs. Cox and Evers as proxies to vote on your behalf.
What
does it mean if I receive more than one set of proxy materials?
If
you receive more than one set of proxy materials, your shares may be registered in more than one name or in different accounts. Please
complete, sign, and return each proxy card to ensure that all of your shares are voted.
I
share the same address with another SurgePays, Inc. shareholder. Why has our household only received one set of proxy materials?
The
SEC’s rules permit us to deliver a single set of proxy materials to one address shared by two or more of our shareholders. This
practice, known as “householding,” is intended to reduce the Company’s printing and postage costs. We have delivered
only one set of proxy materials to shareholders who hold their shares through a bank, broker or other holder of record and share a single
address, unless we received contrary instructions from any shareholder at that address. However, any such street name holder residing
at the same address who wishes to receive a separate copy of the proxy materials may make such a request by contacting the bank, broker
or other holder of record, or, 3124 Brother Blvd, Suite 104, Bartlett, TN, 38133 Attn: Corporate Secretary. Street name holders residing
at the same address who would like to request householding of Company materials may do so by contacting the bank, broker or other holder
of record or the Corporate Secretary at the telephone number or address listed above.
How
do I attend the Annual Meeting?
The
Annual Meeting will be held virtually on September 28, 2023 at 12:00 p.m. Central Time virtually by means of remote communication and
can be accessed by visiting www.virtualshareholdermeeting.com/SURG2023 where you will be able to listen to the meeting live, submit questions
and vote online. You will not be ablet to attend the meeting in person.
Who
is entitled to vote?
The
Board has fixed the close of business on August 1, 2023 as the record date (the “Record Date”) for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof. Only stockholders of record of
the Common Stock at the close of business on the Record Date will be entitled to notice of, and to vote at, the Annual Meeting or any
adjournment thereof. On the Record Date, there were 14,223,202 shares of Common Stock outstanding. Each share of Common Stock represents
one vote that may be voted on each proposal that may come before the Annual Meeting. The Company has no voting shares other than the
Common Stock.
What
is the difference between holding shares as a record holder and as a beneficial owner (holding shares in street name)?
If
your shares are registered in your name with our transfer agent, VStock Transfer, LLC, you are the “record holder” of those
shares. If you are a record holder, these proxy materials have been provided directly to you by the Company.
If
your shares are held in a stock brokerage account, a bank or other holder of record, you are considered the “beneficial owner”
of those shares held in “street name.” If your shares are held in street name, these proxy materials have been forwarded
to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting
at the Annual Meeting. As the beneficial owner, you have the right to instruct this organization on how to vote your shares.
Who
may attend the Annual Meeting?
Only
record holders and beneficial owners of our Common Stock, or their duly authorized proxies, may attend the Annual Meeting.
What
am I voting on?
There
are two (2) matters scheduled for a vote:
1. |
To
elect five (5) members of the Board of Directors to serve to serve until the 2024 annual meeting of stockholders. |
|
|
2. |
To
ratify the selection of Rodefer Moss & Co, PLLC as the Company’s independent registered public accounting firm for the
fiscal year ending December 31, 2023. |
What
if another matter is properly brought before the Annual Meeting?
The
Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought
before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance
with their best judgment.
How
do I vote?
For
your convenience, record holders of our Common Stock have FOUR methods of voting:
VOTE
BY INTERNET - www.proxyvote.com or scan the QR Barcode on your proxy card. Use the Internet to transmit your voting instructions
and for electronic delivery of information. Vote by 11:59 P.M. ET on September 27, 2023. Have your proxy card in hand when you access
the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE
BY PHONE - 1-800-690-6903. Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on September
27, 2023. Have your proxy card in hand when you call and then follow the instructions.
VOTE
BY MAIL. Mark, sign and date your proxy card and return it in the postage-paid envelope we have
provided
or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
VOTE
AT THE MEETING. Virtually attend and vote at the Annual Meeting by visiting www.virtualshareholdermeeting.com/SURG2023.
NOTE
FOR STREET-NAME HOLDERS. If you hold your shares through a broker, bank or other nominee, you must instruct your nominee how to vote
the shares held in your account. The nominee will give you the Notice or voting instruction form. If you do not provide voting instructions,
we expect that your nominee will be permitted to vote only on Proposal 2.
All
shares entitled to vote and represented by a properly completed and executed proxy received before the Annual Meeting and not revoked
will be voted at the Annual Meeting as instructed in a proxy delivered before the Annual Meeting. We provide telephone and Internet proxy
voting to allow you to vote your shares via phone or online, with procedures designed to ensure the authenticity and correctness of your
proxy vote instructions. However, please be aware that you must bear any costs associated with your telephone or Internet access, such
as usage charges from Internet access providers and telephone companies.
How
many votes do I have?
For
Common Stockholders, on each matter to be voted upon, you have one vote for each share of Common Stock you own as of the close of business
on the Record Date.
Is
my vote confidential?
Yes,
your vote is confidential. Only the inspector of elections, individuals who help with processing and counting your votes and persons
who need access for legal reasons will have access to your vote. This information will not be disclosed, except as required by law.
What
constitutes a quorum?
To
carry on business at the Annual Meeting, we must have a quorum. A quorum is present when a majority of the shares entitled to vote, as
of the Record Date, are represented in person or by proxy. Thus, 7,111,602 shares must be represented in person or by proxy to have a
quorum at the Annual Meeting. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on
your behalf by your broker, bank or other nominee) or if you vote in person at the Annual Meeting. Abstentions and broker non-votes will
be counted towards the quorum requirement. Shares owned by us are not considered outstanding or considered to be present at the Annual
Meeting. If there is not a quorum at the Annual Meeting, either the chairperson of the Annual Meeting or our stockholders entitled to
vote at the Annual Meeting may adjourn the Annual Meeting.
How
will my shares be voted if I give no specific instruction?
We
must vote your shares as you have instructed. If there is a matter on which a stockholder of record has given no specific instruction
but has authorized us generally to vote the shares, they will be voted as follows:
1. |
“For”
the election of five (5) members of the Board of Directors to serve until the 2024 annual meeting of stockholders; |
|
|
2. |
“For”
the ratification of the selection of Rodefer Moss & Co, PLLC as the Company’s independent registered public accounting
firm for the fiscal year ending December 31, 2023; |
If
other matters properly come before the Annual Meeting and you do not provide specific voting instructions, your shares will be voted
at the discretion of Messrs. Cox and Evers, the Board’s designated proxies.
If
your shares are held in street name, see “What is a Broker Non-Vote?” below regarding the ability of banks, brokers and other
such holders of record to vote the uninstructed shares of their customers or other beneficial owners in their discretion.
Uninstructed
Shares
All
proxies that are executed or are otherwise submitted over the internet, by mail or in person will be voted on the matters set forth in
the accompanying notice of Annual Meeting in accordance with the instructions set forth herein. However, if no choice is specified on
a proxy as to one or more of the proposals, the proxy will be voted in accordance with the Board’s recommendations on such proposals
as set forth in this Proxy Statement.
How
are votes counted?
Votes
will be counted by the inspector of election appointed for the Annual Meeting, who will separately count, for the election of directors,
“For,” “Withhold” and broker non-votes; and, with respect to the other proposals, votes “For” and
“Against,” abstentions and broker non-votes. Abstentions and broker non-votes will not be included in the tabulation of the
voting results of any of the proposals and, therefore, will have no effect on such proposals.
What
is a broker non-vote?
A
“broker non-vote” occurs when shares held by a broker in “street name” for a beneficial owner are not voted with
respect to a proposal because (1) the broker has not received voting instructions from the stockholder who beneficially owns the shares
and (2) the broker lacks the authority to vote the shares at their discretion.
Proposal
No. 1 for the election of directors is considered a non-discretionary matter, and a broker will lack the authority to vote uninstructed
shares at their discretion on such proposal. Broker non-votes will not have any effect on the outcome of the voting on this proposal.
Proposal
No. 2 for the ratification of the selection of Rodefer Moss & Co, PLLC as our independent registered public accounting firm for our
fiscal year ending December 31, 2023 is considered a discretionary matter, and a broker will be permitted to exercise its discretion
to vote uninstructed shares on the proposal. As such, there will not be any broker non-votes with regard to this proposal.
How
many votes are required to approve each proposal?
The
table below summarizes the proposals that will be voted on, the vote required to approve each item and how votes are counted:
Proposal |
|
Votes
Required |
|
Voting
Options |
Proposal
No. 1: Election of Directors |
|
The
plurality of the votes cast. This means that the nominees receiving the highest number of affirmative “FOR” votes will
be elected as directors. |
|
“FOR”
“WITHHOLD” |
|
|
|
|
|
Proposal
No. 2: Ratification of Selection of Rodefer Moss & Co, PLLC as the Company’s Independent Registered Public
Accounting Firm for the Fiscal Year Ending December 31, 2023 |
|
The
affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions)
at the Annual Meeting by the holders entitled to vote thereon. |
|
“FOR”
“AGAINST”
“ABSTAIN” |
What
is an abstention?
An
abstention is a stockholder’s affirmative choice to decline to vote on a proposal. Under Nevada law, abstentions are counted as
shares present and entitled to vote at the Annual Meeting. Generally, unless provided otherwise by applicable law, our Bylaws provide
that an action of our stockholders (other than the election of directors) is approved if a majority of the number of shares of stock
entitled to vote thereon and present (either in person or by proxy) vote in favor of such action. Therefore, votes that are “WITHHELD”
will have the same effect as an abstention and will not count as a vote “FOR” or “AGAINST” a director, because
directors are elected by plurality voting. A vote marked as “ABSTAIN” is not considered a vote cast and will, therefore,
not affect the outcome of Proposal No. 2.
What
are the voting procedures?
In
voting by proxy with regard to the election of directors, you may vote in favor of all nominees, withhold your votes as to all nominees,
or withhold your votes as to specific nominees. With regard to other proposal, you may vote in favor of or against the proposal, or you
may abstain from voting on the proposal. You should specify your respective choices on the accompanying proxy card or your vote instruction
form.
Is
my proxy revocable?
If
you are a registered stockholder, you may revoke or change your vote at any time before the proxy is voted by filing with our Corporate
Secretary, at 3124 Brother Blvd, Suite 104, Bartlett, TN, 38133, either a written notice of revocation or a duly executed proxy bearing
a later date. If you attend the Annual Meeting, you may revoke your proxy or change your proxy vote by voting at the meeting. Your attendance
at the Annual Meeting will not by itself revoke a previously granted proxy.
If
your shares are held in street name or you hold shares through a retirement or savings plan or other similar plan, please check your
voting instruction card or contact your broker, nominee, trustee or administrator to determine whether you will be able to revoke or
change your vote.
Who
is paying for the expenses involved in preparing this Proxy Statement?
All
of the expenses involved in preparing and assembling these proxy materials and mailing the Notice (and any paper materials, if requested)
and all costs of soliciting proxies will be paid by us. In addition to the solicitation by mail, proxies may be solicited by our officers
and other employees by telephone or in person. Such persons will receive no compensation for their services other than their regular
salaries. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation
materials to the beneficial owners of the shares held of record by such persons, and we may reimburse such persons for reasonable out
of pocket expenses incurred by them in forwarding solicitation materials.
Do
I have dissenters’ rights of appraisal?
The
Company’s stockholders do not have appraisal rights under Nevada law or under the Company’s governing documents with respect
to the matters to be voted upon at the Annual Meeting.
How
can I find out the results of the voting at the Annual Meeting?
Preliminary
voting results will be announced at the Annual Meeting. In addition, final voting results will be disclosed in a Current Report on Form
8-K that we expect to file with the SEC within four business days after the Annual Meeting. If final voting results are not available
to us in time to file a Current Report on Form 8-K with the SEC within four business days after the Annual Meeting, we intend to file
a Current Report on Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file
an additional Current Report on Form 8-K to publish the final results.
When
are stockholder proposals due for the 2024 Annual Meeting?
Stockholders
who intend to have a proposal considered for inclusion in our proxy materials for presentation at our 2024 Annual Meeting of Stockholders
(the “2024 Annual Meeting”) must submit the proposal to us at our corporate headquarters no later than April 17, 2024 which
proposal must be made in accordance with the provisions of Rule 14a-8 of the Exchange Act. Pursuant to our Amended and Restated Bylaws,
nothing in the procedure described in the sentence above shall be deemed to affect the rights of stockholders to request inclusion of
proposals in our proxy statement pursuant to Rule l4a-8 under the Exchange Act.
Stockholders
who intend to present a proposal at our 2024 Annual Meeting without inclusion of the proposal in our proxy materials are required to
provide notice of such proposal to our Corporate Secretary so that such notice is received by our Corporate Secretary at our principal
executive offices on or after April 17, 2024, but no later than June 17, 2024. We reserve the right to reject, rule out of order or take
other appropriate action with respect to any proposal that does not comply with these and other applicable requirements.
Excluding
Proposal No. 1 (Election of Directors), do the Company’s executive officers and Directors have an interest in any of the matters
to be acted upon at the Annual Meeting?
Members
of the Board and executive officers of the Company do not have any substantial interest, direct or indirect, in Proposal No. 2 (the ratification
of the selection of Rodefer Moss & Co, PLLC as our independent registered public accounting firm for our fiscal year ending December
31, 2023).
Are
any of the proposals conditioned on one another?
No.
PROPOSAL
NO. 1:
ELECTION
OF DIRECTORS
Our
Board currently consists of five (5) directors, and their terms will expire at the Annual Meeting. Directors are elected at the Annual
Meeting of stockholders each year and hold office until such director’s successor is elected and qualified, or until such director’s
earlier death, resignation or removal.
Kevin
Brian Cox, David N. Keys, David May, Laurie Weisberg, and Richard Schurfeld have each been nominated to serve as directors and have agreed
to stand for election. If these nominees are elected at the Annual Meeting, then each nominee will serve for a term expiring at the 2024
Annual Meeting and until his or her successor is duly elected and qualified. Directors are elected by a plurality of the votes cast at
the election. This means that the nominees receiving the highest number of affirmative “FOR” votes will be elected as directors.
If
no contrary indication is made, proxies will be voted “FOR” all nominees listed below or, in the event that any such
individual is not a candidate or is unable to serve as a director at the time of the election (which is not currently expected), for
any nominee who is designated by our Board to fill the vacancy.
Nominees
for Election to the Board for a Term Expiring at the 2023 Annual Meeting of Stockholders
Name |
|
Age |
|
Positions |
Kevin
Brian Cox |
|
47 |
|
Chief
Executive Officer and Chairman of the Board of Directors |
David
May |
|
54 |
|
Director |
David
N. Keys |
|
67 |
|
Independent
Director |
Laurie
Weisberg |
|
54 |
|
Independent
Director |
Richard
Schurfeld |
|
59 |
|
Independent
Director |
Kevin
Brian Cox - Mr. Cox has been Chief Executive Officer and Chairman of the Board of Directors since July 2017. He also served as Chief
Financial Officer of the Company from July 2017 to March 2018 and as President of the Company from July 2017 to February 2019. He was
the majority owner of True Wireless from January 2011 through April 2018, when True Wireless became a wholly owned subsidiary of the
Company. Mr. Cox is an accomplished technology entrepreneur growing best-in-class and profitable companies for nearly 20 years. Through
most of his career, he has focused on delivering telecom, broadband and financial services to the unbanked and underserved segments of
society. He began his career in telecom in 2004 when he founded his first prepaid telephone company (CLEC) which through organic growth
and acquisition, became the largest prepaid home phone company in the country before being sold in 2009. Mr. Cox attended Murray State
University majoring in Economics. We believe Mr. Cox is qualified to serve on our Board of Directors due to his experience as the Company’s
Chief Executive Officer and his telecom leadership experience.
David
May - Mr. May has been a Director of the Company since February 2021. Mr. May has been a banking professional since 1994. Throughout
his career, he has established himself as one of the leading convenience store and convenience store wholesaler financiers in the Mid-South
through his cultivation of personal relationships and service to members of this close-knit community. David has been Senior Vice President
of Commercial Banking since 2007 with Landmark Community Bank, a Memphis based commercial bank with over a billion dollars in assets
with offices in the Memphis and Nashville, Tennessee markets. He has been a bank officer for both community banks and large regional
banks over his 27-year banking career. David is a graduate of the Southeastern School of Commercial Banking at Vanderbilt University
and, in the past, served as Chairman of the Board for seven years for The Agency for Youth and Family Development, a residential treatment
facility for adolescent males. He is also a founding owner of Global Defense Specialists, a military aircraft fleet sustainment company
specializing in Lockheed F-16’s and C-130’s and Northrop F-5 jet fighters. We believe Mr. May is qualified to serve on our
Board of Directors due to his banking experience in the convenience store sector.
David
N. Keys - Mr. Keys has been a Director of the Company since July 2019. Mr. Keys began his career with Deloitte serving in the audit
group in the Las Vegas and New York City executive offices. David was the Executive Vice President, CFO and member of the executive committee
of the Board of Directors of American Pacific Corporation, a chemical company that was publicly traded on The Nasdaq Stock Market for
the entirety of the time he was a director and executive officer. Since 2004, Mr. Keys has been an independent financial and operations
consultant. Mr. Keys currently serves as Chairman of the Board and Audit Committee of RSI International Systems Inc. (NEX: RSY.H), and
on the Board of private companies, including Prosetta Biosciences Inc., Akonni Biosystems Inc. and Walker Digital Table Systems, LLC.
He previously served on the Boards of Directors of AmFed Financial Inc., Norwest Bank of Nevada and Wells Fargo Bank of Nevada. Mr. Keys
also served on the Advisory Board of Directors of FM Global, a leading provider of property and casualty insurance. Mr. Keys is a Certified
Public Accountant (CPA), Certified Valuation Analyst (CVA), Certified Management Accountant (CMA), Chartered Global Management Accountant
(CGMA), Certified Information Technology Professional (CITP), Certified in Financial Forensics (CFF), and Certified in Financial Management
(CFM). David is a member of the National Roster of Neutrals of the American Arbitration Association. He received a Bachelor of Science
in accounting from Oklahoma State University. We believe Mr. Keys is qualified to serve on our Board of Directors due to his financial
and governance experience.
Laurie
Weisberg - Ms. Weisberg was appointed to the Board in December 2022. Ms. Weisberg served as a member of the Board of Directors of
Creatd, Inc. from July 2020 to September 2022 and served in a number of executive officer positions while Creatd was traded on the Nasdaq
Capital Market. Ms. Weisberg began her executive tenure at Creatd as Chief Operating Officer from October 2020 until August
2021. Ms. Weisberg then held the position of Co-Chief Executive Officer from August 2021
to February 2022. Ms. Weisberg was sole Chief Executive Officer from February 2022 to September
2022. Ms. Weisberg, who has served as the Chief Sales Officer at Intent since February 2019, has spent over 25 years at the forefront
of sales and marketing innovation in the technology space, having held leadership positions at various technology companies including
Thrive Global, Curalate, and Oracle Data Cloud. From October 2010 to April 2015, Ms. Weisberg was a member of the executive leadership
team at Datalogix, leading up to its acquisition by Oracle in 2015, at which point she assumed the role of VP of Oracle Data Cloud. Additionally,
Ms. Weisberg has served on the Advisory Board at Crowdsmart, an intelligent data-driven investment prediction platform since April 2019.
Ms. Weisberg was born and educated in England. We believe Ms. Weisberg is qualified to serve on our Board of Directors due to
her leadership experience working within the technology space.
Richard
Schurfeld - Mr. Schurfeld was appointed to the Board in December 2022. Since 2001, Mr. Schurfeld has served as Chief
Executive Officer of Redsson, Ltd., a B2B software and services company that develops custom solutions to help utility companies,
healthcare providers and payer organizations accelerate and streamline complicated manual processes and improve efficiencies. Mr. Schurfeld
is a graduate of the United States Air Force Academy. We believe Mr. Schurfeld is qualified to serve on our Board of Directors due to
his leadership experience working within the technology space.
Family
Relationships
There
are no family relationships among any of our current or former directors or executive officers.
Director
Terms; Qualifications
Members
of our Board of Directors serve until the next Annual Meeting of stockholders, or until their successors have been duly elected.
When
considering whether directors and nominees have the experience, qualifications, attributes and skills to enable the Board of Directors
to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Board of Directors
focuses primarily on the industry and transactional experience, and other background, in addition to any unique skills or attributes
associated with a director.
Director
or Officer Involvement in Certain Legal Proceedings
There
are no material proceedings to which any director or officer, or any associate of any such director or officer, is a party that is averse
to our Company or any of our subsidiaries or has a material interest adverse to our Company or any of our subsidiaries None of the directors
and executive officers has been involved in any legal proceedings as listed in Regulation S-K, Section 401(f) material to an evaluation
of the ability or integrity of any director or executive officer.
Directors
and Officers Liability Insurance
The
Company has directors’ and officers’ liability insurance insuring its directors and officers against liability for acts or
omissions in their capacities as directors or officers, subject to certain exclusions. Such insurance also insures the Company against
losses, which it may incur in indemnifying its officers and directors. In addition, officers and directors also have indemnification
rights under applicable laws, and the Company’s Articles of Incorporation, as amended and Bylaws.
Board
Composition, Committees, and Independence
Composition.
Our Board has five members. The Chairman of the Board and our Chief Executive Officer, Kevin Brian Cox, is a member of the Board and
is a full-time employee of the Company. David N. Keys, Laurie Weisberg and Richard Schurfeld are non-employee directors, and the Board
has determined that these persons (who constitute a majority of the Board) are “independent directors” under the criteria
set forth in Rule 5605(a)(2) of the Nasdaq Listing Rules.
Meetings.
During the year ended December 31, 2022, the Board held one meeting, the Audit Committee held four meetings, the Compensation Committee
held one meeting and the Nominating and Corporate Governance Committee held one meeting. All directors attended more than seventy-five
percent (75%) of the meetings of the Board and committee meetings of which such director was a member held during 2022.
Audit
Committee. Our Audit Committee consists of David N. Keys, Laurie Weisberg, and Richard Schurfeld. Mr. Keys is chairman of the Audit
Committee and he qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K.
The
Audit Committee’s duties are to recommend to the Board the engagement of independent auditors to audit our financial statements
and to review its accounting and auditing principles. The Audit Committee will review the scope, timing and fees for the annual audit
and the results of audit examinations performed by the internal auditors and independent public accountants, including their recommendations
to improve the system of accounting and internal controls. The Audit Committee will at all times be composed exclusively of directors
who are, in the opinion of the Board, free from any relationship which would interfere with the exercise of independent judgment as a
committee member and who possess an understanding of financial statements and generally accepted accounting principles.
Compensation
Committee. Our Compensation Committee consists of David N. Keys, Laurie Weisberg, and Richard Schurfeld. Ms. Weisberg is chairwoman
of the Compensation Committee.
In
considering and determining executive and director compensation, the Compensation Committee reviews compensation that is paid by other
similar public companies to its officers and takes that into consideration in determining the compensation to be paid to our officers.
The Compensation Committee also determines and approves any non-cash compensation paid to any employee. We do not engage any compensation
consultants to assist in determining or recommending the compensation to our officers or employees.
Nominating
and Corporate Governance Committee. Our Nominating and Corporate Governance Committee consists of David N. Keys, Laurie Weisberg,
and Richard Schurfeld. Mr. Schurfeld is chairman of the Nominating and Corporate Governance Committee.
The
responsibilities of the Nominating and Corporate Governance Committee include the identification of individuals qualified to become Board
members, the selection of nominees to stand for election as directors, the oversight of the selection and composition of committees of
the Board, establishing procedures for the nomination process, oversight of possible conflicts of interests involving the Board and its
members, developing corporate governance principles, and the oversight of the evaluations of the Board and management. The Nominating
and Corporate Governance Committee has not established a policy with regard to the consideration of any candidates recommended by stockholders.
If we receive any stockholder recommended nominations, the Nominating and Corporate Governance Committee will carefully review the recommendation(s)
and consider such recommendation(s) in good faith.
Director
Independence. We have determined, after considering all the relevant facts and circumstances, that David N. Keys, Laurie Weisberg,
and Richard Schurfeld are independent directors as defined by the listing standards of the Nasdaq Stock Exchange and by the SEC because
they have no relationship with us that would interfere with their exercise of independent judgment in carrying out their responsibilities
as a director. Kevin Brian Cox and David May are not “independent” as defined by the listing standards as Mr. Cox is an executive
officer of the Company and Mr. May was, in 2021, a controlling shareholder of an organization to which the Company made payments for
services that exceeded the greater of $200,000 or five percent (5%) of the organization’s consolidated gross revenues for 2021.
Compensation
Committee Interlocks and Insider Participation
None
of the Company’s executive officers serves, or in the past has served, as a member of the Board of Directors or compensation committee,
or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of the
Company’s Board or its Compensation Committee. None of the members of the Company’s Compensation Committee is, or has ever
been, an officer or employee of the company.
Code
of Ethics and Business Conduct
The
Board adopted a Code of Ethics and Business Conduct applicable to each officer, director, and employee of the Company. The full text
of our Code of Ethics and Business Conduct is posted on our website at www.surgepays.com. We intend to disclose on our website any future
amendments of our Code of Ethics and Business Conduct or waivers that exempt any principal executive officer, principal financial officer,
principal accounting officer or controller, persons performing similar functions or our directors from provisions in the Code of Ethics
and Business Conduct.
EXECUTIVE
OFFICERS
The
following are biographical summaries of our executive officers and their ages, except for Mr. Cox, whose biography is included under
the heading “Proposal No. 1: Election of Directors” set forth above:
Directors
and Executive Officers |
|
Position/Title |
|
Age |
Kevin
Brian Cox |
|
Chief
Executive Officer and Chairman |
|
47 |
Anthony
Evers |
|
Chief
Financial Officer and acting Chief Operating Officer |
|
59 |
David
C. Ansani |
|
Chief
Administrative Officer |
|
58 |
David
C. Ansani - Chief Administrative Officer - Mr. Ansani has been Chief Administrative Officer since August 2017, and was a Director
until February 2021. He was also appointed Secretary of the Company in February 2019. From 2010 to the present date, he has served as
Chief Compliance Officer/Human Resources Officer/In-House Counsel for Glass Mountain Capital, LLC, a start-up financial services company
specializing in the recovery of distressed assets. In this capacity, he reviews and evaluates compliance issues and concerns within the
organization. The position ensures that management and employees are in compliance with applicable laws, rules and regulations of regulatory
agencies (FDCPA, TCPA, GLB, CFPB, etc.); that company policies and procedures are being followed; and that behavior in the organization
meets the company’s standards of conduct. Ms. Ansani received his B.A. and MBA from the University of Chicago, and J.D. from the
Chicago-Kent College of Law.
Anthony
Evers - Chief Financial Officer - Mr. Evers has been the Chief Financial Officer of the Company since May 1, 2020. Mr. Evers has
also served as Chief Financial Officer of LogicsIQ since August 2021. Prior to joining the Company, Mr. Evers served as Chief Financial
Officer for Vista Health System from October 2019 to March 2020. Between June 2019 and October 2019, Mr. Evers served as CFO of Santa
Cruz Valley Regional Hospital. Between 2015 and 2019, Mr. Evers served as CFO and CIO of KSB Hospital. Prior to that, he served as CFO
of various organizations, including Norwegian American Hospital and Horizon Homecare and Hospice. During his career, Mr. Evers has been
the financial lead in over 20 merger and divesture transactions ranging from a single physician practice to multi-entity nursing homes.
Throughout his career, Mr. Evers has served on numerous boards of directors, including Wheaton Franciscan Healthcare, Covenant Healthcare,
All Saints Health System, Rogers Hospital, and the Animal Shelter in Beaver Dam WI. He has also served as a member of the Dixon Illinois
Chamber of Commerce. Mr. Evers has also served as the audit and finance committee chair at several of these organizations. Mr. Evers
obtained his Bachelor of Business Administration in Finance and Masters of Science in Accounting from University of Wisconsin-Whitewater.
Mr. Evers also successfully obtained his Certified Public Accountant and Certified Internal Auditor credentials.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table shows the compensation for the years ended December 31, 2022 and 2021 for our Chief Executive Officer and our two other
executive officers whose total compensation exceeded $100,000 in each year (the “Named Executive Officers”). In
2021, our Named Executive Officers were Kevin Brian Cox, Anthony Nuzzo, and David Ansani. In 2022, our Named Executive Officers were
Kevin Brian Cox, Anthony Evers, and David Ansani.
| |
Annual
Compensation | | |
| | |
Long-Term
Compensation | |
Name and | |
| | |
| | |
| | |
Other Annual | | |
Restricted | | |
Securities | | |
| |
Principal | |
| | |
Salary | | |
Bonus | | |
Compensation | | |
Stock | | |
Underlying | | |
Total | |
Position | |
Year | | |
-1 | | |
-2 | | |
-3 | | |
Awards | | |
Options | | |
Compensation | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Kevin Brian Cox | |
| 2022 | | |
$ | 548,139 | | |
$ | 375,250 | | |
$ | 160,491 | | |
$ | - | | |
$ | - | | |
$ | 1,083,880 | |
CEO and Chairman | |
| 2021 | | |
$ | 733,862 | | |
$ | - | | |
$ | 38,231 | | |
$ | - | | |
$ | - | | |
$ | 772,093 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Anthony P. Nuzzo, Jr | |
| 2022 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
President and Director (through March 2022) | |
| 2021 | | |
$ | 579,157 | | |
$ | - | | |
$ | 65,629 | | |
$ | - | | |
$ | - | | |
$ | 644,786 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
David C. Ansani | |
| 2022 | | |
$ | 231,626 | | |
$ | 116,250 | | |
$ | 18,374 | | |
$ | - | | |
$ | - | | |
$ | 366,250 | |
Chief Administrative Officer | |
| 2021 | | |
$ | 251,422 | | |
$ | - | | |
$ | 16,125 | | |
$ | - | | |
$ | - | | |
$ | 267,547 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Anthony Evers | |
| 2022 | | |
$ | 400,839 | | |
$ | 351,250 | | |
$ | 40,630 | | |
$ | - | | |
$ | - | | |
$ | 792,719 | |
CFO | |
| 2021 | | |
$ | 386,573 | | |
$ | - | | |
$ | 24,635 | | |
$ | - | | |
$ | - | | |
$ | 411,208 | |
(1) |
Management
base salaries can be increased by our Board of Directors based on the attainment of financial and other performance guidelines set
by our management. |
|
|
(2) |
Salaries
listed do not include annual bonuses to be paid based on profitability and performance. These bonuses will be set, from time to time,
by a disinterested majority of our Board of Directors. No bonuses will be set until such time as the aforementioned occurs. |
|
|
(3) |
Other
annual compensation consists of paid medical insurance, auto allowances, and housing allowances. |
On
March 23, 2022, the Compensation Committee and Board approved the following one-time cash bonus payments to the following executives
and members of the Board: (i) $375,000 to Mr. Cox (our CEO and Chairman); (ii) $126,000 to Mr. Evers (our CFO); (iii) $116,000 to David
C. Ansani (our Chief Administrative Officer); (iv) $20,000 to David N. Keys (a member of the Board); (v) $10,000 to David May (a member
of the Board); and (vi) $10,000 to Jay Jones (formerly a member of the Board). These one-time cash bonus payments were paid prior to
April 21, 2022.
In
addition, on March 23, 2022, the Compensation Committee and Board approved the Company issuing the independent members of the Board on
the first day of April each year that an independent director is then serving on the Board the number of options to purchase shares of
Common Stock (the “Director Options”) equivalent to $60,000 with the number of Director Options to be determined in accordance
with the provisions of the 2022 Plan. As of July 31, 2023, no Director Options have been issued.
On
August 8, 2023, the Compensation Committee approved the following one-time cash bonus payments to the following executives: (i) $475,000
to Mr. Cox (our CEO and Chairman); (ii) $337,500 to Mr. Evers (our CFO); and (iii) $125,000 to David C. Ansani (our Chief Administrative
Officer). These one-time cash bonus payments shall be divided amongst two payments to be paid in August and September 2023 in accordance
with the Company’s regular payroll schedule.
Employment
Agreements
On
May 13, 2022, the Company entered into a new employment agreement with Mr. Cox (the “CEO Employment Agreement”).
Below
is a summary of the key provisions of the CEO Employment Agreement.
Term
of Employment: The CEO Employment Agreement had an effective date of May 13, 2022 and continues for a period of five years. The CEO
Employment Agreement will automatically renew and continue for successive one-year terms unless terminated pursuant to qualifying termination
events. In addition, either party may terminate the CEO Employment Agreement by sending written notice to the other party, not more than
270 days and not less than 90 days before the end of the then-existing term of employment, of such party’s desire to terminate
the CEO Employment Agreement at the end of the then-existing term.
Base
Compensation: During the term of the CEO Employment Agreement, Mr. Cox will receive a base salary of $475,000 per year and, provided
that the Company’s EBITDA was positive in the prior calendar year, the base salary will be increased on January 1 of each year
by six percent (6%) per annum. Mr. Cox’s base salary did not increase on January 1, 2023 due to ongoing discussions between the
Compensation Committee and Mr. Cox regarding the definition of EBITDA.
Cash
Bonus: Mr. Cox will receive a cash bonus each year of the greater of (i) between 2.5% and 10% of the Company’s calendar year
EBITDA (with the marginal percentage decreasing as EBITDA increases from $1 million to $3 million). By way of example only, if EBITDA
is $1.5 million, Mr. Cox will receive $137,500 ((10% of $1 million = $100,000) plus (7.5% of $500,000 = $37,500)) and (ii) between 30%
and 150% of base salary determined by the relationship between the Company’s annual performance and an annual target performance
set each year by mutual agreement between the Board and Mr. Cox (with the percentage of base salary increasing as the percentage of target
increases from 79% to over 150%).
As
of July 31, 2023, no cash bonus has been paid to Mr. Cox as there are ongoing discussions between the Compensation Committee and Mr.
Cox regarding the definition of EBITDA.
Stock
Bonus: The Company will issue, out of the 2022 Plan and future equity incentive plans to be approved by the Company’s shareholders,
three different categories of stock bonuses and one category of options. As of July 31, 2023, no stock bonuses or options have been issued
to Mr. Cox as there are ongoing discussions between the Compensation Committee and Mr. Cox regarding the definition of EBITDA and the
measurement period and payment dates for the non-EBITDA milestone-based payments.
(i) |
EBITDA
based issuances - 500,000 shares of common stock upon the Company first reaching positive cash flow EBITDA for a quarter of any amount
and then reaching positive cash flow EBITDA for a quarter of milestones of $1 million, $3 million, and $5 million. |
|
|
(ii) |
Market
Capitalization based issuances - 500,000 shares of common stock upon the Company reaching the following market capitalization milestones:
$250 million, $500 million, $1 billion, $2 billion, $3 billion, $4 billion, and $5 billion. |
|
|
(iii) |
Business
Metrics Growth based issuances - award incentives for achieving 25,000, 50,000, 100,000 active stores on the SurgePays network and
250,000, 500,000, 1,000,000 Wireless MVNO/Mobile broadband or digital content customers - up to a total of 2.75 million shares of
common stock. In addition, Mr. Cox will be issued 500,000 shares of common stock per increment of 500,000 total subscribers (Wireless
MVNO, Mobile Broadband or digital content customers) of the Company beyond 1 million total subscribers. |
|
|
(iv) |
Options
to purchase 250,000 shares of common stock on January 1st of each year from 2023 through 2026. In addition, the Company
was to issue 250,000 options to Mr. Cox in 2022 following shareholder approval of the 2022 Plan. |
Benefits:
Mr. Cox will be eligible to participate in all health, medical, dental, and life insurance employee benefits as are available from
time to time to other key executive employees and their families. Mr. Cox will be entitled to receive an annual car allowance of up to
$15,000 per year, home office expense reimbursement of up to $5,000 per month, and a remote housing allowance of up to $10,000 per month.
Mr. Cox is also entitled to be reimbursed for up to $10,000 per year in costs associated with income tax preparation and estate planning.
Termination
and Severance: The Company or Mr. Cox may terminate the CEO Employment Agreement and Mr. Cox’s employment in various circumstances
and, depending on the circumstances, the benefits that may be due following such termination are described below.
For
a termination by the Company with Cause (as defined in the CEO Employment Agreement), no severance benefits are payable.
For
a termination due to death, disability, by Mr. Cox following a Change in Control, or by Mr. Cox due to Constructive Termination (both
as defined in the CEO Employment Agreement), Mr. Cox will be entitled to (a) a payment equal to the greater of (i) two (2) years’
worth of the then-existing Base and the last year’s bonus and (ii) the Base payable through the remaining Initial Term (if applicable).
Mr. Cox will also be entitled to retain his benefits for the remainder of the Initial Term or Renewal Term, as then applicable
Executive
Covenants: In consideration of Mr. Cox’s continued employment with the Company and the benefits and payments described in the
CEO Employment Agreement, Mr. Cox agrees to (i) nondisclosure of Company confidential information during his term of employment with
the Company and for five years thereafter; (ii) not to compete with the Company during the term of his employment (owning up to 10% of
a publicly traded company that competes with the Company is permitted); (iii) for 12 months following termination of his Employment,
not to solicit customers and not to recruit or hire the Company’s employees. The non-solicit and non-compete provisions are not
applicable if termination of Employment was by Mr. Cox following a Change in Control or by Mr. Cox due to Constructive Termination; and
(iv) not to disparage the Company or its officers, executives or Board members.
On
August 8, 2022, the Company entered into a new employment agreement with Mr. Evers (the “CFO Employment Agreement”).
Below
is a summary of the key provisions of the CFO Employment Agreement.
Term
of Employment: The CFO Employment Agreement had an effective date of August 8, 2022 and continues for a period of five years. The
CFO Employment Agreement will automatically renew and continue for successive one-year terms unless terminated pursuant to qualifying
termination events. In addition, either party may terminate the CFO Employment Agreement by sending written notice to the other party,
not more than 270 days and not less than 90 days before the end of the then-existing term of employment, of such party’s desire
to terminate the CFO Employment Agreement at the end of the then-existing term.
Base
Compensation: During the term of the CFO Employment Agreement, Mr. Evers will receive a base salary of $450,000 per year and, provided
that the Company’s EBITDA was positive in the prior calendar year, the base will be increased on January 1 of each year by six
percent (6%) per annum. Mr. Evers’ base salary did not increase on January 1, 2023 due to ongoing discussions between the Compensation
Committee and Mr. Evers regarding the definition of EBITDA.
Signing
Bonus: The Company paid Mr. Evers a one-time signing bonus of Fifty percent (50%) of the base salary equivalent to $225,000) (the
“Signing Bonus”) within thirty (30) days following August 8, 2022 less payroll deductions and all required withholdings.
If Mr. Evers resigns from employment with the Company without Good Reason (as defined in the CFO Employment Agreement) or the Company
terminates Mr. Evers’ employment for Cause (as defined in the CFO Employment Agreement), in each case prior to August 8, 2023,
Mr. Evers must repay to the Company a pro rata portion of the Signing Bonus representing the remainder of the period between the date
of termination and August 8, 2023.
Restricted
Vesting Shares: The Company shall grant to Mr. Evers under the 2022 Plan a restricted stock award for 500,000 shares (the “Restricted
Shares”) of common stock of the Company. Vesting of the Restricted Shares shall occur in bi-annual installments over five years
commencing on December 31, 2022 on which date 50,000 shares of the Restricted Shares shall vest and continuing to vest thereafter on
each of July 1 and December 31, for the years of 2023-2027. As of July 31, 2023, no securities have been issued to Mr. Evers as there
are ongoing discussions between the Compensation Committee and Mr. Evers regarding the definition of EBITDA and the measurement period
and payment dates for the non-EBITDA milestone-based payments.
Restricted
Signing Shares: The Company shall grant to the Executive 100,000 shares of the Company’s common stock within five (5) business
days of stockholder approval of the 2022 Plan.
Cash
Bonus: Mr. Evers will receive a cash bonus each year of the greater of (i) between 2.5% and 10% of the Company’s calendar year
EBITDA (with the marginal percentage decreasing as EBITDA increases from $1 million to $3 million). By way of example only, if EBITDA
is $1.5 million, Mr. Evers will receive $137,500 ((10% of $1 million = $100,000) plus (7.5% of $500,000 = $37,500)) and (ii) between
9% and 45% of base salary determined by the relationship between the Company’s annual performance and an annual target performance
set each year by mutual agreement between the Board and Mr. Evers (with the percentage of base salary increasing as the percentage of
target increases from 79% to over 150%). As of July 31, 2023, no cash bonus has been paid to Mr. Evers as there are ongoing discussions
between the Compensation Committee and Mr. Evers regarding the definition of EBITDA.
Stock
Bonus: The Company will issue, out of the 2022 Plan and future equity incentive plans to be approved by the Company’s shareholders,
three different categories of stock bonuses and one category of options
(i) |
EBITDA
based issuances - 150,000 shares of common stock upon the Company first reaching positive cash flow EBITDA for a quarter of any amount
and then reaching positive cash flow EBITDA for a quarter of milestones of $1 million, $3 million, and $5 million. |
|
|
(ii) |
Market
Capitalization based issuances - 150,000 shares of common stock upon the Company reaching the following market capitalization milestones:
$250 million, $500 million, $1 billion, $2 billion, $3 billion, $4 billion, and $5 billion. |
|
|
(iii) |
Business
Metrics Growth based issuances - award incentives for achieving 25,000, 50,000, 100,000 active stores on the SurgePays network and
250,000, 500,000, 1,000,000 Wireless MVNO/Mobile broadband or digital content customers - up to a total of 825,000 shares of common
stock. In addition, Executive will be issued 150,000 shares of common stock per increment of 500,000 total subscribers (Wireless
MVNO, Mobile Broadband or digital content customers) of the Company beyond 1 million total subscribers. |
|
|
(iv) |
Options
to purchase 75,000 shares of common stock on January 1 of each year from 2023 through 2026. In addition, the Company will issue 75,000
options to Executive in 2022 following shareholder approval of the 2022 Plan. |
|
|
(i) |
EBITDA
based issuances - 150,000 shares of common stock upon the Company first reaching positive cash flow EBITDA for a quarter of any amount
and then reaching positive cash flow EBITDA for a quarter of milestones of $1 million, $3 million, and $5 million. |
|
|
(ii) |
Market
Capitalization based issuances - 150,000 shares of common stock upon the Company reaching the following market capitalization milestones:
$250 million, $500 million, $1 billion, $2 billion, $3 billion, $4 billion, and $5 billion. |
|
|
(iii) |
Business
Metrics Growth based issuances - award incentives for achieving 25,000, 50,000, 100,000 active stores on the SurgePays network and
250,000, 500,000, 1,000,000 Wireless MVNO/Mobile broadband or digital content customers - up to a total of 825,000 shares of common
stock. In addition, Executive will be issued 150,000 shares of common stock per increment of 500,000 total subscribers (Wireless
MVNO, Mobile Broadband or digital content customers) of the Company beyond 1 million total subscribers. |
|
|
(iv) |
Options
to purchase 75,000 shares of common stock on January 1 of each year from 2023 through 2026. In addition, the Company will issue 75,000
options to Executive in 2022 following shareholder approval of the 2022 Plan. |
(i) |
EBITDA
based issuances - 150,000 shares of common stock upon the Company first reaching positive cash flow EBITDA for a quarter of any amount
and then reaching positive cash flow EBITDA for a quarter of milestones of $1 million, $3 million, and $5 million. |
|
|
(ii) |
Market
Capitalization based issuances - 150,000 shares of common stock upon the Company reaching the following market capitalization milestones:
$250 million, $500 million, $1 billion, $2 billion, $3 billion, $4 billion, and $5 billion. |
|
|
(iii) |
Business
Metrics Growth based issuances - award incentives for achieving 25,000, 50,000, 100,000 active stores on the SurgePays network and
250,000, 500,000, 1,000,000 Wireless MVNO/Mobile broadband or digital content customers - up to a total of 825,000 shares of common
stock. In addition, Executive will be issued 150,000 shares of common stock per increment of 500,000 total subscribers (Wireless
MVNO, Mobile Broadband or digital content customers) of the Company beyond 1 million total subscribers. |
|
|
(iv) |
Options
to purchase 75,000 shares of common stock on January 1 of each year from 2023 through 2026. In addition, the Company will issue 75,000
options to Executive in 2022 following shareholder approval of the 2022 Plan. |
Benefits:
The Executive will be eligible to participate in all health, medical, dental, and life insurance employee benefits as are available
from time to time to other key executive employees and their families. The Executive will be entitled to receive an annual car allowance
of up to $3,750 per year and home office expense reimbursement of up to $500 per month. The Executive is also entitled to be reimbursed
for up to $10,000 per year in costs associated with income tax preparation and estate planning.
Termination
and Severance: The Company or the Executive may terminate the CFO Employment Agreement and the Executive’s employment in various
circumstances and, depending on the circumstances, the benefits that may be due following such termination are described below.
For
a termination by the Company with Cause (as defined in the CFO Employment Agreement), no severance benefits are payable.
For
a termination due to death, disability, by Executive following a Change in Control, or by Executive due to Constructive Termination (both
as defined in the CFO Employment Agreement), the Executive will be entitled to (a) a payment equal to the greater of (i) two (2) years’
worth of the then-existing Base and the last year’s bonus and (ii) the Base payable through the remaining Initial Term (if applicable).
The Executive will also be entitled to retain his benefits for the remainder of the Initial Term or Renewal Term, as then applicable.
Executive
Covenants: In consideration of the Executive’s continued employment with the Company and the benefits and payments described
in the CFO Employment Agreement, the Executive agrees to (i) nondisclosure of Company confidential information during his term of employment
with the Company and for five years thereafter; (ii) not to compete with the Company during the term of his employment (owning up to
10% of a publicly traded company that competes with the Company is permitted); (iii) for 12 months following termination of his Employment,
not to solicit customers and not to recruit or hire the Company’s employees. The non-solicit and non-compete provisions are not
applicable if termination of Employment was by Executive following a Change in Control or by Executive due to Constructive Termination;
and (iv) not to disparage the Company or its officers, executives or Board members.
2022
Plan Highlights
The
essential features of the 2022 Plan are outlined below. The following description is not complete and is qualified by reference to the
full text of the 2022 Plan, which is attached as Exhibit 10.18 to this Annual Report.
Options
are subject to the following conditions:
(i) |
The
Committee determines the restrictions on each Restricted Share Award (as defined in the 2022 Plan). Upon the grant of a Restricted
Share Award and the payment of any applicable purchase price, grantee is considered the record owner of the Restricted Shares and
entitled to vote the Restricted Shares if such Restricted Shares are entitled to voting rights. |
|
|
(ii) |
Restricted
Shares may not be delivered to the grantee until the Restricted Shares have vested. |
|
|
(iii) |
Restricted
Shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as provided in the 2022 Plan
or in the Restricted Share Award Agreement (as defined in the 2022 Plan). |
Grants
Although
all employees and all of the employees of our subsidiaries are eligible to receive grants under our Plan, the grant to any particular
employee is subject to the discretion of the Board, or at the discretion of the Board, or the Compensation Committee of the Board or
such other committee designated by the Board to administer the 2022 Plan (such body that administers the 2022 Plan, the “Committee”).
We
have made and will make appropriate adjustments to outstanding grants and to the number or kind of shares subject to the 2022 Plan in
the event of a stock split, reverse stock split, stock dividend, share combination or reclassification and certain other types of corporate
transactions, including a merger or a sale of all or substantially all of our assets.
Administration
The
Committee shall have the sole authority, in its discretion, to make all determinations under the 2022 Plan, including, but not limited
to, who receives an award, the time or times when an award shall be made (the date of grant of an award shall be the date on which the
award is awarded by the Committee), what type of award shall be granted, the term of an award, the date or dates on which an award vests
(including acceleration of vesting), the form of any payment to be made pursuant to an award, the terms and conditions of an award (including
the forfeiture of the award (and/or any financial gain) if the holder of the award violates any applicable restrictive covenant thereof),
the Restrictions under a Restricted Share Award and the number of Common Stock which may be issued under an Award, all as applicable.
In making such determinations, the Committee may take into account the nature of the services rendered by the respective employees, directors
and consultants, their present and potential contribution to the Company’s (or the Affiliate’s) success and such other factors
as the Committee, in its discretion, shall deem relevant.
Grant
Instruments
All
grants will be subject to the terms and conditions set forth in our Plan and to such other terms and conditions consistent with our Plan
as the Committee deems appropriate and as are specified in writing by the Committee to the individual in a grant instrument or an amendment
to the grant instrument. All grants will be made conditional upon the acknowledgement of the grantee in writing or by acceptance of the
grant, that all decisions and determinations of the Compensation Committee will be final and binding on the grantee, his or her beneficiaries
and any other person having or claiming an interest under such grant.
Terms
and Conditions of Grants
Under
the 2022 Plan, the term “Fair Market Value” of the Common Stock on any given date means the fair market value of the Common
Stock determined in good faith by the Committee based on the reasonable application of a reasonable valuation method that is consistent
with Section 409A of the Code. If the Stock is admitted to trade on a national securities exchange, the determination shall be made by
reference to the closing price reported on such exchange. If there is no closing price for such date, the determination shall be made
by reference to the last date preceding such date for which there is a closing price.
Transferability
No
award under the 2022 Plan or any award agreement and no rights or interests therein, shall or may be assigned, transferred, sold, exchanged,
encumbered, pledged or otherwise hypothecated or disposed of by a holder except (i) by will or by the laws of descent and distribution,
or (ii) except for an Incentive Share Option, by gift to any family member of the holder. An award may be exercisable during the lifetime
of the holder only by such holder or by the holder’s guardian or legal representative unless it has been transferred by gift to
a family member of the holder, in which case it shall be exercisable solely by such transferee.
Amendment
and Termination
The
2022 Plan shall continue in effect, unless sooner terminated, until the tenth (10th) anniversary of the date on which it is adopted by
the Board (except as to awards outstanding on that date). The Board, in its discretion, may terminate the 2022 Plan at any time with
respect to any shares for which awards have not theretofore been granted; provided, however, that the 2022 Plan’s termination shall
not materially and adversely impair the rights of a holder with respect to any Award theretofore granted without the consent of the holder.
The Board shall have the right to alter or amend the 2022 Plan or any part hereof from time to time; provided, however, stockholder approval
shall be required for ay modification of the 2022 Plan that (i) requires stockholder approval under the rules or regulations of the Securities
and Exchange Commission or any securities exchange applicable to the Company, (ii) increases the number of shares authorized under the
2022 Plan, (iii) increases the dollar limitation specified in Section 5.4, or (iv) amends, modifies or suspends Section 7.8 (repricing
prohibitions) or Article XV. In addition, unless otherwise permitted under the award agreement, no change in any award theretofore granted
may be made which would materially and adversely impair the rights of a holder with respect to such award without the consent of the
holder
Outstanding
Equity Awards at Fiscal Year-End
Outstanding
Equity Awards at Fiscal Year-End |
Option
Awards |
| |
Number
of Securities Underlying
Unexercised Options | | |
Option Exercise | | |
Option
Expiration |
Name | |
Exercisable | | |
Unexercisable | | |
Price | | |
Date |
Anthony Evers | |
| 6,801 | | |
| 10,203 | | |
$ | 16.00 | | |
February 28, 2027 |
Option
Exercises and Stock Vested |
| |
Option
Awards | | |
Stock
Awards |
| |
Number
of Shares Acquired on Exercise | | |
Value
Realized on Exercise | | |
Number
of Shares Acquired on Vesting | |
Value
Realized on Vesting | |
None. | |
| | | |
| | | |
| |
| | |
Pay
Versus Performance
In
accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide
the following disclosure regarding executive “Compensation Actually Paid” and certain performance measures required for Smaller
Reporting Companies. The following table provides the information required for our NEOs for each of the fiscal years ended December 31,
2022 and December 31, 2021, along with the financial information required for each fiscal year:
Year | |
Summary
compensation table total CEO ($)(1)(2) | | |
Compensation
actually paid to CEO ($)(1)(3) | | |
Average
summary compensation table total for non-CEO NEOs ($) (2)(4) | | |
Average
compensation actually paid to non-CEO NEOs(3)(4) | | |
Value
of Initial Fixed $100 Investment based on Total shareholder return($) | | |
Net
Income (in millions) ($) (5) | |
2022 | |
| 1,083,880 | | |
| 1,083,880 | | |
| 579,485 | | |
| 579,485 | | |
| 111.19 | | |
| (1.2 | ) |
2021 | |
| 772,093 | | |
| 772,093 | | |
| 456,167 | | |
| 456,167 | | |
| 34.24 | | |
| (7.5 | ) |
(1) |
For
each year shown the PEO was Kevin Brian Cox. |
(2) |
Amounts
in this column represent the “Total Compensation” column set forth in the Summary Compensation Table (“SCT”)
on page 13. See the footnotes to the SCT for further detail regarding the amounts in these columns. |
(3) |
The
dollar amounts reported in these columns represent the amounts of “compensation actually paid.” The Amounts are computed
in accordance with Item 402(v) of Regulation S-K by deducting and adding certain amounts from the “Total” column of the
SCT. These deductions and additions were not applicable to the NEO compensation paid in 2021 and 2022 because no equity was granted
to the NEOs in either year. |
(4) |
Non-CEO
NEOs reflect the compensation of (i) Anthony Evers and David Ansani, our non-CEO NEOs for 2022 and (ii) Anthony P. Nuzzo, Jr. and
David Ansani, our non-CEO NEOs for 2021. |
(5) |
Represents the value as of
the end of the year indicated of $100 invested on December 31, 2020 in the Common Stock. The Company did not declare or pay dividends
on the Common Stock in either year. |
Employee
Pension, Profit Sharing or other Retirement Plan
The
Company maintains a tax-qualified 401(k) savings plan which allows participants to defer eligible compensation up to the maximum permitted
by the Internal Revenue Service and provides for discretionary matching contributions by the Company.
Director
Compensation
We
did not issue any equity to the members of the Board in 2022 but did make one-time cash bonus payments in April 2022 to the members of
the Board as follows: $20,000 to David N. Keys (a member of the Board); $10,000 to David May (a member of the Board); and $10,000 to
Jay Jones (formerly a member of the Board).
On
August 8, 2023, the Board approved the Company issuing the independent members of the Board, pursuant to the provisions of the SurgePays,
Inc. 2022 Omnibus Securities and Incentive Plan (the “2022 Plan”), common stock in the form of restricted share awards (the
“Awards”). The Awards are being granted pursuant to a Restricted Share Award Agreement (the “RSA Agreement”).
Mr. Keys is receiving 32,000 shares and each of Ms. Weisberg and Mr. Schurfeld is receiving 24,000 shares. The RSA Agreement provides
that the shares will not vest until the earliest to occur of (a) the director no longer serves on the Board for any reason (including,
but not limited to, upon death or disability that renders the director incapable of providing services to the Company) other than a Termination
of Service for Cause; (b) upon the occurrence of a Change in Control (as defined in the 2022 Plan; or (c) the fifth anniversary of the
award date. The RSA Agreement defines “Cause”, in part, as: (i) embezzlement or misappropriation of Company funds; (ii) any
acts resulting in a conviction for, or plea of guilty or nolo contendere to, a felony charge; (iii) misconduct resulting in injury to
the Company; (iv) activities harmful to the reputation of the Company; (v) a violation of Company guidelines or policies; or (vi) a violation
of any contractual, statutory or common law fiduciary duty to the Company.
On
July 17, 2019, we entered into a Director Agreement with David N. Keys (the “Keys Director Agreement”) whereby Mr. Keys is
to be reimbursed for (i) all reasonable out-of-pocket expenses incurred in attending any in-person meetings; and (ii) any costs associated
with filings required to be made by Mr. Keys in regards to any beneficial ownership of securities.
In
conjunction with the Keys Director Agreement, we entered into an Indemnification Agreement (the “Keys Indemnification Agreement”)
with Mr. Keys. The Keys Indemnification Agreement indemnifies to the fullest extent permitted under Nevada law for any claims arising
out of or resulting from, amongst other things, (i) any actual, alleged or suspected act or failure to act by Mr. Keys in his capacity
as a director or agent of the Company and (ii) any actual, alleged or suspected act or failure to act by Mr. Keys in respect of any business,
transaction, communication, filing, disclosure or other activity of the Company. Under the Keys Indemnification Agreement, Mr. Keys is
indemnified for any losses pertaining to such claims, provided, however, that the losses shall not include expenses incurred by Mr. Keys
in respect of any claim as which he shall have been adjudged liable to us, unless the court having jurisdiction rules otherwise. The
Keys Indemnification Agreement provides for indemnification of Mr. Keys during his directorship and for a period of six (6) years thereafter.
On
February 13, 2021, we entered into Director Agreements and Indemnification Agreements with each of David May and Jay Jones that are substantially
similar to the Keys Director Agreement and the Keys Indemnification Agreement.
Mr.
Jones resigned from the Board on December 19, 2022. Such resignation was not the result of any disagreement with the Company on any matter
relating to the Company’s operations, policies or practices. In connection with Mr. Jones’ resignation, the Board entered
into a Consulting Agreement with Mr. Jones dated December 19, 2022 (the “Consulting Agreement”).
Pursuant
to such Consulting Agreement, the Company agrees to engage Mr. Jones as a consultant (“the Consultant”) to provide advice
to the Board and senior management of the Company regarding general business matters. The Consultant has industry and Company knowledge
that is valuable to the Company and its ongoing business ventures. The term of the Consultant Agreement is for a period of twelve (12)
months, in which the Consultant’s duties include reporting to the Board and senior management of the Company and advising them
in respect to business matters. Following an annual or special meeting of the Company’s stockholders at which stockholders approve
the 2022 Plan, the Consultant’s compensation will consist of stock options with a value of $5,000 on the first trading day of each
calendar month during the term. Each month’s options will have an exercise price equal to the fair market value of the Company’s
common stock on the last trading day of the previous calendar month. All options granted on the first trading day of each calendar month
shall vest immediately, and the options will be issued quarterly in accordance with the 2022 Plan. The Consultant is considered an independent
contractor and will be reimbursed for (i) all reasonable out-of-pocket expenses and (ii) any costs associated with filing required to
be made by him or any of the entities managed or controlled by the Consultant to report beneficial ownership or the acquisition or disposition
of securities by the Company.
On
December 19, 2022, David May notified the Company of his resignation, effectively immediately, as a member of the Board’s Audit
Committee, Compensation Committee, and the Nominating and Corporate Governance Committee. Such resignation from the Board committees
is not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Mr. May remains a member of the Board.
The
Company and Ms. Weisberg entered into a Director Agreement, dated December 19, 2022 (the “Weisberg Director Agreement”).
Pursuant to the Weisberg Director Agreement, Ms. Weisberg shall make reasonable business efforts to attend all Board meetings and fulfill
her other responsibilities as well as use her best efforts to promote the interests of the Company. Following an annual or special meeting
of the Company’s stockholders at which stockholders approve the 2022 Plan, Ms. Weisberg will receive options with a value of $5,000
on the first trading day of each calendar month. Each month’s options will have an exercise price equal to the fair market value
of the common stock on the last trading day of the previous calendar month. All options granted on the first trading day of each calendar
month shall vest immediately and the options will be issued quarterly in accordance with the terms of the 2022 Plan.
Pursuant
to the Weisberg Director Agreement, Ms. Weisberg shall be considered an independent contractor and shall be reimbursed for (i) all reasonable
out-of-pocket expenses incurred by her in attending in-person meetings and (ii) any costs associated with filing required to be made
by her or any of the entities managed or controlled by her to report beneficial ownership or the acquisition of disposition of securities
of the Company. Ms. Weisberg’s term, subject to nomination and election at each of the Company’s annual stockholders meeting,
will terminate at the earliest of her resignation, death, termination by mutual agreement of the Company and herself, or the removal
of Ms. Weisberg by the majority of the stockholders of the Company.
The
Company and Mr. Schurfeld entered into a Director Agreement, dated December 19, 2022 (the “Schurfeld Director Agreement”).
The terms of the Schurfeld Director Agreement are substantially the same as the terms of the Weisberg Director Agreement.
On
December 19, 2022, the Company entered into an Indemnification Agreement with each of Ms. Weisberg and Mr. Schurfeld (the “December
2022 Indemnification Agreements”).
The
December 2022 Indemnification Agreements indemnifies to the fullest extent permitted under Nevada law for any claims arising out of or
resulting from, amongst other things, (i) any actual, alleged or suspected act or failure to act by Ms. Weisberg and Mr. Schurfeld (together,
the “Indemnitees”) in their capacity as a director or agent of the Company and (ii) any actual, alleged or suspected act
or failure to act by the Indemnitees in respect of any business, transaction, communication, filing, disclosure or other activity of
the Company. Under the December 2022 Indemnification Agreements, the Indemnitees are indemnified for any losses pertaining to such claims,
provided, however, that the losses shall not include expenses incurred by the Indemnitees in respect of any claim as which they shall
have been adjudged liable to the Company, unless the court having jurisdiction rules otherwise.
Change
of Control
There
are no arrangements, known to us, including any pledge by any person of our securities, the operation of which may at a subsequent date
result in a change in control of us.
Vote
Required
The
five nominees for director receiving the highest number of votes “FOR” election will be elected as directors. This is called
a plurality. Withholding a vote from a director nominee will not be voted with respect to the director nominee indicated and will have
no impact on the election of directors although it will be counted for the purposes of determining whether there is a quorum. Broker
non-votes will have no effect on the outcome of this proposal.
Recommendation
of our Board
OUR
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTORS.
PROPOSAL
NO. 2:
RATIFICATION OF THE SELECTION OF RODEFER MOSS & CO, PLLC AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023
The
Board has appointed Rodefer Moss & Co, PLLC (“Rodefer Moss”) to serve as our independent registered public accounting
firm for the year ending December 31, 2023. Rodefer Moss has provided services in connection with the audit of the Company’s financial
statements since 2017.
The
Board is requesting that stockholders ratify the selection of Rodefer Moss. The Board is not required to take any action as a result
of the outcome of the vote on this proposal. Even if the appointment is ratified, the Board may, in its discretion, appoint a different
independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests
of the Company and its stockholders. If the appointment is not ratified, the Board will consider its options.
A
representative of Rodefer Moss will not be attending the Annual Meeting.
Principal
Accountant Fees and Services
The
following table presents for each of the last two fiscal years the aggregate fees billed in connection with the audits of our financial
statements and other professional services rendered by our independent registered public accounting firm Rodefer Moss & Co, PLLC.
| |
2022 | | |
2021 | |
Audit Fees (1) | |
$ | 186,820 | | |
$ | 166,554 | |
(1) |
Audit
Fees. These are fees for professional services for the audit of our annual financial statements, and for the review of the financial
statements included in our filings on Form 10-K and Form 10-Q, and for services that are normally provided in connection with statutory
and regulatory filings or engagements. |
Vote
Required
The
affirmative vote of a majority of the shares (by voting power) present in person at the Annual Meeting or represented by proxy and entitled
to vote at the Annual Meeting is required to approve the ratification of the selection of Rodefer Moss as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2023.
Recommendation
of our Board
OUR
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” the RATIFICATION
OF THE SELECTION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR ENDING DECEMBER 31, 2023.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following sets forth information as of the Record Date, regarding the number of shares of our Common Stock beneficially owned by (i)
each person that we know beneficially owns more than 5% of our outstanding Common Stock, (ii) each of our directors and executive officers
and (iii) all of our directors and executive officers as a group.
The
amounts and percentages of our Common Stock beneficially owned are reported on the basis of SEC rules governing the determination of
beneficial ownership of securities. Under the SEC rules, a person is deemed to be a “beneficial owner” of a security if that
person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment
power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial
owner of any securities of which that person has the right to acquire beneficial ownership within 60 days through the exercise of any
stock option, warrant or other right, and the conversion of preferred stock. Under these rules, more than one person may be deemed a
beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has
no economic interest. Unless otherwise indicated, each of the shareholders named in the table below, or his or her family members, has
sole voting and investment power with respect to such shares of our Common Stock. Except as otherwise indicated, the address of each
of the shareholders listed below is: 3124 Brother Blvd, Suite 410, Bartlett, TN 38133.
Name
of Beneficial Owner(1) | |
Total Common
Stock Shares
Beneficially Owned | | |
%
of Common
Stock (2) | |
| |
| | |
| |
Directors and Executive
Officers: | |
| | | |
| | |
| |
| | | |
| | |
Kevin Brian Cox | |
| 5,453,760 | (3) | |
| 38.3 | % |
| |
| | | |
| | |
Anthony Evers | |
| 24,275 | (4) | |
| * | |
| |
| | | |
| | |
David C. Ansani | |
| 140 | (5) | |
| * | |
| |
| | | |
| | |
David May | |
| 140,944 | | |
| * | |
| |
| | | |
| | |
David N. Keys | |
| 17,044 | (6) | |
| * | |
| |
| | | |
| | |
Laurie Weisberg | |
| - | | |
| - | |
| |
| | | |
| | |
Richard Schurfeld | |
| 65,201 | (7) | |
| * | |
| |
| | | |
| | |
All Directors and Executive
Officers as a Group (7 persons) | |
| 5,701,364 | | |
| 40.0 | % |
* |
Less
than one (1) percent |
|
|
(1) |
The
person named in this table has sole voting and investment power with respect to all shares of Common Stock reflected as beneficially
owned. |
|
|
(2) |
Based
on 14,223,202 shares of Common Stock outstanding as of the Record Date. |
|
|
(3) |
Includes
(i) 4,569,384 shares owned by BLC Family Investments, (ii) 561,758 shares owned by SMDMM, LLC, a Tennessee liability company, (iii)
270,745 shares owned by BC Family Holdings (Mr. Cox is a beneficial owner of all three entities); and (iii) 51,873 shares
of Common Stock that Mr. Cox owns directly in a brokerage account. |
|
|
(4) |
Includes
7,271 shares of Common Stock (held in Mr. Evers’ IRA) and 17,004 options that are currently exercisable. |
|
|
(5) |
Shares
are held in Mr. Ansani’s IRA. |
(6) |
Includes
(i) 1,666 shares held in an IRA owned by Mr. Keys’ wife, however, Mr. Keys shares investing and dipositive power over these
holdings, (ii) 5,378 shares in total held by two different IRAs owned by Mr. Keys and (iii) 10,000 shares are held by PCC Holdings
LLC. Mr. Keys shares investing and dispositive power over these holdings. |
|
|
(7) |
Includes
(i) 30,200 shares owned directly by Mr. Schurfeld; (ii) 957 shares held in Mr. Schurfeld’s IRA; (iii) 11,044 shares held in
Mr. Schurfeld’s 401(K); and (iv) 23,000 warrants to purchase shares of Common Stock with an exercise price of $4.73. |
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires our directors, executive officers and persons who beneficially own 10% or more of a class of securities
registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial ownership with the
SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of the SEC to furnish
us with copies of all reports filed by them in compliance with Section 16(a). To our knowledge, based solely on a review of reports furnished
to it, our officers, directors and ten percent holders have made the required filings other than the following: (i) Mr. May did not timely
file two Form 4s reporting acquisitions of shares; and (ii) Mr. Schurfeld did not timely file his Form 3 following his appointment as
a director.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
At
December 31, 2022 and 2021, the Company had trade payables to Axia of $163,583, respectively. Axia is owned by our Chief Executive Officer,
Mr. Cox.
For
the years ended December 31, 2022 and 2021, the Company rented space from Carddawg Investments, LLC in the amount of $166,356 and $64,488,
respectively. These costs are included in the General and Administrative expenses in the consolidated statements of operations. Mr. Cox
is sole owner of Carddawg Investments, LLC.
For
the years ended December 31, 2022 and 2021, the Company purchased telecom services and access to wireless networks from 321 Communications
in the amount of $16,035,093 and $690,398, respectively. These costs are included in Cost of Revenue in the consolidated statements of
operations. Mr. Jones (formerly a Board member) is the majority owner of 321 Communications and Mr. Cox is a minority owner of 321 Communications.
For
the years ended December 31, 2022 and 2021, the Company purchased telecom services and access to wireless networks from National Relief
Telephone in the amount of $1,163,941 and $0, respectively. These costs are included in Cost of Revenue in the consolidated statements
of operations. Mr. Jones (formerly a Board member) is the majority owner of National Relief Telephone.
At
December 31, 2022 and 2021, the Company had trade payables to 321 Communications of $279,380 and $88,898, respectively.
At
December 31, 2022 and 2021, the Company had trade payables to National Relief Telephone of $0 and $0, respectively.
For
the year ended December 31, 2021, the Company paid $1,217,790 in commissions on tablet sales to Galaxy Distribution, Inc., an entity
that Mr. May (a Board member) was a controlling shareholder of in 2021.
The
Company contracted with Centercom to provide customer service call center services, manage the sales process to include handling incoming
orders, the collection and verification of all documents to comply with FCC regulations, monthly audit of all subscribers to file the
USAC 497 form, yearly audit of all subscribers that have been active over one year to file the USAC 555 form (Recertification), information
technology professionals to maintain company websites, sales portals and server maintenance. Billings for these services in the year
ended December 31, 2022 and 2021 were $3,115.651 and $1,395,674, respectively, and are included in Cost of Revenue in the consolidated
statements of operations. Mr. Nuzzo had a 50% interest in Centercom prior to his death in March 2022.
At
December 31, 2022 and 2021, the Company had trade payables to Centercom of $972,029 and $555,069, respectively.
During
2021, Centercom forgave $429,010 of accounts payable owed by SurgePays to Centercom.
Notes
Payable - Related Parties
| |
| 1 | | |
| 2 | | |
| 3 | | |
| | |
| |
| Loan
Payable | | |
| Loan
Payable | | |
| Loan
Payable | | |
| | |
Terms | |
| Related
Party | | |
| Related
Party | | |
| Related
Party | | |
| Total | |
| |
| | | |
| | | |
| | | |
| | |
Issuance dates of notes | |
| Various | | |
| May
2020/January 2021 | | |
| August
2021 | | |
| | |
Maturity date | |
| January
1, 2023/January 1, 2024 | | |
| March
2021 | | |
| August
2031 | | |
| | |
Interest rate | |
| 10% | | |
| 15% | | |
| 10% | | |
| | |
Collateral | |
| Unsecured | | |
| Unsecured | | |
| Unsecured | | |
| | |
Conversion price | |
| N/A | | |
| N/A | | |
| N/A | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Balance - December 31, 2020 | |
$ | 3,341,940 | | |
$ | 147,500 | | |
$ | - | | |
$ | 3,489,440 | |
Gross proceeds | |
| 3,825,000 | | |
| 63,000 | | |
| 467,385 | | |
| 4,355,385 | |
Accrued interest included in note balance | |
| 692,458 | | |
| - | | |
| - | | |
| 692,458 | |
Conversion of debt into common stock | |
| (2,265,967 | ) | |
| - | | |
| - | | |
| (2,265,967 | ) |
Repayments | |
| - | | |
| (210,500 | ) | |
| - | | |
| (210,500 | ) |
Balance - December 31, 2021 | |
| 5,593,431 | | |
| - | | |
| 467,385 | | |
| 6,060,816 | |
Less: short term | |
| 1,553,799 | | |
| | | |
| - | | |
| 1,553,799 | |
Long term | |
$ | 4,039,632 | | |
$ | - | | |
$ | 467,385 | | |
$ | 4,507,017 | |
| |
| | | |
| | | |
| | | |
| | |
Balance - December 31, 2021 | |
$ | 5,593,431 | | |
$ | - | | |
$ | 467,385 | | |
| 6,060,816 | |
Conversion of debt into common stock | |
| (1,086,413 | ) | |
| - | | |
| - | | |
| (1,086,413 | ) |
Reclass of accrued interest
to note payable | |
| 627,545 | | |
| - | | |
| - | | |
| 627,545 | |
Balance - December 31, 2022 | |
| 5,134,563 | | |
| - | | |
| 467,385 | | |
| 5,601,948 | |
Less: short term | |
| 1,108,150 | | |
| | | |
| - | | |
| 1,108,150 | |
Long term | |
$ | 4,026,413 | | |
$ | - | | |
$ | 467,385 | | |
$ | 4,493,798 | |
1 |
Activity
is with the Company’s Chief Executive Officer and Board Member (Kevin Brian Cox). Prior to September 30, 2021, these notes
were either due on demand or had a specific due date. Additionally, these advances had interest rates from 6% - 15%. On September
30, 2021, all notes and related accrued interest were combined into two (2) new notes. The new notes had due dates of June 30, 2022
or January 1, 2023. In April 2022, the notes were extended to January 1, 2023 and January 1, 2024, respectively. All notes bear interest
at 10%. |
1 |
Activity
is with the Company’s Chief Executive Officer and Board Member (Kevin Brian Cox). Prior to September 30, 2021, these notes
were either due on demand or had a specific due date. Additionally, these advances had interest rates from 6% - 15%. On September
30, 2021, all notes and related accrued interest were combined into two (2) new notes. The new notes had due dates of June 30, 2022
or January 1, 2023. In April 2022, the notes were extended to January 1, 2023 and January 1, 2024, respectively. All notes bear interest
at 10%. |
OTHER
MATTERS
The
Board knows of no other business, which will be presented to the Annual Meeting. If any other business is properly brought before the
Annual Meeting, proxies in the enclosed form will be voted in accordance with the judgment of the persons voting the proxies.
We
will bear the cost of soliciting proxies in the accompanying form. In addition to the use of the mails, proxies may also be solicited
by our directors, officers or other employees, personally or by telephone, facsimile or email, none of whom will be compensated separately
for these solicitation activities.
If
you do not plan to attend the Annual Meeting,
in order that your shares may be represented and in order to assure the required quorum, please sign, date and return your proxy promptly.
In the event you are able to attend the Annual Meeting, at your request, we will cancel
your previously submitted proxy.
HOUSEHOLDING
The
SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements
and other Annual Meeting materials with respect to two or more stockholders sharing the same address by delivering a proxy statement
or other Annual Meeting materials addressed to those stockholders. This process, which is commonly referred to as householding, potentially
provides extra convenience for stockholders and cost savings for companies. Stockholders who participate in householding will continue
to be able to access and receive separate proxy cards.
If
you share an address with another stockholder and have received multiple copies of our proxy materials, you may write or call us at the
address and phone number below to request delivery of a single copy of the notice and, if applicable, other proxy materials in the future.
We undertake to deliver promptly upon written or oral request a separate copy of the proxy materials, as requested, to a stockholder
at a shared address to which a single copy of the proxy materials was delivered. If you hold stock as a record stockholder and prefer
to receive separate copies of our proxy materials either now or in the future, please contact us at 3124 Brother Blvd, Suite 104, Bartlett,
TN, 38133 Attn: Corporate Secretary. If your stock is held through a brokerage firm or bank and you prefer to receive separate copies
of our proxy materials either now or in the future, please contact your brokerage firm or bank.
|
BY
ORDER OF THE BOARD OF DIRECTORS |
|
|
|
/s/
Kevin Brian Cox |
|
Kevin
Brian Cox |
|
Chairman
of the Board of Directors |
|
|
August15,
2023 |
|
SurgePays (NASDAQ:SURG)
Historical Stock Chart
From Apr 2024 to May 2024
SurgePays (NASDAQ:SURG)
Historical Stock Chart
From May 2023 to May 2024