Quarterly report pursuant to Section 13 or 15(d)

Stockholders??? Deficit

v3.21.2
Stockholders’ Deficit
6 Months Ended
Jun. 30, 2021
Equity [Abstract]  
Stockholders’ Deficit

Note 9 – Stockholders’ Deficit

 

At June 30, 2021, and prior to the conversions noted below, the Company had three (3) classes of stock:

 

Common Stock

 

- 500,000,000 shares authorized
- Par value - $0.001
- Voting at 1 vote per share

 

Series A, Convertible Preferred Stock

 

- 13,000,000 shares authorized
- 13,000,000 issued and outstanding
- Par value - $0.001
- Voting at 10 votes per share (130,000,000 votes)
- Ranks senior to any other class of preferred stock
- Dividends - none
- Liquidation preference – none
- Rights of redemption - none
- Conversion into 1/10 of a share of common stock for each share held (1,300,000 common stock equivalents)

 

 

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

Series C, Convertible Preferred Stock

 

- 1,000,000 shares authorized
- 721,598 issued and outstanding
- Par value - $0.001
- Voting at 250 votes per share (180,399,500 votes)
- Ranks junior to any other class of preferred stock
- Dividends – equal to the per share amount (as converted basis) as the common stockholders should the Board of Directors declare a dividend
- Liquidation preference – original issue price plus any declared yet unpaid accrued dividends
- Rights of redemption - none
- Conversion into 250 shares of common stock for each share held (180,399,500 common stock equivalents)

 

Equity Transactions for the Six Months Ended June 30, 2021

 

Stock Issued for Cash

 

The Company issued 13,000,000 shares of common stock for $1,510,000 ($0.10 - $0.16/share).

 

Stock Issued for Services

 

The Company issued 126,000 shares of common stock for services rendered, having a fair value of $22,680 ($0.119 - $0.281/share), based upon the quoted closing trading price.

 

Stock Issued as Debt Discount

 

The Company issued 900,000 shares of common stock in connection with the issuance of debt, having a fair value of $2,038,635 ($0.107/share), based upon the quoted closing trading price.

 

Conversion of Debt

 

The Company issued 6,614,537 shares of common stock in connection with the conversion of convertible debt, having a fair value of $858,158 ($0.068 - $0.208/share), based upon the quoted closing trading price.

 

 

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

Make-whole Arrangement

 

The Company issued 757,345 shares of common stock to debt holders that were entitled to shares upon the settlement of debt and related accrued interest. The shares had a fair value of $90,401 ($0.112 - $0.12/share), based upon the quoted closing trading price.

 

Stock Issued for Debt Modification

 

The Company issued 695,808 shares of common stock in connection with the modification of debt arrangements. The shares had a fair value of $108,931 ($0.112 - $0.16/share), based upon the quoted closing trading price.

 

Stock Issued in Settlement of Liabilities

 

The Company issued 12,180,010 shares of common stock to various vendors and debt holders to settle accounts payable, debt and derivative liabilities. The shares had a fair value of $1,755,150 ($0.09 - $0.27/share), based upon the quoted closing trading price. In connection with these debt settlements, the Company recorded a gain of $842,982.

 

Stock Issued in Acquisition of Membership Interest in ECS

 

On January 30, 2020, the Company entered into a Membership Interest Purchase Agreement and Stock Purchase Agreement with ECS Prepaid, ECS, CSLS and the Winfrey’s. Pursuant to the agreements, the Company acquired all of the membership interests of ECS Prepaid and all of the issued and outstanding stock of each ECS and CSLS. The agreements provide that the consideration is to be paid by the Company through the issuance of 500,000 shares of the Company’s Common Stock. In addition, the agreements called for 25,000 shares of Common Stock to be issued to the Winfrey’s on a monthly basis over a 12-month period. During the three months ended March 31, 2021, the Company issued 100,000 shares of Common Stock in full settlement of the agreements. The shares had a fair value of $17,900 ($0.179/share), based upon the quoted closing trading price.

 

 

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

Stock Options

 

Stock option transactions under the Company’s Plan for the six months ended June 30, 2021 and the year ended December 31, 2020 are summarized as follows:

 Schedule of Stock Option Transactions

Stock Options   Number of Options     Weighted Average Exercise Price    

Weighted Average

Remaining Contractual Term (Years)

    Aggregate Intrinsic Value     Weighted Average Grant Date Fair Value  
Outstanding - December 31, 2019     -     $ -       0.00     $ -     $ -  
Exercisable - December 31, 2019     -     $ -       0.00     $ -     $ -  
Vested and Exercisable - December 31, 2020     -     $ -       0.00     $ -     $ -  
Unvested and non-exercisable - December 31, 2020     -     $ -       0     $ -     $ -  
Granted     850,176     $ 0.32       7.00     $      -     $ 0.17  
Exercised     -     $ -             $ -          
Cancelled/Forfeited     -     $ -             $ -          
Outstanding - December 31, 2020     850,176     $ 0.32       6.16     $ -     $ -  
Vested and Exercisable - December 31, 2020     -     $ -       0.00     $ -     $ -  
Unvested and non-exercisable - December 31, 2020     850,176     $ 0.32       6.16     $ -     $ -  
                                         
Outstanding - December 31, 2020     850,176     $ 0.32       6.16     $ -     $ -  
Vested and Exercisable - December 31, 2020     -     $ -       0.00     $ -     $ -  
Unvested and non-exercisable - December 31, 2020     850,176     $ 0.32       6.16     $ -     $ -  
Granted     -       -                     $ -  
Exercised     -       -                          
Cancelled/Forfeited     -       -                          
Outstanding - June 30, 2021     850,176     $ 0.32       5.67     $ -     $ -  
Vested and Exercisable - June 30, 2021     170,035     $ 0.32       5.67     $ -     $ -  
Unvested and non-exercisable - June 30, 2021     680,141     $ 0.32       5.67     $ -     $ -  

 

Compensation expense recorded for stock-based compensation is as follows for the six months ended June 30, 2021 and 2020, respectively:

 Schedule of Stock-based Compensation

    Six Months Ended  
    June 30, 2021     June 30, 2020  
                 
Compensation expense   $ 18,587     $ 12,391  

 

 

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

Warrants

 

Warrant activity for the Six Months Ended June 30, 2021 and the Year Ended December 31, 2020 are summarized as follows:

 Schedule of Warrants Activity

Warrants   Number of Warrants     Weighted Average Exercise Price     Weighted Average Remaining Contractual Term (Years)     Aggregate Intrinsic Value  
Outstanding and exercisable - December 31, 2019     6,849,635     $ 0.71       1.98     $        -  
Exercisable     -       -       -       -  
Granted     3,116,230     $ 0.53       -       -  
Exercised     -       -       -       -  
Cancelled/Forfeited     (250,000 )   $ 0.80       -       -  
Outstanding - December 31, 2020     9,715,865     $ 0.65       1.52     $ -  
Exercisable - December 31, 2020     9,715,865     $ 0.65       1.52     $ -  
                                 
Outstanding - December 31, 2020     9,715,865     $ 0.65       1.52     $ -  
Exercisable - December 31, 2020     9,715,865     $ 0.65       1.52     $ -  
Granted     13,897,500     $ 0.16       -       -  
Exercised     -       -       -       -  
Cancelled/Forfeited     (2,232,500 )   $ 0.47       -       -  
Outstanding - June 30, 2021     21,380,865     $ 0.35       3.48     $ -  
Exercisable - June 30, 2021     21,380,865     $ 0.35       3.48     $ -  

 

During 2021, the Company granted 13,897,500 warrants to convertible note holders.

 

 

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021