October 8, 2019
Kevin Brian Cox
Chief Executive Officer
Surge Holdings, Inc.
3124 Brother Boulevard, Suite 104
Bartlett, TN 38133
Re: Surge Holdings, Inc.
Registration Statement on Form S-1
Filed September 12, 2019
File No. 333-233726
Dear Mr. Cox:
We have reviewed your registration statement and have the following
comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by amending your registration statement
and providing the
requested information. If you do not believe our comments apply to your facts
and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing any amendment to your registration statement and the
information you
provide in response to these comments, we may have additional comments.
Form S-1 filed on September 12, 2019
Cover Page
1. Please identify the underwriter in your next amendment.
Risk Factors, page 6
2. Please include additional risk factors highlighting your recent losses
and increased
reliance on debt financing focusing on the effect of both on your
results of operation and
financial condition.
Market For Our Common Stock and Related Stockholder Matters, page 14
3. We note the statement on your website that indicates that you have filed
an application to
uplist your common stock on the Nasdaq Capital Market on March 5, 2019.
Please advise
Kevin Brian Cox
Surge Holdings, Inc.
October 8, 2019
Page 2
since your registration statement indicates that you "continue to work
towards listing on
the Nasdaq Capital Market."
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
16
4. For all periods presented, please provide a separate discussion of
each segment s results
(Surge and TW) in MD&A, including sales, gross margin, and operating
income (loss).
Please discuss the factors that contributed to changes in these
amounts. When more than
one factor contributes to the change between periods, please quantify
the impact of each
factor separately. Refer to Item 303(A) of Regulation S-K for further
guidance.
5. Please also provide additional analysis concerning the quality and
variability of your
earnings and cash flows of each segment (Surge and TW) so that
investors can ascertain
the likelihood or to the extent that past performance is indicative of
future performance.
In this regard, with a view to understanding the primary drivers
behind your decrease in
revenue, please discuss which line of products, services or licenses
have generated
revenues, including any known trends and uncertainties associated with
those products,
services or licenses.
6. Rather than reciting your financial results for the periods presented,
you should refocus
your discussion on the drivers behind the changes in your financial
results across financial
periods and management's actions taken, or to be taken, in response to
material changes in
your financial results.
Liquidity, Capital Resources and Going Concern, page 20
7. Please expand your disclosure to include your estimated cash
requirements over the next
twelve months.
Business, page 22
8. Please revise to disclose all the information required under Item
101(h)(4) of Regulation
S-K. We note, as examples only, such topics as the nature of your
competition, the nature
of your customer base, the number of your employees, and the present
and potential future
impact of government regulations on your financial results.
Directors and Executive Officers, page 26
FirstName LastNameKevin Brian Cox Mr. Nuzzo led Glass Mountain Capital LLC.
9. Please revise to clarify how long
Comapanypage 29 you refer to a reverse stock split described elsewhere in the
prospectus, but we
10. On NameSurge Holdings, Inc.
October 8, unable to locate any such discussion. Please revise or advise.
are 2019 Page 2
FirstName LastName
Kevin Brian Cox
FirstName LastNameKevin Brian Cox
Surge Holdings, Inc.
Comapany 2019
October 8, NameSurge Holdings, Inc.
October 8, 2019 Page 3
Page 3
FirstName LastName
Recent Sales of Unregistered Securities, page 53
11. With respect to the sales made during the six-month period ended June
30, 2019, please
revise to name the persons or identify the class of persons to whom
the securities were
sold. We refer you to Item 701(b) of Regulation S-K.
12. It appears that you disclose the same transaction three times under
the date June 29, 2019.
Please revise or advise.
Item 16. Exhibits and Financial Statement Schedules
Exhibit 23.1, page 55
13. Please include a currently dated, signed consent from your independent
registered public
accounting firm in an amendment to your Form S-1 prior to requesting
effectiveness.
Consolidated Financial Statements
Summary of Significant Accounting Policies
Revenue Recognition, page F-12
14. Please apply the guidance to disaggregate revenue into categories that
depict how the
nature, amount, timing, and uncertainty of revenue and cash flows are
affected by
economic factors, e.g., geographical regions, customer market or type
and sales channel,
or advise us. In addition, please disclose sufficient information to
enable the
understanding of the relationship between disaggregated revenue
disclosures and revenue
information for each reportable segment. Refer to ASC 606-10-50-5
through 6 and also
see ASC 606-10-55-89 through 91.
15. Please provide the disclosure requirements of ASC 606-10-50-12 as it
relates to
your performance obligations, particularly when you satisfy your
performance obligations,
significant payment terms, and the nature of goods or services that
you have promised to
transfer.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
Kevin Brian Cox
Surge Holdings, Inc.
October 8, 2019
Page 4
You may contact Joseph Cascarano, Senior Staff Accountant, at (202)
551-3376 or
Robert S. Littlepage, Accountant Branch Chief, at (202) 551-3361 if you have
questions
regarding comments on the financial statements and related matters. Please
contact Gregory
Dundas, Attorney Adviser, at (202) 551-3436 or Larry Spirgel, Office Chief, at
(202) 551-
3815 with any other questions.
Sincerely,
FirstName LastNameKevin Brian Cox
Division of
Corporation Finance
Comapany NameSurge Holdings, Inc.
Office of Trade &
Services
October 8, 2019 Page 4
cc: Steven Lipstein
FirstName LastName