Note 12 – Subsequent Event

Subsequent to December 31, 2025, the Company had the following transactions:

Stock Issued for Cash

ATM Offering

The Company issued an additional 7,323 shares of common stock for net proceeds of $14,375.

Underwritten Public Offering

On January 20, 2026, the Company entered into an underwriting agreement with R.F. Lafferty & Co., Inc. for an underwritten public offering of 2,000,000 shares of common stock at a public offering price of $1.25 per share, for gross proceeds of $2,500,000. The offering closed on January 22, 2026. The underwriter was granted a 45-day option to purchase up to an additional 300,000 shares at the public offering price to cover over-allotments. The Company intends to use the net proceeds for expansion of its Lifeline business and for working capital and general corporate purposes.

In connection with the offering, the Company issued warrants to the underwriter to purchase a number of shares equal to 3.0% of the total shares sold (60,000 warrants), at an exercise price equal to 110% of the public offering price ($1.38/share). The warrants are exercisable commencing six months after the closing date and expire five years after the commencement of sales, and were issued without registration under the Securities Act of 1933 in reliance on the exemption provided by Section 4(a)(2).

The offering was made pursuant to the Company’s effective registration statement on Form S-3 (File No. 333-273110).

Nasdaq Continued Listing Compliance

In March 2026, the Company received two notices from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) indicating non-compliance with certain continued listing requirements.

On March 18, 2026, the Company was notified that it no longer meets the minimum market value of listed securities (“MVLS”) requirement of $35,000,000. On March 23, 2026, the Company received a separate notice of non-compliance with the $1.00 minimum bid price requirement. These notices have no immediate effect on the listing or trading of the Company’s common stock on Nasdaq.

Under Nasdaq listing rules, the Company has 180 calendar days to regain compliance with each requirement - until September 14, 2026 for the MVLS deficiency and September 21, 2026 for the minimum bid price deficiency. Compliance with the MVLS requirement will be regained if the market value of listed securities closes at or above $35,000,000 for at least ten consecutive business days during the compliance period. Compliance with the minimum bid price requirement will be regained if the closing bid price of the Company’s common stock is at or above $1.00 per share for at least ten consecutive business days during the applicable period.

If the Company does not regain compliance with the minimum bid price requirement within the initial 180-day period, it may be eligible for an additional 180-day compliance period, subject to meeting certain other continued listing standards and notifying Nasdaq of its intention to cure the deficiency.

If the Company’s common stock were ultimately delisted from Nasdaq, it could have a material adverse effect on the liquidity and market price of its shares, its ability to raise equity financing, its access to the public capital markets, and its ability to provide equity incentives to employees. The Company is actively monitoring its compliance status and intends to pursue all available options to regain compliance within the applicable cure periods.

Conversion of Related Party Note Payable to Common Stock

On March 23, 2026, the Company issued 800,000 shares of common stock to its Chief Executive Officer in connection with the partial conversion of a related party note payable (see Note 6). The shares had a fair value of $707,200 ($0.884 per share), based on the quoted closing market price on the issuance date. In connection with this transaction, the Chief Executive Officer forgave an additional $292,800 of principal. The forgiveness of principal by the Chief Executive Officer, acting in his capacity as a principal shareholder and creditor, has been accounted for as a capital contribution, with the $292,800 credited to additional paid-in capital. No gain on extinguishment of debt has been recognized. The aggregate extinguishment of $1,000,000 reduced the outstanding balance of the related party note payable accordingly.

Convertible Secured Notes Payable Financing

On January 6, 2026, the Company’s Board of Directors authorized a private placement of convertible secured promissory notes (the “Notes”) in an aggregate principal amount of up to $20,000,000, to be issued in one or more closings. The Notes bear interest at 14.5% per annum, computed on the basis of actual days elapsed over a 365-day year, with interest payable quarterly in arrears commencing on the date that is three months from each respective issue date, and mature 24 months from each respective issue date. Beginning on the 12-month anniversary of each respective issue date, the Company is required to make equal quarterly principal amortization payments over four consecutive quarters through maturity.

The Notes may not be prepaid prior to the one-year anniversary of each respective issue date. From the one-year anniversary through the maturity date, the Company may prepay the outstanding principal and accrued interest upon five Trading Days’ prior written notice to the applicable Holder, during which period the Holder retains the right to convert any or all of the amount subject to prepayment.

The Company’s subsidiary, Torch Wireless, acts as guarantor of the Notes pursuant to an unconditional guaranty of payment, and the Notes are secured by a junior perfected security interest in substantially all assets of the Company, subordinated to the senior indebtedness held by an existing lender pursuant to an intercreditor and subordination agreement.

The Convertible Secured Notes are convertible into shares of the Company’s common stock at the applicable holder’s option at any time from each respective issue date. The conversion price is determined on a tiered basis according to the portion of outstanding principal and accrued interest being converted. The applicable conversion prices vary by closing: notes issued in one closing, representing an aggregate principal amount of $175,000, are subject to the lower tier pricing, and notes issued in other closings, representing an aggregate principal amount of $650,000, are subject to the higher tier pricing. The tiered conversion price structure is as follows:

All conversion prices are subject to adjustment for stock splits, dividends, recapitalizations, and similar events. Conversions are subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% upon 61 days’ prior written notice to the Company. The Notes do not contain any cash settlement provisions upon conversion; all conversions are settled exclusively in shares of the Company’s common stock.

Commencing six months after each respective issue date, the Company has the right to force conversion of any portion of the outstanding Notes into common stock at the applicable tiered conversion price, subject to specified conditions, including the absence of any Event of Default, minimum volume-weighted average price thresholds, and trading volume requirements during the 20 trading days preceding the forced conversion effective date, and the requirement that all conversion shares be freely tradeable and eligible for immediate resale by the applicable Holder.

Upon an uncured Event of Default, the outstanding principal balance of the applicable Note becomes immediately due and payable, and default interest accrues at 18% per annum from the date of such Event of Default. A going concern disclosure in the Company’s financial statements is expressly excluded from constituting an Event of Default under the terms of the Notes.

The Convertible Secured Notes are being issued in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506(b) promulgated thereunder. Through the date of these financial statements, the Company has completed closings under this offering, issuing Convertible Secured Notes in an aggregate principal amount of $825,000. In connection with these issuances, the Company issued 31,525 shares of common stock as commitment shares, having an aggregate fair value of $54,828, based on the quoted closing price of the Company’s common stock on each respective issuance date, ranging from $0.83 to $2.04 per share. The commitment shares are treated as a debt issuance cost and are amortized to interest expense over the contractual term of the respective Convertible Secured Notes using the effective interest method in accordance with ASC 835-30.

The Company evaluated the embedded conversion features of the Notes in accordance with ASC 815-10-15-74(a) and ASC 815-40. The tiered fixed conversion prices are indexed solely to the Company’s own common stock and are subject only to standard anti-dilution adjustments for stock splits, dividends, and recapitalizations. These features satisfy the fixed-for-fixed criteria under ASC 815-40-15 and therefore qualify for the scope exception from derivative accounting. Accordingly, each Note is accounted for in its entirety as a debt instrument. Debt issuance costs associated with each Note are recorded as a direct reduction of the carrying amount of the related debt and amortized to interest expense over the contractual term of each respective Note using the effective interest method in accordance with ASC 835-30.

Convertible Notes Payable – Other

In March 2026, the Company entered into two separate one-year unsecured note purchase agreements with institutional investors and issued convertible promissory notes and accompanying common stock purchase warrants (collectively, the “Subsequent Notes”). In accordance with ASC 835-30, each Subsequent Note was issued at a discount arising from original issue discounts, guaranteed interest capitalized at issuance, and debt issuance costs paid to or on behalf of the holders at closing. These discount components are recorded as a reduction of the carrying value of the respective Subsequent Notes on the commitment date and are amortized to interest expense using the effective interest method over each Subsequent Note’s one-year contractual term.

The Subsequent Notes had an aggregate original principal amount of $833,333 and aggregate guaranteed interest of $66,667 capitalized at issuance, resulting in a total aggregate obligation of $900,000. The aggregate purchase price paid by the investors was $750,000, consisting of $450,000 under the first note and $300,000 under the second note. After deducting $14,500 in debt issuance costs paid to or on behalf of the holders at closing, consisting of $5,000 under the first note and $9,500 under the second note, net cash proceeds to the Company were $735,500.

Each Subsequent Note matures twelve months from its respective issue date and accrues a one-time guaranteed interest charge at a rate of 8% per annum on the original principal amount, which is fully earned as of the respective issue date regardless of early repayment or conversion, with a default interest rate of 22% per annum. Each Subsequent Note is repayable in four fixed monthly cash installments followed by a fifth and final payment equal to all remaining outstanding amounts, inclusive of the capitalized guaranteed interest. The first note, with an original principal amount of $500,000 and a total obligation of $540,000, requires four monthly payments of $106,920 commencing November 12, 2026, with the final payment of all remaining amounts due March 12, 2027. The second note, with an original principal amount of $333,333 and a total obligation of $360,000, requires four monthly payments of approximately $72,000 commencing November 27, 2026, with the final payment of all remaining amounts due March 27, 2027.

Each Subsequent Note contains embedded conversion features that allow the investor to convert outstanding principal and capitalized guaranteed interest into shares of the Company’s common stock, structured in three tranches:

The first and second tranche fixed conversion prices are subject to customary anti-dilution adjustments for stock splits, stock dividends, and recapitalizations, and are also subject to reduction to the price of any dilutive issuance of common stock or common stock equivalents at an effective price below the then-applicable conversion price, subject to specified exempt issuances. The holder of each Subsequent Note is subject to a 4.99% beneficial ownership limitation (subject to increase to 9.99% upon 61 days’ prior written notice) and is entitled to deduct $1,250 from each conversion amount to reimburse conversion-related expenses.

The Company evaluated the embedded conversion features of the Subsequent Notes in accordance with ASC 815-10-15-74(a) and ASC 815-40 to determine whether bifurcation as derivative liabilities was required. The first and second tranche fixed conversion prices ($4.00 and $6.00 per share, respectively) are subject to downward adjustment upon dilutive issuances of common stock or common stock equivalents at effective prices below the then-applicable conversion price, subject to specified exempt issuances. The Company evaluated whether this provision causes the conversion features to fail the fixed-for-fixed criteria under ASC 815-40-15 and concluded that, consistent with its analysis of Notes #2 through #6, the adjustment provisions applicable to the Subsequent Notes do not cause the fixed-price conversion features to require bifurcation. The fixed-price conversion options therefore qualify for the scope exception from derivative accounting under ASC 815-10-15-74(a). The third tranche of each Subsequent Note becomes convertible only upon an event of default or a missed monthly amortization payment, at a variable rate of 85% of the lowest daily VWAP during the five preceding trading days. Management has assessed the likelihood of default as remote, based on the Company’s history of compliance with its debt obligations and continued access to capital markets. Accordingly, this contingent feature does not require bifurcation, is considered clearly and closely related to the debt host under ASC 815-10-15-74(a), and qualifies for the equity scope exception under ASC 815-40. Each Subsequent Note is therefore accounted for in its entirety as a debt instrument.

The Company reassesses the probability of default at each reporting date. Should an event of default no longer be considered remote, the contingent variable conversion feature would be bifurcated and recognized as a derivative liability at fair value, with subsequent changes in fair value recognized in earnings. As of the date of these financial statements, the Company was in compliance with all terms and conditions of the Subsequent Notes.

In connection with each Subsequent Note, the Company issued common stock purchase warrants to the respective investors, consisting of 225,000 warrant shares issued with the first note and 150,000 warrant shares issued with the second note, each with a five-year term (5) and an initial exercise price of $1.25 per share. The warrants contain exercise price adjustment provisions, including a stock combination event adjustment under which the exercise price may be reduced to a market-based price following certain recapitalization events, and a cash settlement provision under which the Company may be required to settle warrant exercises in cash to the extent shares cannot be issued due to the Company’s failure to obtain required shareholder approval.

The Company evaluated the warrants under ASC 815-40 to determine the appropriate classification. Because the cash settlement obligation is potentially outside the Company’s control and could require net cash settlement under specified circumstances, the Company has preliminarily concluded that the warrants do not qualify for equity classification and will be recognized as derivative liabilities measured at fair value on the issuance date. The initial fair value of the warrants will be recorded as a debt discount, to the extent it does not exceed the face amount of the respective Subsequent Note, with any excess recognized as derivative expense. The warrant liabilities will be remeasured at fair value at each subsequent reporting date, with changes in fair value recognized in the consolidated statements of operations. The Company will complete the fair value measurement and record all related accounting entries in the quarter ending March 31, 2026.

Stock Issued for Services – Related Party

On April 1, 2026, the Company issued Mr. Cox 500,000 shares of common stock for services rendered, having a fair value of $360,000. See Note 8.

Ellenoff Grossman & Schole, LLP and SurgePays – Litigation

Ellenoff Grossman & Schole LLP v. SurgePays, Inc., Index No. 651282/2026, Supreme Court of the State of New York, County of New York, filed March 2, 2026. The action sought recovery of $234,151 in unpaid legal fees, plus costs and attorneys’ fees. Effective April 7, 2026, the Company entered into a settlement agreement resolving all claims, pursuant to which the Company agreed to pay the total settlement amount of $234,151 in eight equal monthly installments of $29,269, commencing April 2026 and ending November 2026. The first installment has been paid. The settlement agreement provides for a default interest rate of 9% per annum on any overdue amounts and is secured by an Affidavit of Confession of Judgment held in escrow by the plaintiff, which may be filed upon an uncured payment default.

Amendment of Promissory Note

On January 31, 2026, the Company agreed to an amendment of Note #1 which revised the amortization commencement date from January 31, 2026 to June 30, 2026 and extended the Maturity Date from May 12, 2027 to October 12, 2027.