{"url_path":"/sec/surg/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 LEGAL PROCEEDINGS**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-20","source_url":"https://www.sec.gov/Archives/edgar/data/1392694/0001493152-26-024591-index.html","accession_number":"0001493152-26-024591","cik":"0001392694","ticker":"SURG","issuer_name":"SurgePays, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1392694/0001493152-26-024591-index.html","primary_entity_key":"0001392694","primary_entity_name":"SurgePays, Inc."},"word_count":1260,"has_tables":true,"body_markdown":"** **\n\n**ITEM\n1: LEGAL PROCEEDINGS**\n\n** **\n\nFrom\ntime to time, we may be engaged in various lawsuits and legal proceedings in the ordinary course of our business. Except as described\nbelow, we are currently not aware of any legal proceedings the ultimate outcome of which, in our judgment based on information currently\navailable, would have a material adverse effect on our business, financial condition or results of operations.\n\n \n\nThe\nfollowing is a summary of threatened, pending, asserted or unasserted claims against us or any of our wholly owned subsidiaries for which\nthere have been material developments:\n\n \n\nBlue\nSkies Connections, LLC, and True Wireless, Inc. v. SurgePays, Inc., et. al.\n\n \n\nDistrict\nCourt of Oklahoma County, OK, CJ-2021-5327, filed on December 13, 2021. Plaintiffs’ petition alleges breach of a Stock Purchase\nAgreement by SurgePays, SurgePhone Wireless, LLC, and Kevin Brian Cox (“Defendants”), and makes other allegations related\nto SurgePays’ consulting work with Jonathan Coffman, formerly a True Wireless employee. The petition requests injunctive relief,\ngeneral damages, punitive damages, attorney fees and costs for alleged breach of contract, tortious interference with a business relationship,\nand fraud. Blue Skies alleged the Defendants are in violation of their non-competition and non-solicitation agreements related to the\nsale of True Wireless from SurgePays to Blue Skies. Defendants filed various dispositive motions with the Court demonstrating Oklahoma\nstate law does not recognize non-compete agreements and non-solicitation agreements in the manner alleged by Plaintiffs, and the Court\ngranted these motions, finding the non-solicitation and non-competition clauses in the Stock Purchase Agreement void as a matter of Oklahoma\nlaw. Defendants then filed additional dispositive motions on Plaintiffs’ claims in tort and equity, which the Court granted in\npart based on its prior rulings. Plaintiffs took the position the Court granting Defendants’ dispositive motions on these material\nissues only leaves partial contract claims that are inextricably intertwined with the remaining claims and defenses. Plaintiffs sought\na certified interlocutory appeal of the Court’s orders. On March 10, 2025, the Oklahoma Supreme Court entered an order denying\nPlaintiffs’ Petition for Certiorari to review the certified interlocutory appeal. In December 2025, Judge Dishman recused himself\nfrom the case following a request from the Blue Skies and True Wireless parties and objection by SurgePays’ counsel. Judge Andrews\nhas been assigned to the matter and has set remaining matters for status and briefing schedules on outstanding motions in the trial court.\nThe case will now proceed in the district court on the parties’ remaining claims. Presently, there is no trial date.\n\n \n\nIn\nthe Circuit Court of Tennessee for the 30th Judicial District at Memphis, Docket # CT-3219-23. On August 8, 2023, a complaint was filed\nby SurgePays for breach of a promissory note by Blue Skies Connections, LLC. The note at issue is dated June 14, 2021, and requires Blue\nSkies Connections to repay the principal sum of $176,850.56, by monthly payments of $7,461.37 commencing on June 1, 2023. Blue Skies\nConnections has failed to make any payments due under the terms of the note, and this breach entitles SurgePays to demand payment of\nthe entire amount of the note together with all accrued interest. Blue Skies Connections responded by filing a Motion to Dismiss or,\nin the alternative, a Motion to Stay, taking the position that, under the prior suit pending doctrine, the subject promissory note is\nsubject to the prior litigation instituted by Blue Skies Connections against SurgePays, styled Skies Connections, LLC and True Wireless,\nInc. v. SurgePays, Inc., et al., Case No. CJ-2021-5327, District Court of Oklahoma County, Oklahoma. SurgePays elected to dismiss its\ncomplaint without prejudice and is in the process of evaluating re-filing the matter in the District Court of Oklahoma County, Oklahoma.\n\n \n\nSurgePays,\nInc. et al. v. Fina et al., Case No. CJ-2022-2782, District Court of Oklahoma County, Oklahoma\n\n \n\nPlaintiffs\nSurgePays, Inc. and Kevin Brian Cox initiated this case against its former officer Mike Fina, his companies Blue Skies Connections, LLC,\nTrue Wireless, Inc., Government Consulting Solutions, Inc., Mussell Communications LLC, and others. This case also arises from the June\n2021 transaction by which SurgePays sold True Wireless to Blue Skies. During the litigation of CJ-2021-5327 described above, SurgePays\nlearned information that showed Mike Fina breached his duties owed to True Wireless during his employment and consulting work for True\nWireless prior to SurgePays’ sale of True Wireless to Blue Skies. SurgePays alleges that Mike Fina conspired with the other defendants\nto damage True Wireless thereby harming the value of the company and causing its eventual sale at a greatly reduced price. SurgePays\nasserts claims for (i) breach of contract; (ii) breach of fiduciary duty; (iii) fraud; (iv) tortious interference; and (v) unjust enrichment.\nAt this stage, no defendant has asserted a counterclaim against SurgePays. SurgePays filed a Second Amended Petition on January 27, 2023.\nDefendants Fina, Blue Skies, True Wireless, and Government Consulting Solutions filed a Motion to Dismiss on March 10, 2023. On June\n29, 2023, the Court granted the Motion to Dismiss, ruling the claims asserted are “derivative” and could only be asserted\nby the True Wireless entity now owed by Blue Skies. The Court rejected SurgePays’ request to certify this ruling for immediate\nappeal. Defendant Misty Garrett filed a Motion for Summary Judgment seeking the same relief as the Motion to Dismiss, which was granted\nby the Court. It is SurgePays’ intent to evaluate an additional options in the Court’s dismissal of Fina, Blue Skies, True\nWireless, Government Consulting Solutions, and Misty Garrett. At this stage, no attempts at settlement have been made.\n\n \n\nAll\nclaims against all parties have been adjudicated by the Court. SurgePays filed a Motion for New Trial, which was denied by the Court\non February 20, 2025. SurgePays’ has filed an appeal of the Court’s dismissal of Fina, Blue Skies, True Wireless, Government\nConsulting Solutions, and summary judgment for Misty Garrett.\n\n \n\nWith\nregard to the appeal against Misty Garrett and Misty Garrett’s claims against SurgePays, Misty Garrett and SurgePays have entered\ninto a Settlement Agreement and Release dated as of October 16, 2025 in which the parties have agreed to dismiss all matters in the courts\nand release each other from liability, with an agreement to file such dismissal documents at the in the respective courts.\n\n \n\n78\n\n \n\n \n\nSSB\nCommunications, Inc., Plaintiff v SurgePays, Inc., and American Broadband & Telecommunications Company, Defendants, Case No. DC-26-07054\n\n \n\nDistrict\nCourt 116th Judicial District, Dallas County, Texas filed April 20, 2026. Plaintiff filed this collection suit seeking an\namount over $250,000 but less than $1,000,000 for breach of contract for the provision of goods, plus interest, fees and costs. SurgePays,\nInc.’s initial pleading is not due until May 25, 2026. At this time, SurgePays, Inc. is in settlement discussions with Co-Defendant,\nAmerican Broadband & Telecommunications Company and the Plaintiff.\n\n \n\nEllenoff\nGrossman & Schole, LLP and SurgePays\n\n \n\nEllenoff\nGrossman & Schole LLP v. SurgePays, Inc., Index No. 651282/2026, Supreme Court of the State of New York, County of New York, filed\nMarch 2, 2026. The action sought recovery of $234,151 in unpaid legal fees, plus costs and attorneys’ fees.\n\n \n\nEffective\nApril 7, 2026, the Company entered into a settlement agreement resolving all claims, pursuant to which the Company agreed to pay the\ntotal settlement amount of $234,151 in eight equal monthly installments of $29,269, commencing April 2026 and ending November 2026. All\nrequired installments have been paid to date. The settlement agreement provides for a default interest rate of 9% per annum on any overdue\namounts and is secured by an Affidavit of Confession of Judgment held in escrow by the plaintiff, which may be filed upon an uncured\npayment default."}