UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
Surge Components, Inc.
(Name of Issuer)
Common Stock, par value $.001 per share
(Title of Class of Securities)
868908104
(CUSIP Number)
Bradley P. Rexroad
970 Reserve Drive, Suite 126
Roseville, CA 95678
(916) 791-1842
Michael D. Tofias
25 Cambridge Drive
Short Hills, NJ 07078
(917) 699-6505
With a copy to:
David J. Berger
Douglas K. Schnell
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
August 25, 2016
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box: ¨
Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
| CUSIP No. 868908104 | 13D | |
| (1) NAMES OF REPORTING PERSONS Bradley P. Rexroad |
||
|
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (see instructions) (a) x (b) ¨ | ||
| (3) SEC USE ONLY | ||
| (4) SOURCE OF FUNDS (see instructions) PF | ||
| (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) ¨ | ||
| (6) CITIZENSHIP OR PLACE OF ORGANIZATION United States of America | ||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH |
(7) SOLE VOTING POWER | |
| 670,743 shares | ||
| (8) SHARED VOTING POWER | ||
| 0 shares | ||
| (9) SOLE DISPOSITIVE POWER | ||
| 670,743 shares | ||
| (10) SHARED DISPOSITIVE POWER | ||
| 0 shares | ||
| (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 670,743 shares | ||
| (12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (see instructions) ¨ | ||
| (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.6%* | ||
| (14) TYPE OF REPORTING PERSON (see instructions) IN | ||
* Percentage calculated based on 10,098,276 shares of common stock, par value $.001 per share, outstanding as of June 8, 2016, which number of shares is taken from disclosures made by Surge Components, Inc. in its Registration Statement on Form S-8, as filed with the Securities and Exchange Commission on June 8, 2016.
| Page 2 of 9 |
| CUSIP No. 868908104 | 13D | |
| (1) NAMES OF REPORTING PERSONS Michael D. Tofias |
||
|
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (see instructions) (a) x (b) ¨ | ||
| (3) SEC USE ONLY | ||
| (4) SOURCE OF FUNDS (see instructions) PF | ||
| (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) ¨ | ||
| (6) CITIZENSHIP OR PLACE OF ORGANIZATION United States of America | ||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH |
(7) SOLE VOTING POWER | |
| 1,568,123 shares | ||
| (8) SHARED VOTING POWER | ||
| 0 | ||
| (9) SOLE DISPOSITIVE POWER | ||
| 1,568,123 shares | ||
| (10) SHARED DISPOSITIVE POWER | ||
| 0 | ||
| (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,568,123 shares | ||
| (12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (see instructions) ¨ | ||
| (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 15.5%* | ||
| (14) TYPE OF REPORTING PERSON (see instructions) IN | ||
* Percentage calculated based on 10,098,276 shares of common stock, par value $.001 per share, outstanding as of June 8, 2016, which number of shares is taken from disclosures made by Surge Components, Inc. in its Registration Statement on Form S-8, as filed with the Securities and Exchange Commission on June 8, 2016.
| Page 3 of 9 |
| Item 1. | Security and Issuer. |
The securities to which this statement on Schedule 13D (this “Statement”) relates are the common stock, par value $.001 per share (the “Common Stock”), of Surge Components, Inc., a Nevada corporation (the “Issuer”). The address of the principal executive offices of the Issuer is 95 East Jefryn Boulevard, Deer Park, NY 11729.
| Item 2. | Identity and Background. |
| (a) | Name |
This Statement is filed by Bradley P. Rexroad and Michael D. Tofias. Messrs. Rexroad and Tofias are referred to as the “Reporting Persons.”
The Reporting Persons have entered into a Joint Filing, Group and Solicitation agreement (the “Joint Agreement”), a copy of which is attached as Exhibit 1.
| (b) | Residence or Business Address |
The address of the principal business and principal office of Mr. Rexroad is 970 Reserve Drive, Suite 115, Roseville, CA 95678.
The address of the principal business and principal office of Mr. Tofias is 25 Cambridge Drive, Short Hills, NJ 07078.
| (c) | Present Principal Occupation or Employment and the Name, Principal Business and Address of any Corporation or Other Organization in Which Such Employment Is Conducted |
Mr. Rexroad is a Principal of Assay Research LLC.
Mr. Tofias is an independent private investor.
| (d) | Criminal Convictions |
During the past five years, neither of the Reporting Persons has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
| (e) | Civil Proceedings |
During the past five years, neither of the Reporting Persons has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
| (f) | Citizenship |
Each of the Reporting Persons are both citizens of the United States of America.
| Page 4 of 9 |
| Item 3. | Source and Amount of Funds or Other Consideration. |
All of the shares of Common Stock to which this Statement relates were purchased by the Reporting Persons using their personal funds. The aggregate purchase price of the 670,743 shares of Common Stock beneficially owned by Mr. Rexroad was $510,899. The aggregate purchase price of the 1,568,123 shares of Common Stock beneficially owned by Mr. Tofias was $114,495.45.
| Item 4. | Purpose of Transaction. |
The Reporting Persons purchased the shares of Common Stock for investment purposes.
In pursuing such investment purposes, the Reporting Persons may further, from time to time, purchase, hold, vote, trade, dispose or otherwise deal in the Common Stock at times, and in such manner, as they deem advisable to benefit from, among other things, (1) changes in the market prices of the Common Stock; (2) changes in the Issuer’s operations, business strategy or prospects; or (3) from the sale or merger of the Issuer. To evaluate such alternatives, the Reporting Persons will closely monitor the Issuer’s operations, prospects, business development, management, competitive and strategic matters, capital structure, and prevailing market conditions, as well as other economic, securities markets and investment considerations. Consistent with their investment research methods and evaluation criteria, the Reporting Persons may discuss such matters with the management or Board of Directors of the Issuer (the “Board”), other stockholders, industry analysts, existing or potential strategic partners or competitors, investment and financing professionals, sources of credit, and other investors. Such evaluations and discussions may materially affect, and result in, among other things, the Reporting Persons (1) modifying their ownership of the Common Stock; (2) exchanging information with the Issuer pursuant to appropriate confidentiality or similar agreements; (3) proposing changes in the Issuer’s operations, governance or capitalization; (4) pursuing a transaction that would result in the acquisition of a controlling interest in the Issuer; or (5) pursuing or supporting one or more of the other actions described in subsections (a) through (j) of Item 4 of Schedule 13D.
In addition to the information disclosed in this Statement, the Reporting Persons reserve the right to (1) formulate other plans and proposals; (2) take any actions with respect to their investment in the Issuer, including any or all of the actions set forth in subsections (a) through (j) of Item 4 of Schedule 13D; and (3) acquire additional shares of Common Stock or dispose of some or all of the shares of Common Stock beneficially owned by them, in each case in the open market, through privately negotiated transactions or otherwise. The Reporting Persons may at any time reconsider and change their plans or proposals relating to the foregoing.
On August 25, 2016, the Reporting Persons (under the name Concerned Stockholders of Surge Components, Inc.) submitted a letter to the Issuer (the “Nomination Letter”) nominating the Reporting Persons for election to the Board at the Issuer’s 2016 Annual Meeting of Stockholders (the “2016 Annual Meeting”). In the Nomination Letter, the Reporting Persons reserved the right to further nominate, substitute or add additional persons in the event that (1) the Issuer purports to increase the number of directorships; (2) the Issuer makes or announces any changes to its by-laws or takes or announces any other action that purports to have, or if consummated would purport to have, the effect of disqualifying any of the Reporting Persons as nominees; or (3) any of the Reporting Persons is unable or becomes unwilling for any reason to serve as a director of the Issuer. The Reporting Persons also submitted stockholder proposals for consideration at 2016 Annual Meeting proposing: (1) that the Board take all necessary steps (other than steps that must be taken by stockholders) to eliminate the classification of the Board and to require that all directors be elected on an annual basis; and (2) the repeal of each provision or amendment to the Issuer’s by-laws adopted by the Board after February 18, 2016, which is the date of the last publicly available amendment to the Issuer’s by-laws, without the approval of stockholders.
| Page 5 of 9 |
| Item 5. | Interest in Securities of the Issuer. |
(a) and (b) The responses of the Reporting Persons to rows 7, 8, 9, 10, 11 and 13 on the cover pages of this this Statement are incorporated herein by reference. As of the close of business on August 25, 2016, the Reporting Persons beneficially owned 2,238,866 shares of Common Stock, representing approximately 22.2% of the outstanding shares of Common Stock. The percentage in this paragraph relating to beneficial ownership of Common Stock is based on 10,098,276 shares of Common Stock outstanding as of June 8, 2016, as reported in the Registration Statement on Form S-8 filed by the Issuer with the Securities and Exchange Commission on June 8, 2016.
Of the shares of Common Stock beneficially owned by Mr. Rexroad, 30,500 are held by his spouse.
(c) Except as set forth in Schedule A, none of the Reporting Persons has effected any transactions in the Common Stock in the last 60 days.
(d) No other person is known to the Reporting Persons to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock covered by this Statement.
(e) Not applicable.
| Item 6. | Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. |
Except for the Joint Agreement and other than as described in this Statement, to the knowledge of the Reporting Persons, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the Reporting Persons or between the Reporting Persons and any other persons with respect to any securities of the Issuer, including but not limited to transfer or voting of any of the securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies.
| Item 7. | Material to be Filed as Exhibits. |
The following documents are filed as exhibits:
|
Exhibit |
Description |
| 1 | Joint Filing, Group and Solicitation Agreement. |
| Page 6 of 9 |
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: August 26, 2016
| BRADLEY P. REXROAD | |
| /s/ Bradley P. Rexroad | |
| MICHAEL D. TOFIAS | |
| /s/ Michael D. Tofias |
| Page 7 of 9 |
Schedule A
Transactions by the Reporting Persons in the Past 60 Days
|
Beneficial Owner |
Transaction |
Purchase
or |
Quantity |
Price per
Share |
How Effected |
| Bradley P. Rexroad | 7/5/2016 | Purchase | 5,600 | $0.78 | (1) |
| Bradley P. Rexroad | 7/6/2016 | Purchase | 100 | $0.78 | (1) |
| Bradley P. Rexroad | 7/11/2016 | Purchase | 10,368 | $0.76 | (1) |
| Bradley P. Rexroad | 7/20/2016 | Purchase | 10,000 | $0.70 | (1) |
| Bradley P. Rexroad | 7/21/2016 | Purchase | 190 | $0.70 | (1) |
| Bradley P. Rexroad | 7/22/2016 | Purchase | 2,000 | $0.70 | (1) |
| Bradley P. Rexroad | 7/29/2016 | Purchase | 2,000 | $0.70 | (1) |
| Bradley P. Rexroad | 8/1/2016 | Purchase | 10,000 | $0.70 | (1) |
| Bradley P. Rexroad | 8/1/2016 | Purchase | 1,500 | $0.70 | (1) |
| Bradley P. Rexroad | 8/5/2016 | Purchase | 3,000 | $0.70 | (1) |
| Bradley P. Rexroad | 8/8/2016 | Purchase | 2,000 | $0.70 | (1) |
| Bradley P. Rexroad | 8/9/2016 | Purchase | 6,500 | $0.70 | (1) |
| Bradley P. Rexroad | 8/9/2016 | Purchase | 7,000(2) | $0.70 | (1) |
| Bradley P. Rexroad | 8/15/2016 | Purchase | 1,100 | $0.68 | (1) |
| Bradley P. Rexroad | 8/16/2016 | Purchase | 500 | $0.69 | (1) |
| (1) | Open market purchase of shares of Common Stock. |
| (2) | By spouse. |
| Page 8 of 9 |
EXHIBIT INDEX
|
Exhibit |
Description |
| 1 | Joint Filing, Group and Solicitation Agreement. |
| Page 9 of 9 |
Exhibit 1
JOINT FILING, GROUP AND SOLICITATION AGREEMENT
This JOINT FILING, GROUP AND SOLICITATION AGREEMENT (this “Agreement”) is made and entered into as of August 25, 2016, by Bradley P. Rexroad and Michael D. Tofias (each, a “Party” and together the “Parties” or the “Group”).
WHEREAS, each of the Parties is a stockholder, direct or beneficial, of Surge Components, Inc., a Nevada corporation (the “Company”); and
WHEREAS, the Parties are forming the Group for the purpose of (a) engaging in discussions with the Company regarding operating results, costs and capital allocation, opportunities to enhance stockholder value, corporate governance, and related matters; (b) seeking representation on the Board of Directors of the Company (the “Board”) at the Company’s 2016 Annual Meeting of Stockholders or a Special Meeting of Stockholders (whether in lieu of an annual meeting or otherwise) that includes the election of directors (in each case including any adjournments, postponements or other delays thereof, the “2016 Annual Meeting”); (c) taking all other action with respect to the foregoing; and (d) taking any other actions that the Group determines to undertake in connection with the Parties’ respective investments in the Company.
NOW, IT IS AGREED, by the Parties:
1. Joint Filing. In accordance with Rule 13d-1(k)(1)(iii) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), each Party agrees to the joint filing on behalf of each of them of statements on Schedule 13D, and any amendments thereto, with respect to the equity securities of the Company, options to purchase or sell equity securities of the Company, and swaps, synthetics and other derivative securities or instruments, the value of which is solely and directly related to equity securities of the Company (collectively, “Securities”). Each Party will be responsible for the accuracy and completeness of his own disclosure in any such filing, and is not responsible for the accuracy and completeness of the information concerning the other Parties, unless such Party knows or has reason to know that such information is inaccurate.
2. Notification of Transactions. So long as this Agreement is in effect, each of Parties will provide prompt notice to Wilson Sonsini Goodrich & Rosati, Professional Corporation (“WSGR”) of any (a) purchases or sales of Securities; or (b) Securities of the Company over which they acquire or dispose of beneficial ownership. Such notice will be given no later than 24 hours after each such transaction. For purposes of this Agreement, the term “beneficial ownership” will have the meaning given to such term set forth in Rule 13d-3 under the Exchange Act.
3. Purpose. The Parties agree to form the Group for the purpose of (a) engaging in discussions with the Company regarding operating results, costs and capital allocation, opportunities to enhance stockholder value, corporate governance, and related matters; (b) seeking representation on the Board at the 2016 Annual Meeting; (c) taking all other action with respect to the foregoing; and (d) taking any other actions that the Group determines to undertake in connection with the Parties’ respective investments in the Company.
4. Cost Sharing. The Parties agree that certain expenses and costs (including all legal fees) are likely to be incurred in connection with the Group’s activities (the “Expenses”). Mr. Tofias will pay 60% of all Expenses and Mr. Rexroad will pay 40% of all Expenses. Any reimbursement from the Company in
respect of the Expenses paid pursuant to this Section 4 will be split by the Parties in proportion to the Expenses paid pursuant to this Section 4.
5. Communications. The Parties will agree in advance upon any filing with the Securities and Exchange Commission, press release concerning the Company, communication to the Company or communication to other stockholders of the Company proposed to be made or issued by the Group or any member of the Group in connection with the Group’s activities.
6. Limited Relationship. The relationship of the Parties will be limited to carrying on the business of the Group in accordance with the terms of this Agreement. Such relationship will be construed and deemed to be for the sole and limited purpose of carrying on such business as described in this Agreement. Nothing in this Agreement will be construed to authorize any Party to act as an agent for any other Party, or to create a joint venture or partnership, or to constitute an indemnification. Except as otherwise provided in this Agreement, nothing in this Agreement will restrict any Party’s right to purchase or sell securities of the Company, as it deems appropriate, in its sole discretion, so long as all such purchases and sales are made in compliance with all applicable securities laws and this Agreement.
7. Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original and all of which, taken together, will constitute one and the same instrument, which may be sufficiently evidenced by one counterpart.
8. Jurisdiction; Governing Law. In the event of any dispute arising out of the provisions of this Agreement, the Parties consent and submit to the exclusive jurisdiction of the Federal and state courts located in New York, New York. This Agreement will be governed by the laws of the State of New York.
9. Termination. Any Party may terminate its obligations under this Agreement on 24 hours’ prior written notice to the other Party, with a copy sent to Douglas K. Schnell of WSGR, fax number (650) 493-6811.
10. Counsel. Each of the Parties agrees that WSGR will act as counsel for the Group as it relates to the Group’s activities set forth in this Agreement.
11. Filing Requirement. Each of the undersigned Parties agrees that this Agreement will be filed as an exhibit to any Schedule 13D that may in the future be required to be filed under applicable law pursuant to Rule 13d-1(k)(1)(iii) under the Exchange Act.
[Signature page follows.]
| -2- |
IN WITNESS WHEREOF, the Parties caused this Agreement to be executed as of the day and year first above written.
| BRADLEY P. REXROAD | |
| /s/ Bradley P. Rexroad | |
| MICHAEL D. TOFIAS | |
| /s/ Michael D. Tofias |