Surna Inc (OTCMKTS:SRNA) Files An 8-K

Surna Inc (OTCMKTS:SRNA) began private negotiations with certain holders of certain 10% convertible promissory notes (the “Original Notes”) and warrants (the “Original Warrants” and together with the Original Notes, the “Original Securities”) with a view to amending and converting the Original Notes and amending the terms of the Original Warrants.

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The Original Securities were issued as part of a unit (each unit consisted of 250,000 shares of Common Stock, an Original Warrant to purchase 50,000 shares of Common Stock and an Original Note in the principal amount of $50,000) to investors participating in the Company’s private placement financing that completed closings between October 31, 2014 and February 27, 2015. The Original Notes mature and become payable two years from issuance.

The Company is negotiating individually with each holder to: (i) amend the Original Note (each an “Amended Note”) to reduce the conversion price of the Original Note to an amount which is expected to be below the Company’s recent trading price per share and simultaneously cause the conversion of the outstanding amount under such Original Note into shares of Common Stock of the Company (“Conversion Shares”); and (ii) reduce the exercise price of the Original Warrant (each, an “Amended Warrant” and together with an Amended Note, the “Amendments”) to an amount which is expected to be above the Company’s recent trading price per share. In connection with the Amendments, the Company is also negotiating a restriction that would limit the number of Conversion Shares a holder may sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any of such shares issuable in connection with the Amendments without the prior written consent of the Company for a period of ninety (90) days after the date of definitive documents are entered into.

The purpose of these negotiations is to encourage the amendment and conversion of the Original Notes by significantly reducing the conversion price and significantly reducing the exercise price of the Original Warrants. The Company believes this will help it to avoid an event of default from occurring under the Original Notes, reduce the amount of indebtedness recorded on its financial statements and improve the Company’s ability to attract new investors in potential future financing transactions. The Company believes that the amendment of the Original Warrants will make it more likely that a holder will exercise their respective Amended Warrant if the Company’s trading price per share exceeds the revised exercise price reflected in the Amended Warrant, which will result in cash proceeds that will assist the Company’s growth plans.

The Company can provide no assurance that any owner of the Original Securities will agree to these amendments. The Company may make different arrangements with different investors. The Company may engage a broker-dealer or financial consultant to assist it in conducting and completing these negotiations.

Important Information

The information in this Current Report on Form 8-K (this “Current Report”) is for informational purposes only, and the proposed transactions described above shall not constitute an offer to buy, exchange or amend securities or constitute the solicitation of an offer to sell, exchange or amend any of the Company’s securities. The holders of the Original Securities previously represented to the Company that they were accredited investors (as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”)) in connection with the transactions in which such holders acquired the Original Securities. The Company will not modify a holder’s Original Securities if the Company does not have a reasonable belief that such holder currently is an accredited investor. Additionally, the Company will not modify the Original Securities if the Company determines that a valid securities exemption is not available under the Securities Act. The disclosure contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company, and is made only as permitted by Rule 135c under the Securities Act.

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