Item 3.02
Unregistered Sales of Equity Securities.
On
June 8, 2018, Surna Inc. (the “Company”) completed a private placement offering of investment units (each, a “Unit”
or, collectively, the “Units”), at a price of $0.16 per Unit, with certain accredited investors. Each Unit consisted
of one share of the Company’s common stock and one warrant for the purchase of one share of the Company’s common stock.
The Company issued a total of 7,562,500 Units for aggregate proceeds of $1,210,000. The Company did not engage any placement agents
in connection with the offer and sale of the Units and, accordingly, no commissions or fees were paid.
The
warrants have an exercise price of $0.25 per share (the “Exercise Price”) of the common stock underlying each warrant,
subject to adjustment as provided in the warrant. The warrants will be exercisable commencing July 1, 2018 until 5 p.m. MT on
June 30, 2021. The warrants will expire at 5 p.m. MT on June 30, 2021. The warrant may be exercised only for cash.
Each
warrant is callable at the Company’s option, beginning on July 1, 2019 until the expiration date of the warrant, provided
the closing price of the Company’s common stock is $0.40 (subject to adjustment as provided in the warrant) or greater for
five consecutive trading days (the “Call Condition”). Commencing at any time after the date on which the Call Condition
is satisfied, the Company has the right, upon notice to the holders, to redeem the shares of common stock underlying each warrant
at a price of $0.01 per share (the “Redemption Price”), but such redemption may not occur earlier than sixty-one (61)
days following the date of the receipt of notice by the holder (the “Redemption Date”). The holder may exercise the
warrant (in whole or in part) prior to the Redemption Date at the Exercise Price.
The
Company’s Chief Executive Officer, Chris Bechtel, invested $125,000 in the offering, with two other senior employees collectively
investing $110,000.
The
offer and sale of the Units was made by the Company in reliance upon an exemption from registration under Section 4(a)(2) of the
Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. No registration rights were provided
for any of the securities issued in the offering or on exercise of the warrants.
Pursuant
to a certain Stock Repurchase Agreement dated May 29, 2018 between the Company and Stephen B. and Brandy M. Keen, co-founders
of the Company (the “Keens”), the Company will use $400,000 of the proceeds from the offering to repurchase 3,125,000
shares of the Company’s common stock from the Keens for a repurchase price of $0.128 per share. The closing
of the transactions under the Stock Repurchase Agreement are expected to occur on or about June 20, 2018. The remainder of the
proceeds from the offering will be used for working capital and general corporate purposes.
Immediately
following the completion of the private placement offering, but without giving effect to the repurchase of common stock,
the Company will have 224,396,602 shares of common stock issued and outstanding.