UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01. Entry into a Material Definitive Agreement
On October 25, 2021, pursuant to a Securities Purchase Agreement (the “October SPA”), the Company issued to certain accredited investors (the “Noteholders”) (i) secured convertible notes in an aggregate principal amount of $16.3 million for an aggregate purchase price of $15 million (collectively, the “October Secured Notes”), which were, subject to certain conditions, convertible at any time by the investors, into an aggregate of 71,043 shares of the Company’s common stock, at a price per share of $229.50 and (ii) Class A, Class B and Class C common stock purchase warrants (collectively, the “October Warrants”) to purchase up to an aggregate of 71,043 shares of common stock, at an initial exercise price of $312.50, $375 and $450 per share, respectively. The October Warrants are legally detachable and can be separately exercised immediately for five years upon issuance, subject to applicable Nasdaq rules. Subsequently, in connection with prior amendments to the original transaction documents, additional warrants were issued.
On November 20, 2023 the Company and the Noteholders entered into a Third Amendment Agreement to amend the Notes, the October SPA and related agreements (collectively, the “Transaction Documents”) to facilitate future financings by the Company that may include funds for prepayment of the Notes by permitting the Company to force conversion of up to $1,500,000 of the Notes under certain circumstances and reduce the prepayment penalty in return for reducing the conversion price of the $4,700,000 of the Notes and reducing the exercise price of 150,000 of the Warrants to $0.01.
As provided in the original terms of the Notes, in the event the Company prepays the amounts owed under Notes, the Company must pay an additional 20% prepayment penalty. Under the new Transaction Documents, in the event the prepayment occurs between February 15, 2024 and July 24, 2024, prepayment penalty is reduced to 10%.
In addition, under the new Transaction Documents, the Company has the right to force the conversion of up to $1,500,000 of face value of the Notes in whole or in part at any time up to the maturity date of the Notes, provided that at the time of such conversion the share price on the trading market on which the Company’s shares is then listed exceeds $4.25 and a minimum volume of 50,000 traded each trading day for the five trading days immediately prior to such forced conversion.
As consideration for the reduction in the prepayment penalty and the new forced conversion right, the Company agreed that an aggregate $4,700,000 of the Notes had the conversion price reduced to $3.78 per share and 150,000 of the Warrants had the exercise price reduced to $0.01 (the “Repriced Warrants”), provided that prior to February 1, 2024, for each $31.33 in Notes converted by a Noteholder, such Noteholder may exercise one Repriced Warrant and that on February 1, 2024, all Repriced Warrants become immediately exercisable.
The related Escrow Agreement has been amended to permit the Company to withdraw up to $500,000 from a related escrow account established to provide security for the repayment of the Notes at various times through December 31, 2023 and to provide that any remaining amounts in the escrow account shall be used on the maturity date to pay down the Notes.
The foregoing summary of the new Transaction Documents does not purport to be complete and is subject to, and qualified in its entirety by, such document(s), which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K, and are incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
The Company issued a press release announcing the completion of the Note Amendment on November 22, 2023. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference
The information contained in this Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” with the Commission for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |
| 10.1 | Third Amendment Agreement with the holders of the Company’s Convertible Notes | |
| 10.2 | Amendment to Escrow Agreement | |
| 99.1 | Press Release announcing the new Transaction Documents | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SOLUNA HOLDINGS, INC. | |||
| Date: | November 22, 2023 | By: | /s/ David Michaels |
David Michaels Chief Financial Officer (principal financial and accounting officer) | |||