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Item 1.01. |
Entry into a Material Definitive Agreement. |
October Convertible Note Repricing
As previously disclosed, on October 19, 2022,
Crown Electrokinetics Corp. (the “Company”) entered into a Securities Purchase Agreement (the “October Purchase Agreement”)
with certain accredited investors as purchasers (the “October Investors”). Pursuant to the October Purchase Agreement, the
Company sold, and the October Investors purchased, approximately $5.4 million in principal amount of senior secured convertible notes
(the “October Notes”) and warrants (the “Warrants”).
On May 12, 2023, the Company entered into letter
agreements (the “Inducement Agreements”) with certain of the October Investors, pursuant to which such October Investors agreed
to reduce the conversion price of October Notes in an aggregate principal amount equal to $1,500,000, to $0.1547 per share, which are
now convertible into 9,693,681 shares of the Company’s common stock, representing an increase of 5,030,951 shares in excess of the
number of shares into which such October Notes were convertible prior to the Company’s entry into the Inducement Agreements.
On May 17, 2023, the Company entered into Inducement
Agreements with the remaining October Investors, pursuant to which such October Investors agreed to reduce the conversion price of October
Notes in an aggregate principal amount equal to $1,392,657, to $0.1822 per share, which are now convertible into 7,643,560 shares of the
Company’s common stock, representing an increase of 3,314,506 shares in excess of the number of shares into which such October Notes
were convertible prior to the Company’s entry into the Inducement Agreements.
Line of Credit Promissory Note Extension
As
previously disclosed, on February 2, 2023, the Company entered into a Line of Credit Agreement (the “Line of Credit”)
with a lender, pursuant to which the lender extended to the Company a secured line of credit in an amount not to exceed $100,000,000,
to be used to fund expenses related to the fulfillment of contracts with customers of Crown Fiber Optics, the Company’s wholly-owned
subsidiary. In connection therewith, the Company issued to the lender a secured promissory note (the “LOC Note”) in a principal
amount equal to $2,000,000.
On May 15, 2023, the Company entered into that
certain Third Amendment to the Convertible Promissory Note (the “LOC Note Amendment”) with the lender, pursuant to which the
lender agreed to extend the maturity date of the LOC Note until June 7, 2023 in exchange for, subject to stockholder approval, 4,000 shares
of the Company’s Series E Preferred Stock, which are convertible into 4,000,000 shares of the Company’s common stock.
January Convertible Note
As
previously disclosed, on January 3, 2023, the Company entered into a Securities Purchase Agreement (the “January Purchase
Agreement”) with certain accredited investors as purchasers (the “January Investors”). Pursuant to the January Purchase
Agreement, the Company sold, and the January Investors purchased, $1.2 million in principal amount of senior secured notes (the “January
Notes”) and 2,500,000 warrants (“January Warrants”), each January Warrant entitling the holder to purchase one share
of the Company’s common stock.
On May 15, 2023, the lead lender and collateral
agent for the January Notes agreed to grant the Company an extension of the maturity date thereof until May 23, 2023 in exchange for the
issuance by the Company to the January Investors, on a pro rata basis, of 4,000,000 shares of the Company’s common stock, subject
to approval by the Company’s stockholders.
Demand Notes
Between May 17, 2023 and May 18, 2023, the Company
issued secured demand promissory notes (the "Demand Notes") to certain investors (the “Holders”) in an aggregate
principal amount equal to $429,877. The Demand Notes are due and payable at any time upon demand by a Holder after the earlier of (i)
the consummation of the Company’s first securities offering after the issuance of the Demand Notes and (ii) July 16, 2023. The Demand
Notes do not bear interest. In connection with the issuance of the Demand Notes, subject to stockholder approval, the Company agreed to
issue to the Holders an aggregate of 8,597,539 shares of the Company’s common stock.
The foregoing descriptions of the Inducement Agreement,
LOC Note Amendment and Demand Note do not purport to be a complete description of the rights and obligations of the parties thereunder
and are qualified in their entirety by reference to the full text of such Inducement Agreement, LOC Note Amendment and Demand Note, respectively,
forms of which are attached hereto as Exhibit 10.1, 10.2 and 10.3, respectively.
