Item 2.01 Completion of Acquisition or Disposition of Assets
On June 30, 2014Surna Inc. (the "Company") entered into a Separation Agreement
with Lead Focus Limited, a British Virgin Islands company, a related party
("LFL") to sell LFL 100% of the issued and outstanding stock of Surna Media Inc.
("Surna Media"), the Company's wholly owned subsidiary. LFL is the sole
shareholder of Surna Hongkong Limited, a Hong Kong company, which is in turn the
sole shareholder of Flying Cloud Information Technology Co. Ltd. ("Flying
Cloud"), a PRC Wholly Foreign-Owned Entity which is in the business of
developing online and mobile games in Guangzhou, China. As of March 31, 2014,
the Company had a $2,574,659 balance due to related parties who control LFLSurna
Media's principal business is the development of web and mobile games and social
networks, and Surna Network's principal business was telecommunications
services, IT support services and open-source software development. We acquired
Surna Media and its subsidiaries in a series of transactions during 2011 by
issuing 20,000,000 shares of our common stock. Upon completion of this
transaction, we have exited the businesses operated by Surna Media and its
The sales price for Surna Media was $2,643,880 which is comprised of a payment
of $1 in cash and LFL's assumption of all of the liabilities of Surna Media and
its subsidiaries. As a result of this sale, the Company will eliminate from its
balance sheet all assets and liabilities associated with Surna Media and record
a credit of $2,643,881 to its Additional Paid in Capital.
A pro forma unaudited balance sheet of the Company as of March 31, 2014 giving
effect to the disposition of Surna Media as if it had occurred on March 31, 2014
is included herewith as Exhibit 99.1 to this Current Report and incorporated by
reference herein. Unaudited Pro Forma Condensed Consolidated Income Statements
for the interim period ended March 31, 2014 and for the fiscal year ended
December 31, 2013 are not presented because the results of operations for Surna
Media were nominal during those respective periods
The foregoing description of the Separation Agreement does not purport to be
complete and is qualified in its entirety by the Separation Agreement which is
identified in this Current Report on Form 8-K as Exhibit 10.1 which is
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
Separation Agreement between the Company and Lead Focus Limited dated
10.1 June 30, 2014.
99.1 Pro forma unaudited balance sheet of the Company as of March 31, 2014.