AKTS Akoustis Technologies Inc

Item 1.01 Entry into a Material Definitive Agreement. 

On January 1, 2023 (the “Closing Date”), Akoustis Technologies, Inc. (the “Company”) and its wholly-owned subsidiary, Akoustis, Inc. (the “Purchaser”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Grinding & Dicing Services, Inc. (“GDSI”) and the stockholders of GDSI (the “Sellers”). Pursuant to the Purchase Agreement, the Purchaser acquired all of the outstanding capital stock of GDSI (such acquisition, the “Transaction”).

The total consideration paid to the Sellers at closing of the Transaction consisted of $14.0 million in cash, approximately $2.0 million unregistered shares (the “Closing Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”), and a secured promissory note in the original principal amount of $4.0 million issued by the Purchaser to the Sellers’ representative (the “Note”). The Note does not bear interest, is subject to partial prepayment (reduction of the outstanding principal amount down to $1.3 million) on the second anniversary of the Closing Date, and is payable in full on the third anniversary of the Closing Date. The Purchaser can reduce the principal amount of the Note (i) to satisfy certain post-closing adjustments to the Transaction purchase price, (ii) to satisfy the Sellers’ indemnification obligations under the Purchase Agreement, and (iii) if GDSI’s President is terminated for cause or due to disability or resigns without good reason prior to maturity. The Note is secured by certain of the Purchaser’s and GDSI’s assets. In the event of certain events of default, including failure to pay amounts due under the Note and certain bankruptcy events, the outstanding principal amount of the Note will become immediately due.

The Purchaser, GDSI and the Sellers have each made certain customary representations, warranties, covenants and agreements in the Purchase Agreement. Additionally, the Purchaser and the Sellers agreed to customary indemnification for breaches of representations, warranties, covenants and agreements, subject to certain limitations set forth in the Purchase Agreement. The Sellers have also agreed to enter into customary non-compete and non-solicitation covenants in connection with the Transaction.

The foregoing description of the Purchase Agreement and the Note does not purport to be complete and is qualified in its entirety by reference to each of the Purchase Agreement and the Note, which the Company will file as exhibits to its Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.