Rule 424(b)(3)
Registration No. 333-219195
PROSPECTUS
NEURALSTEM, INC.
282,054 Shares of Common Stock
The selling stockholders named in this prospectus (“Selling
Stockholders”) are offering up to 282,054 common shares they may acquire upon the exercise of outstanding warrants. During
March of 2017 we issued the Selling Stockholders an aggregate of 282,054 warrants (“Inducement Warrants”) as an inducement
for them to exercise, for cash, previously outstanding warrants. The warrants have an exercise price of $5.80 per share (subject
to adjustment pursuant to the terms of the warrants). We will not receive any proceeds from the resale of the common shares by
the Selling Stockholders. Any proceeds received by us from the exercise of the warrants will be used for general corporate purposes.
Our common stock is listed on the NASDAQ Capital Market under the
symbol “CUR” On July 3, 2017, the last reported sale price of our common stock was $5.90 per share.
Our principal executive offices are located at 20271 Goldenrod Lane,
Germantown, Maryland 20876, telephone number 301-366-4960.
Investing in our common stock involves a high
degree of risk. You are urged to read the section entitled “Risk Factors” beginning on page 7 of this prospectus,
which describes specific risks and other information that should be considered before you make an investment decision.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
This prospectus is dated July 18, 2017
Table of Contents
ABOUT THIS PROSPECTUS
Unless the context requires otherwise or unless otherwise
noted, all references in this prospectus to
“our company,” “we,” “our,” “Neuralstem”
and “us” refer to Neuralstem, Inc. and its subsidiaries. Also, any reference to “common share” or “common
stock,” refers to our $0.01 par value common stock. Additionally, any reference to “Series A Preferred Stock”
refers to our Series A 4.5% Convertible Preferred Stock.
This prospectus is part of a registration statement on Form S-3
that we have filed with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as
amended (the “Securities Act”). Under this registration process, holders of the Inducement Warrants may, from time
to time, sell or otherwise dispose of up to an aggregate of 282,054 common shares issued to them upon exercise of such warrants.
The registration statement containing this prospectus, including the exhibits to the registration statement, provides additional
information about us and the securities offered under this prospectus. The registration statement, including the exhibits, can
be read on the SEC’s website or at the SEC offices mentioned under the heading “Where You Can Find More Information.”
You should rely only on the information contained or incorporated
by reference in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides
you with different information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information contained in this prospectus and the documents
incorporated by reference herein and therein are accurate only as of the date such information is presented or in any applicable
prospectus supplement. Neither the delivery of this prospectus nor any sale made in connection with this prospectus shall, under
any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus or that
the information contained by reference to this prospectus is correct as of any time after its date.
This prospectus may be supplemented from time to time to add, update
or change information in this prospectus. Any statement contained in this prospectus will be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained in such prospectus supplement modifies or supersedes such
statement. Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement
so superseded will be deemed not to constitute a part of this prospectus.
FORWARD-LOOKING STATEMENTS
The SEC encourages companies to disclose forward-looking information
so that investors can better understand a company’s future prospects and make informed investment decisions. This prospectus
and the documents we have filed with the SEC that are incorporated herein by reference contain such “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such statements in connection with any discussion of future operations
or financial performance are identified by the use of words such as “may,” “anticipate,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe,” and other words and
terms of similar meaning. Forward-looking statements include, but are not limited to, statements about: our business, operations,
financial performance and condition, earnings, our prospects, our ability to raise capital to fund our operations and business
plan, the continued listing of our securities on the NASDAQ Capital Market, our ability to protect intellectual property rights
as well as regarding our industry generally. Forward–looking statements are not guarantees of performance. Such statements
are based on management’s expectations and are subject to certain factors, risks and uncertainties that may cause actual
results, outcome of events, timing and performance to differ materially from those expressed or implied by such statements. For
a summary of such factors, please refer to the section entitled “Risk Factors” in this prospectus, as updated and supplemented
by the discussion of risks and uncertainties in our most recent annual report on Form 10-K, as revised or supplemented by our subsequent
quarterly reports on Form 10-Q or our current reports on Form 8-K, as well as any amendments thereto, as filed with the SEC and
which are incorporated herein by reference. The information contained in this document is believed to be current as of the date
of this document. We do not intend to update any of the forward-looking statements after the date of this document to conform these
statements to actual results or to changes in our expectations, except as required by law.
In light of these assumptions, risks and uncertainties, the results
and events discussed in the forward-looking statements contained in this prospectus or in any document incorporated herein by reference
might not occur. Investors are cautioned not to place undue reliance on the forward-looking statements, which speak only as of
the date of this prospectus or the date of the document incorporated by reference in this prospectus. We are not under any obligation,
and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information,
future events or otherwise. All subsequent forward-looking statements attributable to us or to any person acting on our behalf
are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.
Our Business
Overview
We are focused on the research and development of nervous system
therapies based on our proprietary human neural stem cells and our small molecule compounds with the ultimate goal of gaining approval
from the United States Food and Drug Administration or FDA, and its international counterparts, to market and commercialize such
therapies. We are headquartered in Germantown, Maryland.
Our technology has produced three primary assets: our NSI-189 small
molecule program, our NSI-566 stem cell therapy program and our novel and proprietary chemical entity screening platform.
Our patented technologies enable the commercial-scale production
of multiple types of central nervous system stem cells, which are under development for the potential treatment of nervous system
diseases and conditions. In addition, this ability to generate human neural stem cell lines provides a platform for chemical screening
and discovery of novel compounds that we believe may be used to stimulate the brain's capacity to regenerate neurons, thereby potentially
treating or reversing pathologies associated with certain nervous system conditions.
We have developed and maintain what we believe is a strong portfolio
of patents and patent applications that form the proprietary base for our research and development efforts. We own or exclusively
license over 20 U.S. issued and pending patents and over 120 foreign issued and pending patents in the field of regenerative medicine,
related to our stem cell technologies as well as our small molecule compounds.
We believe our technology, in combination with our expertise, and
established collaborations with major research institutions, could facilitate the development and commercialization of products
for use in the treatment of a wide array of nervous system disorders including neurodegenerative conditions and regenerative repair
of acute and chronic disease.
Recent Clinical & Business Highlights
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NSI-189 Phase 2 Major Depressive Disorder (MDD) study results expected 4 months ahead of schedule in 3Q17. Neuralstem’s Phase 2 clinical study evaluating NSI-189 for the indication of MDD was initiated in May 2016. The company announced 50% enrollment in September 2016 and last subject enrolled in February 2017. 220 subjects were randomized for a 12-week interventional study with NSI-189 or placebo. Subjects completing the study are eligible to enroll in a 24-week non-interventional, observation-only durability study, from which the results are expected in the first half of 2018.
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NSI-189 preclinical data published in the Journal of Cellular Physiology showed oral administration of NSI-189 in rats with ischemic stroke led to a significant recovery from motor deficit. The improvements were maintained post cessation of dosing for the additional 12-week observational period. The sustained improvement suggests that NSI-189 initiated a host brain repair mechanism enabling tissue remodeling of the stroke brain.
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In April 2017, a new cohort (Group B) of four subjects with stable cervical injuries was added for recruitment to the Phase 1 chronic spinal cord injury (cSCI) human clinical trial evaluating the safety and feasibility of treatment with NSI-566. The amended protocol was approved by the U.S. Food and Drug Administration and the Institutional Review Board at the study site, University of California San Diego (UCSD).
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NSI-566 preclinical data in a rat model of penetrating ballistic-like brain injury (PBBI) was published in the Journal of Neurotrauma. These data showed robust engraftment and long-term survival of NSI-566 post transplantation.
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In January 2017, the Company executed a 1-for-13 reverse stock split of the Company’s common stock. The reverse stock split enabled Neuralstem to regain compliance with the $1.00 minimum bid price condition and thereby fulfill all of the NASDAQ Capital Market continued listing requirements.
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In March and April 2017, we received approximately $2,750,000 upon the exercise of 846,156 common stock purchase warrants issued in our May 2016 registered offering at an exercise price of $3.25 per share. We expect that our existing cash and cash equivalents will be sufficient to enable us to fund our anticipated level of operations based on our current operating plans, into the third quarter of 2018.
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Clinical Development Program Review
We have devoted substantially all of our efforts and financial resources
to the pre-clinical and clinical development of our small molecule compounds and our stem cell therapeutics. Below is a description
of our most advanced clinical programs, their intended indication and current stage of development.
Clinical Pipeline:
Pipeline Summary
NSI-189 Phase 2 randomized, placebo-controlled, double-blind clinical
trial for the treatment of MDD
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In February 2017, the company announced the last subject enrolled
and results expected four months ahead of schedule in 3Q17. The first subject enrolled in May 2016 and 50% enrollment was achieved
in September 2016. The Phase 2 trial randomized 220 subjects for a 12-week interventional study with NSI-189 across three arms
(40mg QD, 40mg BID or placebo), at 12 select trial sites, all in the U.S. Eligible subjects are given the opportunity to enroll
in a separate 24-week observational study to assess durability of effect defined as the time until the start of a new antidepressant
treatment. Both the interventional and observational studies are being conducted and under the direction of study Principal Investigator
(PI) Maurizio Fava, MD, Executive Vice Chair, Department of Psychiatry and Executive Director, Clinical Trials Network and Institute,
Massachusetts General Hospital.
NSI-566 Phase 1 and 2 safety trials for the treatment of Amyotrophic
Lateral Sclerosis (ALS)
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In September 2015, nine-month Phase 2 and combined Phase 1 and
Phase 2 data from our ALS trials were presented at the American Neurological Association Meeting by Principal Investigator Eva
Feldman, MD, PhD, Director of the A. Alfred Taubman Medical Research Institute and Director of Research of the ALS Clinic at the
University of Michigan Health. The data showed that the intraspinal transplantation of the cells was safe and well tolerated. Subjects
from both the Phase 1 and Phase 2 continue to be monitored for long-term follow-up evaluations.
NSI-566 Phase 1 safety trial for the treatment of motor deficits
in stroke
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In March 2016, we completed dosing the final planned cohort, for
a total of nine subjects. Subjects are currently being monitored through their 24-month observational follow-up period. The trial
is being conducted by Suzhou Neuralstem, a wholly owned subsidiary of Neuralstem in China.
NSI-566 Phase 1 safety trial for the treatment of chronic Spinal
Cord Injury (cSCI)
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In April 2017, the company announced that it had received FDA approval
to recruit a new cohort (Group B) of four subjects with stable AISA-A complete, quadriplegic, cervical injuries to the ongoing
Phase 1 human clinical trial evaluating the safety and feasibility of using NSI-566 spinal cord-derived neural stem cells to repair
chronic cSCI. In January 2016, we reported on the interim status of the Phase 1 safety data on all four subjects with stable
thoracic spinal cord injuries; the stem cell treatment demonstrated feasibility and safety. A self-reported ability to contract
some muscles below the level of injury was confirmed via clinical and electrophysiological follow-up examinations in one of the
four subjects treated. All subjects will be followed for five years. This study is being conducted with support from the University
of California, San Diego (UCSD) School of Medicine.
Pre-Clinical Development Pipeline
Our preclinical research on NSI-189 is focused on identifying its
mechanism of action and investigating its potential utility as a broad neuroregenerative drug that can prevent or reverse various
types of central and peripheral nerve degeneration and that may have significant cognitive benefit in diseases that impact memory
and cognition. Recent preclinical data support the potential benefits of NSI-189 in other indications beyond MDD.
Our preclinical studies with NSI-566 have served to provide a solid
foundation for our ongoing clinical trials by demonstrating performance and efficacy of this cell line in animal models for ALS,
spinal cord injury, and ischemic stroke, and demonstrated safety in large animals. Additional studies involving NSI-566 are directed
at identifying new therapeutic indications.
In addition to NSI-566 we have developed an inventory of over 300
unique stem cell lines. These stem cell lines include cortex, hippocampus, midbrain, hindbrain, cerebellum, and spinal cord. We
believe these lines possess unique properties and represent candidates for both transplantation-based strategies to treat disease
and for screening of compound libraries to discover novel drug therapies.
Our Technologies
Our technology has produced three primary assets: our NSI-189 small
molecule program, our NSI-566 stem cell therapy program and our novel and proprietary chemical entity screening platform.
Small Molecule Pharmaceutical Compounds.
Utilizing our proprietary stem cell-based screening capability,
we have discovered and patented a series of small molecule compounds. We believe our low molecular weight organic compounds can
efficiently cross the blood/brain barrier. In mice, research indicated that the small molecule compounds both stimulate neurogenesis
of the hippocampus and increase its volume. We believe the small molecule compounds may promote synaptogenesis and neurogenesis
in the human hippocampus in indications such as MDD.
Our portfolio of small molecule compounds which includes NSI-189
are covered by 7 patent families related to small molecule pharmaceuticals, including granted patents in the U.S. covering these
pharmaceuticals as compositions of matter, granted patents in the U.S. and abroad covering methods of manufacture and methods of
identifying additional candidates, and granted patents and pending applications in the U.S. and abroad covering indications for
which these pharmaceuticals are useful.
Stem Cells.
Therapeutic Characteristics
From a therapeutic perspective, our stem cell based technology enables
the isolation and large-scale expansion of regionally specific, human neural stem cells from all areas of the developing human
brain and spinal cord thus enabling the generation of physiologically relevant human neurons of different types. We believe that
our stem cell technology will enable the replacement of malfunctioning or dead cells or the protection of neurons as a way to treat
disease and injury. Many significant and currently untreatable human diseases arise from the loss or malfunction of specific cell
types in the body. Our focus is the development of effective methods to generate replacement cells from neural stem cells. We believe
that replacing damaged, malfunctioning or dead neural cells with fully functional ones may be a useful therapeutic strategy in
treating many diseases and conditions of the central nervous system.
Our Proprietary and Novel Screening Platform
Our human neural stem cell lines form the foundation for functional
cell-based assays used to screen for small molecule compounds that can impact biologically relevant outcomes such as neurogenesis,
synapse formation, and protection against toxic insults. We have developed over 300 unique stem cell lines representing multiple
different regions of the developing brain and spinal cord at multiple different time points in development, enabling the generation
of physiologically relevant human neural cells for screening, target validation, and mechanism-of-action studies. This platform
provides us with a unique and powerful tool to identify new chemical entities to treat a broad range of nervous system conditions.
NSI-189 was discovered using our stem cell-based screening platform.
Intellectual Property
We have developed and maintain what we believe is a strong portfolio
of patents and patent applications that form the basis for our research and development efforts. We own or exclusively license
over 10 U.S. issued and pending patents and over 60 foreign issued and pending patents related to our stem cell technologies for
use in treating disease and injury. We additionally have 7 patent families related to small molecule pharmaceuticals, including
granted patents in the U.S. covering these pharmaceuticals as compositions of matter, granted patents in the U.S. and abroad covering
methods of manufacture and methods of identifying additional candidates, and granted patents and pending applications in the U.S.
and abroad covering indications for which these pharmaceuticals are useful. Our issued patents have expiration dates ranging from
2017 through 2035. Two of our original patents covering methods and composition of matter associated with our stem cell technologies
expired in 2016. In our opinion the expiration of these patents is not material to our intellectual property.
Operating Strategy
We generally employ an outsourcing strategy where we outsource our
preclinical and clinical development activities to contract research organizations and academic partners. Manufacturing is also
outsourced to organizations with approved facilities and manufacturing practices. All non-critical corporate functions are outsourced
as well. This model allows us to better manage cash on hand and minimize non-vital expenditures. It also allows for us to operate
with relatively fewer employees and lower fixed costs than that required by other companies conducting similar business.
Employees
As of June 30, 2017, we had ten (10) full-time employees. Of these
full-time employees, seven (7) work on research and development and clinical operations and three (3) work in administration. We
also use the services of numerous outside consultants in business and scientific matters.
Our Corporate Information
We were incorporated in Delaware in 2001. Our principal executive
offices are located at 20271 Goldenrod Lane, Germantown, Maryland 20876, and our telephone number is (301) 366-4960. Our website
is located at www.neuralstem.com.
We have not incorporated by reference into this report the information in, or that can
be accessed through, our website and you should not consider it to be a part of this report.
RISK FACTORS
Investing in our common shares involves significant risks. Please
see the risk factors under the heading “Risk Factors” in our most recent Annual Report on Form 10-K, as revised or
supplemented by our Quarterly Reports on Form 10-Q filed with the SEC since the filing of our most recent Annual Report on Form
10-K, each of which are on file with the SEC and are incorporated by reference in this prospectus. Before making an investment
decision, you should carefully consider these risks as well as other information we include or incorporate by reference in this
prospectus.
USE OF PROCEEDS
This prospectus relates to shares of our common stock that may be
offered and sold from time to time by the Selling Stockholders. There will be no proceeds to us from the sale of shares of common
stock in this offering. In the event the Inducement Warrants held by the Selling Stockholders are exercised for cash, we will receive
approximately $1,635,913. We will use the proceeds received from the exercise of the Inducement Warrants, if any, for working capital.
DETERMINATION OF OFFERING PRICE
This offering is being made solely to allow the Selling Stockholders
to offer and sell the securities to the public. The Selling Stockholders may offer for resale some or all of their securities at
the time and price that they choose pursuant to the Plan of Distribution. On any given day, the price of our common shares will
be based on the market price for our common shares, as quoted on the NASDAQ Capital Market under the symbol “CUR”.
SELLING STOCKHOLDERS
This prospectus relates to the offering and sale, from time to time,
of up to 282,054 shares which are issuable upon the exercise of the Inducement Warrants. The Selling Stockholders may exercise
their respective Inducement Warrants at any time in their sole discretion. All of the Selling Stockholders named below acquired
their Inducement Warrants directly from us in private transactions. The shares consist of: (i) 230,771 common shares underlying
Inducement Warrants issued on March 20, 2017 and (ii) 51,283 common shares underlying Inducement Warrants issued on March 30, 2017.
The Inducement Warrants were issued as an inducement to exercise outstanding warrants previously issued in the Company’s
May 6, 2016 registered offering (the “Prior Warrants”). Each participating holder received one (1) Inducement Warrant
for every three (3) Prior Warrants exercised.
Set forth below is information, to the extent known to us, setting
forth the name of each Selling Stockholder and the amount and percentage of common stock owned by each (including shares that can
be acquired on the exercise of outstanding warrants) prior to the offering, the shares to be sold in the offering, and the amount
and percentage of common stock to be owned by each (including shares that can be acquired on the exercise of outstanding warrants)
after the offering assuming all shares are sold. The footnotes provide information about persons who have voting and dispositive
power for the Selling Stockholders and about transactions between the Selling Stockholders and the Company, if any.
The Selling Stockholders may sell all or some of the shares of common
stock they are offering, and may sell shares of our common stock otherwise than pursuant to this prospectus. The table below assumes
that each selling stockholder exercises all of its warrants and sells all of the shares issued upon exercise thereof, and that
each selling stockholder sells all of the shares offered by it in offerings pursuant to this prospectus, and does not acquire any
additional shares. We are unable to determine the exact number of shares that will actually be sold or when or if these sales will
occur.
The Selling Stockholders may sell all, some or none of their shares
in this offering. See “Plan of Distribution.” The total number of common shares sold under this prospectus may be adjusted
to reflect adjustments due to stock dividends, stock distributions, splits, combinations, recapitalizations or the triggering anti-dilution
protective provisions with regard to the common stock and warrants.
Unless otherwise stated below in the footnotes, to our knowledge,
no Selling Stockholder nor any affiliate of such stockholder: (i) has held any position or office with, been employed by or otherwise
has had any material relationship with us or our affiliates during the three years prior to the date of this prospectus; or (ii)
is a broker-dealer, or an affiliate of a broker-dealer.
We may amend or supplement this prospectus from time to time in
the future to update or change this list and shares which may be resold.
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Common Shares Owned Before Sale (1)
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Common Shares Owned After Sale (2)
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Held Outright
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Convertible Securities
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Amount
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% of class
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Shares being registered
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Amount
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% of Class
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Sabby Healthcare Master Fund, Ltd. (3)
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153,847
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153,847
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1.26
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%
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153,847
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-
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0.00
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%
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Sabby Volatility Warrant Master Fund, Ltd. (4)
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-
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76,924
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76,924
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*
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76,924
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-
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0.00
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%
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CVI Investments, Inc. (5)
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-
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51,283
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51,283
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*
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51,283
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-
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0.00
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%
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-
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282,054
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282,054
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2.29
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%
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282,054
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-
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0.00
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%
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* Represents less than 1%
**Unless otherwise stated, the individual(s)
with voting and dispositive control of securities offered on behalf of trusts or custodial accounts is the individual or entity
referenced in the name of such accounts.
(1) Pursuant
to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any common shares as to which a shareholder has sole
or shared voting power or investment power, and also any common shares which the shareholder has the right to acquire within 60
days, including upon exercise of common shares purchase options or warrants. There were 12,012,877 common shares outstanding as
of June 30, 2017.
(2) Includes
the sale of all common shares registered herein.
(3) The
shares being registered include 153,847 shares underlying common stock purchase warrants issued as an inducement warrant in March
2017. Sabby Management, LLC serves as the investment manager of Sabby Healthcare Master Fund, Ltd. and Sabby Volatility Warrant
Master Fund, Ltd. Hal Mintz is the manager of Sabby Management, LLC. Each of Sabby Management, LLC and Hal Mintz disclaims
beneficial ownership over the securities covered except to the extent of its pecuniary interest therein.
(4) The
shares being registered include 76,924 shares underlying common stock purchase warrants issued as an inducement warrant in March
2017. Sabby Management, LLC serves as the investment manager of Sabby Healthcare Master Fund, Ltd. and Sabby Volatility Warrant
Master Fund, Ltd. Hal Mintz is the manager of Sabby Management, LLC. Each of Sabby Management, LLC and Hal Mintz disclaims
beneficial ownership over the securities covered except to the extent of its pecuniary interest therein.
(5) The
shares being registered include 51,283 shares underlying common stock purchase warrants issued as an inducement warrant in March
2017. Heights Capital Management, Inc., the authorized agent of CVI Investments, Inc. (“CVI”), has the discretionary
authority to vote and dispose of the shares held by CVI and may be deemed to be the beneficial owner of these shares. Martin Kobinger,
in his capacity as Investment Manager of Heights Capital Management, Inc., may also be deemed to have investment discretion and
voting power over the shares held by CVI. Mr. Kobinger disclaims any such beneficial ownership of the shares. CVI is an affiliate
of a broker-dealer.
PLAN OF DISTRIBUTION
Each Selling Stockholder of the securities and any of their pledgees,
assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the [principal
Trading Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions.
These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods
when selling securities:
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ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
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block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
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purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
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an exchange distribution in accordance with the rules of the applicable exchange;
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privately negotiated transactions;
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settlement of short sales;
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in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities
at a stipulated price per security;
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through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
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a combination of any such methods of sale; or
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any other method permitted pursuant to applicable law.
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The Selling Stockholders may also sell securities
under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”),
if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders
may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the
Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to
be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess
of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or
markdown in compliance with FINRA IM-2440.
In connection with the sale of the securities
or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions,
which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling
Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge
the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option
or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such
broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).
The Selling Stockholders and any broker-dealers
or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and
any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the
Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the securities.
The Company is required to pay certain fees
and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
We agreed to keep this prospectus effective
until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without
regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance
with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of
the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect.
The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities
laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and
is complied with.
Under applicable rules and regulations under
the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making
activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement
of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock
by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders
and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including
by compliance with Rule 172 under the Securities Act).
DESCRIPTION OF SECURITIES TO BE REGISTERED
The following description of our securities summarizes the material
terms and provisions of our common shares that the Selling Stockholders are offering under this prospectus. For the complete terms
of our common shares, please refer to our restated certificate of incorporation and restated by-laws, as they are in effect as
of the date of this prospectus. For more detailed information, please see our amended and restated certificate of incorporation
and restated bylaws, which are filed with the Securities and Exchange Commission as exhibits to the registration statement of which
this prospectus forms a part.
We are authorized to issue 300,000,000 shares of common stock, par
value $0.01 per share, and 7,000,000 shares of preferred stock, par value $0.01 per share. As of June 30, 2017, we had:
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12,012,877 shares of common stock outstanding; and
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1,000,000 shares of our Series A 4.5% Convertible Preferred Stock which is convertible into 3,887,387 shares of common stock subject to certain ownership restrictions.
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Common Stock
Holders of common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders, subject to the holder of our Series A 4.5% Convertible Preferred
Stock having the ability to appoint one director, and do not have cumulative voting rights. Subject to preferences that may be
applicable to any outstanding shares of preferred stock, holders of common stock are entitled to receive ratably such dividends,
if any, as may be declared from time to time by our board of directors out of funds legally available for dividend payments. All
shares of common stock outstanding as of the date of this prospectus are fully paid and nonassessable. The holders of common stock
have no preferences or rights of conversion, exchange, pre-emption or other subscription rights. There are no redemption or sinking
fund provisions applicable to the common stock. In the event of any liquidation, dissolution or winding-up of our affairs, holders
of common stock will be entitled to share ratably in our assets that are remaining after payment or provision for payment of all
of our debts and obligations and after liquidation payments to holders of outstanding shares of preferred stock, if any.
Preferred Stock
Our board of directors has the authority, without action by our
stockholders, to designate and issue up to an additional 6,000,000 shares of preferred stock in one or more series and to designate
the rights, preferences, and limitations of all such series, any or all of which may be superior to the rights of our common stock.
It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of the holders of
common stock until our board of directors determines the specific rights of the holders of preferred stock. However, effects of
the issuance of preferred stock include restricting dividends on our common stock, diluting the voting power of our common stock,
impairing the liquidation rights of our common stock, and making it more difficult for a third party to acquire us, which could
have the effect of discouraging a third party from acquiring, or deterring a third party from paying a premium to acquire, a majority
of our outstanding voting stock. We have no present plans to issue any additional shares of our preferred stock.
Series A 4.5% Convertible Preferred Stock
We currently have outstanding 1,000,000 shares of Series A 4.5%
Convertible Preferred Stock with a stated value of $12.7895 per share and which are immediately convertible into an aggregate of
3,887,387 shares of common stock, subject to a beneficial ownership limitation not allowing the holder to have greater than a 19.99%
voting interest. The Series A Preferred Stock has no provisions regarding subsequent securities issuances or so called “price
protection provisions.” The holders of Series A Preferred Stock shall be entitled receive 4.5% dividends in cash or additional
shares of Series A Preferred Stock if and when declared by the Company’s board of directors in preference to the payment
of any dividends on the Common Stock. The holders of Series A Preferred Stock shall have no voting rights but shall be entitled
to appoint one (1) member to our board of directors. This right to appoint a member of the board of directors will terminate when
there are less than 200,000 shares of Series A Preferred Stock outstanding.
Additionally, until the Company’s 2019 annual meeting of stockholders,
subject to certain limitations, the holder of the Series A Preferred Stock has agreed not to solicit proxies, seek to remove any
member of the board of directors, contest any of our solicitations, make stockholder proposals, vote its securities against the
recommendations of our board of directors, participate in any group with respect to its voting stock, seek to waive, amend or modify
our certificate of incorporation or bylaws, or effect or participate in any tender offer; or business combination; or acquisition
or restructuring or recapitalization of the Company.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American
Stock Transfer & Trust Company. We act as the transfer agent and registrar for out Series A 4.5% Convertible Preferred Stock.
Description of Warrants
As of June 30, 2017, there were warrants to purchase 2,458,543 shares
of our common stock outstanding at a weighted-average exercise price of $18.06 per share and expiration dates between 2017 and
2022. This amount is comprised of the following warrants:
Range of
Exercise
Prices
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Number of
Warrants
Outstanding
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Range of Expiration Dates
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$3.25 - $3.90
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811,556
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May 2021 - July 2021
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$5.80 - $6.50
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282,054
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March 2018
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$12.80 - $12.90
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39,296
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January 2022
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$13.20 - $13.30
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314,246
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August 2017
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$16.20 - $16.30
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174,544
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March 2020
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$18.60 - $19.80
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12,309
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March 2018 - June 2018
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$22.10 - $27.90
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153,755
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March 2019 - January 2021
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$34.50 - $39.00
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164,114
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November 2017 - October 2019
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$39.10 - $39.20
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230,772
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October 2020 - October 2021
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$47.30 - $52.20
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275,897
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January 2019 - July 2019
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2,458,543
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There is no established market for any of our warrants.
Description of Inducement Warrants
We are registering the shares underlying the Inducement Warrants.
The shares consist of: (i) 230,771 common shares underlying warrants issued on March 20, 2017 and (ii) 51,283 common shares underlying
warrants issued on March 30, 2017. The Inducement Warrants were issued as an inducement to exercise the Prior Warrants.
The Inducement Warrants (i) have a term of one (1) year from the
date of issuance and (ii) an exercise price of $5.80 per share. The Inducement Warrants contain provisions providing for an adjustment
in the underlying number of shares and exercise price in the event of stock splits, dividends, subsequent rights offerings, pro
rata distributions, and fundamental transactions. We are obligated to register the shares underlying the Inducement Warrants prior
to the release of the Company’s Phase II data related to the Company’s clinical trial for NSI-189 or we will be subject
to the payment of liquidated damages in cash in an amount equal to 2% of the exercise price of the Inducement Warrants per month
for each 30 day period (pro rata if less than 30 days) that the registration statement is not declared effective. In the event
that the shares underlying the Inducement Warrants are not registered at the time of exercise, the Inducement Warrants may be exercised
on a cashless basis at any time after six (6) months from the issuance date.
Anti-Takeover Effects of Some Provisions of Delaware Law
Provisions of Delaware law could make the acquisition of our company
through a tender offer, a proxy contest or other means more difficult and could make the removal of incumbent officers and directors
more difficult. We expect these provisions to discourage coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of our company to first negotiate with our board of directors. We believe that the benefits
provided by our ability to negotiate with the proponent of an unfriendly or unsolicited proposal outweigh the disadvantages of
discouraging these proposals. We believe the negotiation of an unfriendly or unsolicited proposal could result in an improvement
of its terms.
We are subject to Section 203 of the Delaware General Corporation
Law, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business
combination” with an “interested stockholder” for a period of three years following the date the person became
an interested stockholder, unless:
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Prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
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The stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (a) shares owned by persons who are directors and also officers, and (b) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
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On or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
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Generally, a “business combination” includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An “interested
stockholder” is a person who, together with affiliates and associates, owns or, within three years prior to the determination
of interested stockholder status, did own 15% or more of a corporation’s outstanding voting securities. We expect the existence
of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance.
We also anticipate that Section 203 may also discourage attempts that might result in a premium over the market price for
the shares of common stock held by stockholders.
Anti-Takeover Effects of Provisions of Our Charter Documents
Our amended and restated bylaws provide for our board of directors
to be divided into three classes serving staggered terms. Approximately one-third of the board of directors will be elected each
year. The provision for a classified board could prevent a party who acquires control of a majority of the outstanding voting stock
from obtaining control of the board of directors until the second annual stockholders meeting or longer, following the date the
acquirer obtains the controlling stock interest. The classified board provision could discourage a potential acquirer from making
a tender offer or otherwise attempting to obtain control of our company and could increase the likelihood that incumbent directors
will retain their positions. Our amended and restated bylaws provides any director or the entire Board may be removed from office
at any time, with or without cause, by the affirmative vote of the holders of at least a majority of the voting power of the issued
and outstanding shares of capital stock of the corporation then entitled to vote in the election of directors.
Our amended and restated bylaws establish an advance notice procedure
for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons
for election to the board of directors. At an annual meeting, stockholders may only consider proposals or nominations specified
in the notice of meeting or brought before the meeting by or at the direction of the board of directors. Stockholders may also
consider a proposal or nomination by a person who was a stockholder of record on the record date for the meeting, who is entitled
to vote at the meeting and who has given to our Secretary timely written notice, in proper form, of his or her intention to bring
that business before the meeting. The amended and restated bylaws do not give the board of directors the power to approve or disapprove
stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting of the
stockholders. However, our bylaws may have the effect of precluding the conduct of business at a meeting if the proper procedures
are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies
to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
Our amended and restated bylaws provide that only our board of directors,
the chairperson of the board or the chief executive officer (or president, in the absence of a chief executive officer) or holders
of more than twenty percent (20%) of the total voting power of the outstanding shares of capital stock may call a special meeting
of stockholders. The restriction on the ability of stockholders to call a special meeting means that a proposal to replace the
board also could be delayed until the next annual meeting.
Limitations on Liability and Indemnification of Officers and
Directors
Our amended restated certificate of incorporation limits the liability
of our officers and directors to the fullest extent permitted by the Delaware General Corporation Law, and our restated certificate
of incorporation and restated bylaws provide for indemnification of our officers and directors to the fullest extent permitted
by such law.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will
be passed upon for us by the Silvestre Law Group, P.C., Westlake Village, California. The Silvestre Law Group, P.C. or its affiliates
or principals own 4,154 shares of our common stock and 46,156 of our common stock purchase warrants.
EXPERTS
The consolidated financial statements incorporated in this prospectus
by reference from our Annual Report on Form 10-K have been audited by Stegman & Company, our prior independent registered
public accounting firm, with regarding to the year ended December 31, 2015 and Dixon Hughes Goodman LLP, our current independent
registered public accounting firm, for the year ended December 31, 2016, as stated in their respective reports, which are each
incorporated herein by reference. Such financial statements have been so incorporated in reliance upon the report of each
such firm given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are a public company and file annual, quarterly and current reports,
proxy statements and other information with the SEC. You may obtain copies of our public filings, as noted in the paragraph
below or by writing or telephoning us at:
Neuralstem, Inc.
Attn: Investor Relations
20271 Goldenrod Lane
Germantown, Maryland 20876
Phone: (301)-366-4960
We file annual, quarterly and other reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s website at
http://www.sec.gov
.
You may also read and copy any document we file at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. You can also inspect reports,
proxy statements and other information about us at the offices of the National Association of Securities Dealers, Reports Section,
1735 K Street, N.W., Washington, D.C. 20006. We maintain a website at http://www.neuralstem.com. Information contained in
or accessible through our website does not constitute a part of this prospectus.
This prospectus is part of a registration statement on Form S-3
that we filed with the SEC registering the securities that may be offered and sold hereunder. The registration statement, including
exhibits thereto, contains additional relevant information about us and these securities that, as permitted by the rules and
regulations of the SEC, we have not included in this prospectus. A copy of the registration statement can be obtained at the address
set forth above. You should read the registration statement for further information about us and these securities.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC permits us to “incorporate by reference” the
information contained in documents we file with the SEC, which means that we can disclose important information to you by referring
you to those documents rather than by including them in this prospectus. Information that is incorporated by reference is considered
to be part of this prospectus, and you should read it with the same care that you read this prospectus. Later information that
we file with the SEC will automatically update and supersede the information that is either contained, or incorporated by reference,
in this prospectus, and will be considered to be a part of this prospectus from the date those documents are filed.
We incorporate by reference into this prospectus the following documents
and information filed with the SEC:
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Our Annual Report on Form 10-K filed with the SEC on March 23, 2017, for the year ended December 31, 2016;
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Our Quarterly Report on Form 10-Q filed with the SEC on May 10, 2017, for the three month period ended March 31, 2017;
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Our Definitive Proxy Statement on Form 14A for our 2017 Annual Meeting of Stockholders, filed with the SEC on May 1, 2017;
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Our Current Reports on Form 8-K filed with the SEC on January 6, February 16 and 22, March 20 and 31, April 13 and 19, and May 4, 18, 24 and, 31 and June 27, 2017 (excluding any information furnished in such reports under Item 2.02, Item 7.01 or Item 9.01); and
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the description of our common stock and related rights contained in our registration statement on Form 8-A (File No. 001-33672), filed with the Commission on July 1, 2015, including any amendment or report filed for the purpose of updating such description.
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We also incorporate by reference into this prospectus all additional
documents that we file with the SEC under the terms of Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 that are made after the date of this prospectus and before the termination of the offering of securities offered by this prospectus.
We are not, however, incorporating, in each case, any documents or information that we are deemed to furnish and not file in accordance
with SEC rules.
You may request a copy of any of the documents incorporated by reference
into this prospectus, at no cost, by writing or telephoning us at the following address: Neuralstem, Inc., Attn: Investor Relations,
20271 Goldenrod Lane, Germantown, Maryland 20876 Phone: (301) 366-4960.
NEURALSTEM, INC.
282,054 Shares of Common Stock
July 18, 2017
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