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Item 1.01
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Entry into a Material Definitive Agreement.
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On July 27, 2017, Neuralstem, Inc. (the “Company”) entered
into an Underwriting Agreement (the “Underwriting Agreement”) with Canaccord Genuity Inc., as the underwriter identified
therein (the “Underwriter”), pursuant to which the Company agreed to issue and sell to the Underwriter in an underwritten
public offering (the “Offering”) 3,000,000 shares (the “Shares”) of the Company’s common stock, par
value $0.01 per share (“Common Stock”), and warrants to purchase an aggregate of 2,250,000 shares of Common Stock (the
“Warrants”). The Shares and Warrants will be sold together at a price to the public per Share and Warrant of $2.00.
The Shares and Warrants are immediately separable. Each Warrant has an initial exercise price of $2.00 per share, will be exercisable
immediately upon the date of issuance, and will expire seven (7) years from the date of issuance which is expected to be August
1, 2017. The Warrants will not be listed on The Nasdaq Capital Market or any other securities exchange.
The Underwriter will purchase one Share and one Warrant from the
Company at a combined price of $1.88, representing a 6.0% discount from the public offering price. Canaccord Genuity Inc. is acting
as sole book-runner for the offering.
The Company expects to issue and deliver the securities sold in
the Offering to the Underwriter against payment therefore on or about August 1, 2017, subject to the satisfaction of customary
closing conditions. The Company expects to receive gross proceeds from the Offering of $6 million and net proceeds of approximately
$5.4 million assuming no exercise of the Warrants and after deducting underwriting discounts and commissions and estimated offering
expenses.
The exercise price of the Warrants are subject to adjustment upon
certain corporate events, including but not limited to, stock dividends, stock splits, issuance of variable priced securities,
and other corporate events. In addition, the exercise price of the Warrants is subject to adjustment in the event of sales of shares
of the Company’s common stock at a price per share less than the exercise price per share then in effect (or securities convertible
into or exercisable or exchangeable for common stock at a conversion price or exercise price less than the exercise price then
in effect). In addition, the holders shall be entitled to any purchase rights granted to common stock holders and the Company shall
not enter into any fundamental transaction unless the successor entity assumes the obligations of the Company under the Warrants.
Notwithstanding, In the event of a fundamental transaction, as described in the Warrants and generally including any merger with
or into another entity, sale of all or substantially all of the Company’s assets, tender offer or exchange offer, or reclassification
of Common Stock, the Company or any successor entity will pay, at the holder’s option, an amount of cash equal to the value
of the Warrant as determined in accordance with the Black Scholes option pricing model and the terms of the Warrants. The terms
of the Warrants prohibit a holder from exercising its Warrants if doing so would result in such holder (together with its affiliates
and other persons acting as a group) beneficially owning more than 4.99% of the outstanding shares of Common Stock after giving
effect to such exercise, provided that, at the election of a holder and notice to the Company, such beneficial ownership limitation
shall be 9.99% of the outstanding shares of Common Stock after giving effect to such exercise. The Warrants will not be listed
on any national securities exchange or any other nationally recognized trading system, and no trading market for the Warrants is
expected to develop.
If, a registration statement relating to the issuance of the shares
underlying the Warrants is not effective or available, the Warrants may be exercised on a cashless basis, where the holder receives
the net value of the Warrant in shares of Common Stock. No fractional shares of Common Stock will be issued in connection with
the exercise of a warrant. In lieu of a fractional share, the Company will round up to the next whole share.
The Offering is made pursuant to the Company’s Registration
Statement on Form S-3 (Registration No. 333-218608), which was declared effective by the Securities and Exchange Commission
(the “SEC”) on June 23, 2017. A preliminary prospectus supplement and the accompanying prospectus relating to the Offering
was filed with the SEC on July 26, 2017, and a final prospectus supplement and the accompanying prospectus relating the Offering
will be filed with the SEC on July 28, 2017.
The Underwriting Agreement is included as an exhibit to this Current
Report on Form 8-K to provide investors and security holders with information regarding its terms. It is not intended to provide
any other factual information about the Company. The representations, warranties and covenants contained in the Underwriting Agreement
were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to the Underwriting
Agreement, and may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures
exchanged between the parties in connection with the execution of the Underwriting Agreement.
The Underwriting Agreement and form of Warrant are filed herewith
as Exhibits 1.01 and 4.01, respectively, and are incorporated herein by reference. The foregoing description of the Underwriting
Agreement and Warrants does not purport to be complete and is qualified in its entirety by reference to such exhibits.
The legal opinion, including the related consent, of Silvestre Law
Group, P.C. is filed as Exhibit 5.01 and 23.01 to this Current Report.
This Current Report contains forward-looking statements that involve
risk and uncertainties, such as statements related to the anticipated closing of the Offering and the amount of net proceeds expected
from the Offering. The risks and uncertainties involved include the Company’s ability to satisfy certain conditions to closing
on a timely basis or at all, as well as other risks detailed from time to time in the Company’s SEC filings.