Item
1.01
Entry into a Material Definitive
Agreement.
On May 3, 2016, Neuralstem, Inc. (the “Company”)
entered into an Underwriting Agreement (the “Underwriting Agreement”) with Roth Capital Partners, LLC, as the representative
of the underwriters identified therein (collectively, the “Underwriters”), pursuant to which the Company agreed to
issue and sell to the Underwriters in an underwritten public offering (the “Offering”) 20,000,000 shares (the “Shares”)
of the Company’s common stock, par value $0.01 per share (“Common Stock”), and warrants to purchase an aggregate
of 20,000,000 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 $0.40. The Shares and Warrants are immediately separable. Each Warrant has an initial exercise
price of $0.40 per share, will be exercisable immediately upon the date of issuance, and will expire five (5) years from the
date of issuance which is expected to be May 6, 2016. The Warrants will not be listed on The Nasdaq Capital Market or any other
securities exchange.
The Underwriters will purchase one Share
and one Warrant from the Company at a combined price of $0.376, representing a 6.0% discount from the public offering price. Roth
Capital Partners is acting as sole book-runner for the offering and Brean Capital is acting as co-manager in the offering.
The Company expects to issue and deliver
the securities sold in the Offering to the Underwriters against payment therefore on or about May 6, 2016, subject to the satisfaction
of customary closing conditions. The Company expects to receive gross proceeds from the Offering of $8 million and net proceeds
of approximately $7,420,000 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 reclassifications, stock dividends and stock splits. 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 the event of an extraordinary
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, exercisable at any time concurrently with or within 30 days after the consummation
of the extraordinary transaction, 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 at its election, either pay
the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round up to the next whole share.
The Offering is made pursuant to the Company’s
Registration Statement on Form S-3 (Registration No. 333-196567), which was declared effective by the Securities and Exchange
Commission (the “SEC”) on June 19, 2014. A preliminary prospectus supplement and the accompanying prospectus relating
to the Offering was filed with the SEC on May 2, 2016, and a final prospectus supplement and the accompanying prospectus relating
the Offering will be filed with the SEC on May 4, 2016.
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.