Item
1.01 Entry into a Material Definitive Agreement.
On November 24, 2021, Pasithea
Therapeutics Corp. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”) with
investors (the “Investors”) pursuant to which the Company agreed to sell to the Investors in a private placement (i) an aggregate
of 8,680,000 shares (the “Shares”) of its common stock, par value $0.0001 per share (the “Common Stock”) and (ii)
warrants (the “Warrants”) to purchase up to an aggregate of 8,680,000 shares of Common Stock (the “Offering”).
The combined purchase price for one Share and associated Warrant was $3.50. The Warrants are immediately exercisable, expire five years
from the date of issuance and have an exercise price of $3.50 per share of Common Stock, subject to adjustment as set forth in the Warrants.
The Company intends to use
the net proceeds to fund pre-clinical research and development work for future product candidates, invest in developing its U.S. clinic
and UK clinic businesses and for working capital and general corporate purposes. The closing of the Offering occurred on November 29,
2021 (the “Closing Date”).
The Investors may exercise
the Warrants on a cashless basis if the shares of Common Stock underlying the Warrants (the “Warrant Shares”) are not then
registered pursuant to an effective registration statement. The Investors have contractually agreed to restrict their ability to exercise
the Warrants such that the number of shares of Common Stock held by each Investor and its affiliates after such exercise does not exceed
either 4.99% or9.99% of the Company’s then issued and outstanding shares of Common Stock, at the Investor’s election.
Pursuant to the Purchase Agreement,
until 90 days following the Effective Date (as defined in the Purchase Agreement) pursuant to which all Shares and Warrants are registered
for resale, neither the Company nor any of its subsidiaries shall (i) issue, enter into any agreement to issue or announce the issuance
or proposed issuance of any shares of Common Stock or Common Stock Equivalents (as defined in the Purchase Agreement) or (ii) file any
registration statement or any amendment or supplement thereto, in each case other than as contemplated pursuant to the Registration Rights
Agreement (as defined below). In addition, until the one year one (1) year anniversary of the Effective Date pursuant to which all Shares
and Warrants are registered for resale, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance
by the Company or any of its subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a
Variable Rate Transaction (as defined in the Purchase Agreement).
In connection with the
Purchase Agreement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with
the Investors. Pursuant to the Registration Rights Agreement, the Company will be required to file a resale registration statement
(the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) to register for
resale of the Shares and Warrant (including the shares of Common Stock issuable upon exercise of the Warrants), promptly following
the Closing Date but in no event later than 15 calendar days after the effective date of the Registration Rights Agreement, and to
have such Registration Statement declared effective by the Effectiveness Date (as defined in the Registration Rights Agreement). The
Company will be obligated to pay certain liquidated damages to the Investors if the Company fails to file the Registration Statement
when required, fails to file or cause the Registration Statement to be declared effective by the SEC when required, or fails to
maintain the effectiveness of the Registration Statement pursuant to the terms of the Registration Rights Agreement.
The
Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties and covenants by the Company,
customary conditions to closing, indemnification obligations of the Company and the Investors, other obligations of the parties and termination
provisions.
Pursuant to Placement Agent
Agreement (the “PAA”), dated as of November 24, 2021 by and between the Company and EF Hutton, division of Benchmark Investments,
LLC (“EF Hutton”), the Company engaged EF Hutton to act as the Company’s exclusive placement agent in connection with
the Offering. Pursuant to the PAA, the Company agreed to pay EF Hutton a cash fee equal to 9.0% of the gross proceeds raised by the Company
in the Offering, and a cash fee equal to 1.0% of the gross proceeds raised by the Company in the Offering for non-accountable expenses,
and also agreed to reimburse EF Hutton up to $70,000 for accountable expenses.
The foregoing descriptions
of the Purchase Agreement, Warrant, Registration Rights Agreement, and PAA are not complete and are qualified in their entirety by reference
to the full text of the forms of the Purchase Agreement, the Warrants, the Registration Rights Agreement and the PAA, copies of which
are filed as Exhibits 10.2, 10.3, 10.4 and 10.1, respectively, to this Current Report on Form 8-K and are incorporated herein
by reference.