| Item 1.01 | Entry into a Merial Definitive Agreement. |
On June 13, 2023, First Wave
BioPharma, Inc., a Delaware corporation (the “Company”), entered into warrant exercise inducement offer letters (the “Inducement
Letters”) with certain holders (the “Holders”) of warrants to purchase shares of the Company’s common stock (the
“Existing Warrants”) pursuant to which the Holders agreed to exercise for cash their Existing Warrants to purchase 1,724,332
shares of the Company’s common stock, in the aggregate, at a reduced exercised price of $1.15 per share, in exchange for the Company’s
agreement to issue new warrants (the “Inducement Warrants”) on substantially the same terms as the Existing Warrants as described
below, to purchase up to 3,448,664 shares of the Company’s common stock (the “Inducement Warrant Shares”) and a cash
payment of $0.125 per Inducement Warrant Share which was paid in full upon the exercise of the Existing Warrants. The Company received
aggregate gross proceeds of approximately $2.4 million from the exercise of the Existing Warrants by the Holders and the sale of the Inducement
Warrants. The Company engaged Roth Capital Partners, LLC (“Roth”) to act as its financial advisor in connection with the transactions
summarized above and will pay Roth $150,000 for its services.
The shares of the Company’s
common stock issuable upon exercise of the Existing Warrants are registered pursuant to existing registration statements declared effective
by the Securities and Exchange Commission (the “SEC”).
The Company also agreed to
file a registration statement on Form S-3 covering the resale of the Inducement Warrant Shares issued or issuable upon the exercise of
the Inducement Warrants (the “Resale Registration Statement”) by June 23, 2023. In the Inducement Letters, the Company agreed
not to issue any shares of common stock or common stock equivalents or to file any other registration statement with the SEC (in each
case, subject to certain exceptions) for a period ending on the later of (i) July 3, 2023 or (ii) the date the Resale Registration Statement
is declared effective by the SEC. The Company also agreed not to effect or agree to effect any variable rate transaction (as defined in
the Inducement Letters) until June 13, 2024.
Inducement Warrant Terms
The following summary of certain
terms and provisions of the Inducement Warrants is not complete and is subject to, and qualified in its entirety by, the provisions of
the Inducement Warrants, the form of which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The following description of the Inducement Warrants is qualified in its entirety by reference to such exhibit.
Duration and Exercise Price
Each Inducement Warrant will
have an exercise price equal to $1.15 per share. The Inducement Warrants will be immediately exercisable and may be exercised until the
fifth anniversary of the initial exercise date. The exercise price and number of shares of common stock issuable upon exercise is subject
to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock
and the exercise price. The Inducement Warrants will be issued in certificated form only.
Exercisability
The Inducement Warrants will
be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by
payment in full for the number of shares of our common stock purchased upon such exercise (except in the case of a cashless exercise as
discussed below). A holder (together with its affiliates) may not exercise any portion of such holder’s Inducement Warrants to the
extent that the holder would own more than 4.99% of the outstanding common stock immediately after exercise, except that upon at least
61 days’ prior notice from the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising
the holder’s Inducement Warrants up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect
to the exercise, as such percentage ownership is determined in accordance with the terms of the Inducement Warrants.
Cashless Exercise
If, at the time a holder exercises
its Inducement Warrants, a registration statement registering the issuance of the shares of common stock underlying the Inducement Warrants
under the Securities Act is not then effective or available for the issuance of such shares, then in lieu of making the cash payment otherwise
contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon
such exercise (either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the
Inducement Warrant.
Fundamental Transactions
In the event of any fundamental
transaction, as described in the Inducement Warrants and generally including any merger with or into another entity, sale of all or substantially
all of our assets, tender offer or exchange offer, or reclassification of our common stock, then upon any subsequent exercise of a Inducement
Warrant, the holder will have the right to receive as alternative consideration, for each share of our common stock that would have been
issuable upon such exercise immediately prior to the occurrence of such fundamental transaction, the number of shares of common stock
of the successor or acquiring corporation or of our company, if it is the surviving corporation, and any additional consideration receivable
upon or as a result of such transaction by a holder of the number of shares of our common stock for which the Inducement Warrant is exercisable
immediately prior to such event. Notwithstanding the foregoing, in the event of a fundamental transaction, the holders of the Inducement
Warrants have the right to require us or a successor entity to redeem the Inducement Warrants for cash in the amount of the Black-Scholes
Value (as defined in each Inducement Warrant) of the unexercised portion of the Inducement Warrants concurrently with or within 30 days
following the consummation of a fundamental transaction.
However, in the event of a
fundamental transaction which is not in our control, including a fundamental transaction not approved by our board of directors, the holders
of the Inducement Warrants will only be entitled to receive from us or our successor entity, as of the date of consummation of such fundamental
transaction the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised portion
of the Inducement Warrant that is being offered and paid to the holders of our common stock in connection with the fundamental transaction,
whether that consideration is in the form of cash, stock or any combination of cash and stock, or whether the holders of our common stock
are given the choice to receive alternative forms of consideration in connection with the fundamental transaction.
Transferability
Subject to applicable laws,
a Inducement Warrant may be transferred at the option of the holder upon surrender of the Inducement Warrant to us together with the appropriate
instruments of transfer.
Fractional Shares
No fractional shares of common
stock will be issued upon the exercise of the Inducement Warrants. Rather, the number of shares of common stock to be issued will, at
our election, either be rounded up to the next whole share or we will pay a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the exercise price.
Trading Market
There is no established trading
market for the Inducement Warrants, and we do not expect an active trading market to develop. We do not intend to apply to list the Inducement
Warrants on any securities exchange or other trading market. Without a trading market, the liquidity of the Inducement Warrants will be
extremely limited.
Right as a Stockholder
Except as otherwise provided
in the Inducement Warrants or by virtue of the holder’s ownership of shares of our common stock, such holder of Inducement Warrants
does not have the rights or privileges of a holder of our common stock, including any voting rights, until such holder exercises such
holder’s Inducement Warrants. The Inducement Warrants will provide that the holders of the Inducement Warrants have the right to
participate in distributions or dividends paid on our shares of common stock.
Waivers and Amendments
The Inducement Warrant may
be modified or amended or the provisions of the Inducement Warrant waived with our and the holder’s written consent.
The forms of Inducement Letter
and Inducement Warrant are attached as Exhibits 10.1 and 4.1, respectively. The description of the terms of the Inducement Letter and
the Inducement Warrant is not intended to be complete and is qualified in its entirety by reference to such exhibits. The Inducement Letters
contain customary representations, warranties and covenants by the Company which were made only for the purposes of such agreements and
as of specific dates, were solely for the benefit of the parties to such agreements, and may be subject to limitations agreed upon by
the contracting parties.
On June 13, 2023, the Company
issued a press release disclosing the transactions described herein, a copy of which is filed as Exhibit 99.1 to this Current Report on
Form 8-K.