Item
1.01. Entry Into a Material Definitive Agreement.
On
April 24, 2023, Cingulate Inc. (the “Company”) entered into a purchase agreement (the “Purchase Agreement”) and
a registration rights agreement (the “Registration Rights Agreement”), with Lincoln Park Capital Fund, LLC (“Lincoln
Park”), pursuant to which Lincoln Park has committed to purchase up to $12.0 million of the Company’s common stock, par value
$0.0001 per share (the “Common Stock”) subject to certain limitations and satisfaction of the conditions set forth
in the Purchase Agreement.
Under
the terms and subject to the conditions of the Purchase Agreement, the Company has the right, but not the obligation, to sell to
Lincoln Park, and Lincoln Park is obligated to purchase up to $12.0 million of the Company’s Common Stock (the “Purchase
Shares”). Such sales of Common Stock by the Company, if any, will be subject to certain limitations set forth in the Purchase
Agreement, and may occur from time to time, at the Company’s sole discretion, over the 36-month period commencing on the date
that the conditions to Lincoln Park’s purchase obligation set forth in the Purchase Agreement are satisfied, including that a
registration statement covering the resale by Lincoln Park of shares of Common Stock that have been and may be issued to Lincoln
Park under the Purchase Agreement, which the Company agreed to file with the Securities and Exchange Commission (the
“SEC”) pursuant to the Registration Rights Agreement is declared effective by the SEC and a final prospectus relating
thereto is filed with the SEC (the date on which all of such conditions are satisfied, the “Commencement
Date”).
From
and after the Commencement Date, on any business day, the Company may, by written notice, direct Lincoln Park to purchase up to 30,000
shares of Common Stock on such business day (or the purchase date) at a purchase price per share that will be determined in accordance
with the Purchase Agreement at the time the Company delivers such written notice to Lincoln Park (a “Regular Purchase”). The
maximum number of shares the Company may sell to Lincoln Park in a Regular Purchase may be increased by certain amounts to up to 80,000
shares, with the applicable maximum share limit determined by whether the closing sale price per share of Common Stock as reported on
The Nasdaq Capital Market (“Nasdaq”) on the applicable purchase date for such Regular Purchase equals or exceeds certain minimum
price thresholds set forth in the Purchase Agreement. The purchase price per share for each Regular Purchase will be based on prevailing
market prices of the Common Stock immediately preceding the time of sale as computed in accordance with the terms set forth in the Purchase
Agreement. Lincoln Park’s maximum purchase commitment in any single Regular Purchase may not exceed $500,000. There are no upper
limits on the price per share that Lincoln Park must pay for shares of Common Stock under the Purchase Agreement.
If
the Company directs Lincoln Park to purchase the maximum number of shares of Common Stock that the Company may sell in a Regular Purchase,
then in addition to such Regular Purchase, and subject to certain conditions and limitations in the Purchase Agreement, the Company may
direct Lincoln Park to purchase additional shares of Common Stock in an “accelerated purchase” (each, an “Accelerated
Purchase”) and an “additional accelerated purchase” (each, an “Additional Accelerated Purchase”) (including
multiple Additional Accelerated Purchases on the same trading day) as provided in the Purchase Agreement. The purchase price per share
for each Accelerated Purchase and Additional Accelerated Purchase will be based on market prices of the Common Stock on the applicable
purchase date for such Accelerated Purchases and such Additional Accelerated Purchases.
The Company will control the timing
and amount of any sales of Common Stock to Lincoln Park pursuant to the Purchase Agreement. Lincoln Park has no right to require the Company
to sell any shares of Common Stock to Lincoln Park, but Lincoln Park is obligated to make purchases as the Company directs, subject to
certain conditions set forth in the Purchase Agreement.
Actual sales of shares of Common
Stock to Lincoln Park will depend on a variety of factors to be determined by the Company from time to time, including, among others,
general market conditions, the trading price of the Company’s Common Stock and determinations by the Company as to the appropriate
sources of funding for the Company and its operations. The net proceeds under the Purchase Agreement to the Company will depend on the
frequency and prices at which the Company sells shares of its stock to Lincoln Park. The Company expects that any proceeds received by
the Company from such sales to Lincoln Park will be used to support its operations, for continued research and development and commercialization
activities of CTx-1301, continued research and development of CTx-1302 and CTx-2103, and for working capital, capital expenditures and
general corporate purposes, including investing further in research and development efforts
In
the case of Regular Purchases, Accelerated Purchases and Additional Accelerated Purchases, the purchase price per share will be equitably
adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring
during the business days used to compute the purchase price.
The aggregate
number of shares that the Company can sell to Lincoln Park under the Purchase Agreement may in no case exceed 2,260,751 shares (subject
to adjustment as described above) of the Common Stock (which is equal to 19.99% of the shares of the Common Stock outstanding immediately
prior to the execution of the Purchase Agreement) (the “Exchange Cap”), unless (i) stockholder approval is obtained to issue
Purchase Shares above the Exchange Cap, or (ii) at the time the Company has issued shares of Common Stock equal to the Exchange Cap and
at all times thereafter, the average price per share of Common Stock for all shares of Common Stock sold by the Company to Lincoln Park
under the Purchase Agreement equals or exceeds $1.232 per share (which represents the lower of (A) the official closing price of our Common
Stock on Nasdaq on the trading day immediately preceding the date of the Purchase Agreement and (B) the average official closing price
of our Common Stock on Nasdaq for the five consecutive trading days ending on the trading day immediately preceding the date of the Purchase
Agreement, as adjusted under applicable Nasdaq rules to take into account the issuance
of shares of Common Stock to Lincoln Park for non-cash consideration as payment of the commitment fee described below so that the Exchange Cap limitation would not apply to issuances and sales of Common Stock under the Purchase Agreement
pursuant to the rules and regulations of Nasdaq.
In
all cases, the Purchase Agreement also prohibits the Company from directing Lincoln Park to purchase any shares of Common Stock if those
shares, when aggregated with all other shares of Common Stock then beneficially owned by Lincoln Park (as calculated pursuant to Section
13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder), would result in Lincoln Park beneficially owning
more than 4.99% of the then total outstanding
shares of Common Stock).
There
are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase
Agreement or Registration Rights Agreement, except the Company is prohibited (with certain specified exceptions set forth in the Purchase
Agreement) from effecting or entering into an agreement to effect an “equity line of credit” or other continuous offering
or similar offering in which the Company may issue and sell Common Stock, from time to time over a certain period of time, at future determined
prices based on the market prices of the Common Stock at the time of each such issuance and sale. Lincoln Park has agreed not to
engage in or effect, directly or indirectly, for its own principal account or for the principal account of any of its affiliates, any
short sales of the Common Stock or hedging transaction that establishes a net short position in the Common Stock during the term of the
Purchase Agreement.
Pursuant
to the terms of the Purchase Agreement, on April 24, 2023, the Company issued 368,023 shares of Common Stock (the “Commitment Shares”)
to Lincoln Park as consideration for its commitment to purchase shares of Common Stock under the Purchase Agreement.
The
Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties, conditions and indemnification
obligations of the parties. The Company has the right to terminate the Purchase Agreement at any time with one business day notice, at
no cost or penalty. Following the Commencement Date, any “Suspension Event” under the Purchase Agreement, Lincoln Park does not have the right to terminate
the Purchase Agreement; however, the Company may not initiate any regular or other purchase of shares by Lincoln Park, until such Suspension Event is cured.
The
foregoing descriptions of the Purchase Agreement and the Registration Rights Agreement are summaries and are qualified in their entirety
by reference to the full texts of the Purchase Agreement and Registration Rights Agreement, which are filed as Exhibits 10.1 and 10.2,
respectively, to this Current Report on Form 8-K and incorporated herein by reference. The representations, warranties and covenants contained in such agreements were made only for 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.
This current report on Form 8-K
shall not constitute an offer to sell or a solicitation of an offer to buy any shares of common stock in any state or jurisdiction in
which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such
state or other jurisdiction.