UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01. Entry into a Material Definitive Agreement.
Effective May 1, 2024, Seelos Therapeutics, Inc. (the “Company”) and Lind Global Asset Management V, LLC (together with its successors and representatives, the “Holder”) entered into an Amendment No. 6 to Convertible Promissory Note (the “Amendment”), which amended that certain Convertible Promissory Note No. 1 in the initial principal amount of $22,000,000, issued by the Company to the Holder on November 23, 2021, as amended on December 10, 2021, February 8, 2023, May 19, 2023, September 30, 2023 and March 27, 2024 (as so amended, the “Note”).
Pursuant to the Amendment, the Company and the Holder agreed, among other things, that: (A) the Company shall not be required to maintain any minimum balance of cash or cash equivalents with one or more financial institutions prior to May 31, 2024, and that it shall thereafter be required to maintain an aggregate minimum balance equal to 50% of the then outstanding principal amount under the Note or more in cash or cash equivalents with one or more financial institutions; (B) that all payments of accrued interest and monthly payments of the outstanding principal amount payable by the Company under the Note in shares of common stock shall be reduced from ninety percent (90%) to eighty-five percent (85%) of the average of the five lowest daily volume weighted average price of common stock during the 20 trading days prior to each respective payment date; (C) the Holder will, through May 1, 2024, forebear from exercising any right to assert or claim that a Material Adverse Effect (as defined in the Note) has occurred as a result of any event, occurrence, fact, condition or change that occurred on or prior to May 1, 2024.
The foregoing summary of the Amendment does not purport to be complete and is qualified in its entirety by reference to the copy of the Amendment filed herewith as Exhibit 4.1.
Item 2.05. Costs Associated with Exit or Disposal Activities.
On April 30, 2024, the Company announced a reduction in its workforce that affected approximately 33% of its current employees (the “RIF”), along with a reduction in working hours and related compensation for all of its remaining employees. This decision relates to the Company’s recent announcement of its strategic focus on its mental health initiatives and serves to reduce ongoing operating expenses not related to such initiatives and extend the Company’s cash runway. Total annualized cost savings from the RIF are estimated at approximately $0.8 million and total annualized cost savings from the reduction in working hours are estimated at approximately $1.6 million. The RIF was substantially completed on April 30, 2024.
The Company expects to recognize approximately $50,000 in total charges for related benefits for employees whose employment was terminated pursuant to the RIF. These are one-time termination benefits and are cash charges. The estimates of costs and expenses that the Company expects to incur in connection with the RIF are subject to a number of assumptions and actual results may differ materially from those estimates. The Company may also incur other charges or cash expenditures not currently contemplated due to events that may occur as a result of, or associated with, the RIF.
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
On April 30, 2024, the Company received written notice (the “Bid Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, for the last thirty consecutive business days, the bid price for the Company’s common stock had closed below the minimum $1.00 per share requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (“Rule 5550(a)(2)”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided an initial period of 180 calendar days, or until October 28, 2024, to regain compliance. The Bid Notice states that the Nasdaq staff will provide written confirmation that the Company has achieved compliance with Rule 5550(a)(2) if at any time before October 28, 2024, the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of ten consecutive business days.
If the Company does not regain compliance with Rule 5550(a)(2) by October 28, 2024, the Company may be eligible for an additional 180 calendar day compliance period. To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and would need to provide written notice to Nasdaq of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary. However, if it appears to the Nasdaq staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq would notify the Company that its securities will be subject to delisting.
As previously reported, on November 2, 2023, the Company received written notice (the “Initial Notice”) from Nasdaq indicating that, for the last thirty-two consecutive business days, the market value of the Company’s listed securities has been below the minimum requirement of $35 million for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2) (“Rule 5550(b)(2)”). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Company was provided a period of 180 calendar days, or until April 30, 2024, to regain compliance. The Initial Notice stated that the Nasdaq staff will provide written notification that the Company has achieved compliance with Rule 5550(b)(2) if at any time before April 30, 2024, the market value of the Company’s common stock closes at $35 million or more for a minimum of ten consecutive business days.
Additionally, on May 1, 2024, the Company received written notice (the “Delist Notice” and, together with the Bid Notice and Initial Notice, the “Notices”) from Nasdaq indicating that, based upon the Company’s continued non-compliance with Rule 5550(b)(2), the Nasdaq staff has determined to delist the Company’s common stock from the Nasdaq Capital Market effective May 10, 2024 unless the Company timely requests an appeal of this determination before the Nasdaq Hearings Panel (the “Panel”) by May 8, 2024. The Company currently intends to timely request a hearing before the Panel, which will stay the suspension of the Company’s common stock pending the Panel’s decision. During the pendency of any requested hearing before the Panel, the Company’s common stock will remain listed and trading on Nasdaq.
The Company is diligently working to evidence compliance with all applicable requirements for continued listing on the Nasdaq Capital Market and intends to submit a plan to that effect to the Panel as part of the hearing process; however, there can be no assurance the Panel will grant any request for continued listing or that the Company will be able to regain compliance with the applicable listing criteria within the period of time that may be granted by the Panel.
The Notices have no immediate effect on the listing or trading of the Company’s common stock and the common stock will continue to trade on the Nasdaq Capital Market under the symbol “SEEL.”
The Company intends to monitor the bid price and market value of its common stock and consider available options if its common stock does not trade at a level likely to result in the Company regaining compliance with Nasdaq’s minimum bid price rule by October 28, 2024, or the minimum market value of listed securities rule, which may include, among other options, effectuating a reverse stock split. There can be no assurance that the Company will be able to regain compliance with Nasdaq’s minimum bid price rule or Nasdaq’s minimum market value of listed securities rule or that the Company will otherwise be in compliance with the other listing standards for the Nasdaq Capital Market.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 2, 2024, Daniel J. O’Connor notified the Board of Directors (the “Board”) of the Company of his decision to resign from the Board, effective immediately. Mr. O’Connor’s resignation was solely for personal reasons and not due to any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices. Mr. O’Connor had served on the Board since January 2019, and the Company wishes to thank Mr. O’Connor for his contributions and service to the Company over the years.
Forward-Looking Statements
Except for the factual statements made herein, information contained in this Current Report on Form 8-K consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions that are difficult to predict. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects or future events, as well as words such as “believes,” “intends,” “expects,” “plans” and similar expressions, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Such forward-looking statements are not guarantees of performance and actual actions or events could differ materially from those contained in such statements. For example, there can be no assurance that the RIF or the reduction in working hours will have the intended effect on the Company’s operational results and strategic decisions, that any anticipated charges and any anticipated cost savings associated with the RIF or the reduction in working hours will achieve its intended benefits, that the Company will ultimately request a hearing before the Panel, or that the Company will meet the bid price requirement or the minimum market value of listed securities requirement during any compliance period or otherwise in the future, that the Company will otherwise meet Nasdaq compliance standards, or that the Panel will grant the Company any relief from delisting as necessary or whether the Company can agree to or ultimately meet applicable Nasdaq requirements for any such relief. Reference is also made to other factors detailed from time to time in the Company’s periodic reports filed with the Securities and Exchange Commission, including the Company’s most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. The forward-looking statements contained in this Current Report on Form 8-K speak only as of the date of this Current Report on Form 8-K and the Company assumes no obligation to publicly update any forward-looking statements to reflect changes in information, events or circumstances after the date of this Current Report on Form 8-K, unless required by law.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| 4.1 | Amendment No. 6 to Convertible Promissory Note, by and between Seelos Therapeutics, Inc. and Lind Global Asset Management V, LLC, effective May 1, 2024. |
| 104 | Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Seelos Therapeutics, Inc. | ||
| Date: May 3, 2024 | By: | /s/ Michael Golembiewski |
| Name: Michael Golembiewski | ||
| Title: Chief Financial Officer | ||
Exhibit 4.1
AMENDMENT NO. 6 TO CONVERTIBLE PROMISSORY NOTE
This Amendment No. 6 to Convertible Promissory Note (this “Amendment”) is effective as of May 1, 2024 (the “Effective Date”), by and between Seelos Therapeutics, Inc., a Nevada corporation (the “Company”), and Lind Global Asset Management V, LLC, a Delaware limited liability company (together with its successors and representatives, the “Holder”) and amends that certain Convertible Promissory Note No. 1 in the initial principal amount of $22,000,000 and due November 23, 2024, issued by the Company to the Holder on November 23, 2021, as amended on December 10, 2021, on February 8, 2023, on May 19, 2023, on September 30, 2023 and on March 27, 2024 (as so amended, the “Note”). Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Note or that certain Securities Purchase Agreement, dated as of November 23, 2021, by and between the Company and the Holder (as amended and in effect from time to time, the “Purchase Agreement”).
RECITALS
Whereas, the Company issued the Note to the Holder pursuant to the Purchase Agreement;
Whereas, the Company and the Holder desire to amend certain provisions of the Note as set forth herein;
Whereas, the Section 2.1(r) of the Note provides that the Company must, at any time on or after April 29, 2024, maintain an aggregate minimum balance equal to 50% of the then Outstanding Principal Amount or more in cash or cash equivalents with one or more financial institutions (the “Minimum Cash Covenant”);
Whereas, the Company is not currently in compliance with the Minimum Cash Covenant;
Whereas, under the terms of the Note, following a failure to satisfy the Minimum Cash Covenant that remains uncured for 15 Business Days, the Holder may, among other things, from time-to-time demand that all or a portion of the Outstanding Principal Amount be converted into shares of Common Stock at the lower of (i) the then-current Conversion Price and (ii) eighty-five percent (85%) of the average of the five (5) lowest daily VWAPs during the twenty (20) Trading Days prior to the delivery by the Holder of the applicable Conversion Notice (the “Default Conversion Right”);
Whereas, as consideration for the Holder agreeing to extend the date by which the Company must be compliance with the Minimum Cash Covenant to May 31, 2024 and agreeing not to assert than an Event of Default has occurred or exercising the Default Conversion Right, the Company and the Holder desire to agree, as set forth herein, that the Repayment Share Price shall be reduced from ninety percent (90%) to eighty-five (85%) of the average of the five (5) lowest daily VWAPs during the twenty (20) Trading Days ending on the last Trading Day prior to the Payment Date or the Interest Payment Date, as applicable, such that it is equal to the rate at which the Holder could convert the Note pursuant to the Default Conversion Right; and
Whereas, pursuant to Section 5.8 of the Note, the Note may be amended by an instrument in writing signed by the Company and the Holder.
Now, Therefore, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1. Section 2.1(r). Section 2.1(r) of the Note is hereby amended and restated in its entirety to read as follows:
“(r) at any time on or after May 31, 2024, the Maker shall fail to maintain an aggregate minimum balance equal to 50% of the then Outstanding Principal Amount or more in cash or cash equivalents with one or more financial institutions;”
2. Section 5.14(g). Effective as of the Effective Date, Section 5.14(g) of the Note is hereby amended and restated in its entirety to read as follows:
““Repayment Share Price” means eighty-five percent (85%) of the average of the five (5) lowest daily VWAPs during the twenty (20) Trading Days ending on the last Trading Day prior to the Payment Date or the Interest Payment Date, as applicable.”
3. Waivers. The Holder hereby agrees to forebear, from the date hereof through May 31, 2024 (the “Forbearance Period”) from exercising any right the Holder may have to assert or claim that a Material Adverse Effect has occurred as a result of any event, occurrence, fact, condition or change that occurred at any time on or prior to May 1, 2024, and, in connection therewith, further agrees, during the Forbearance Period, to forbear from exercising any right with respect to any Event of Default that may have occurred pursuant to Section 2.1(s) of the Note or as a result of any alleged breach by the Company of Section 2.1(s) of the Note as a result of any event, occurrence, fact, condition or change that occurred at any time on or prior to May 1, 2024 . The Holder expressly retains the right to assert any Event of Default with respect to Section 2.1(s) of the Note as a result of any event, occurrence, fact, condition or change that occurred or occurs after May 1, 2024. Notwithstanding anything to the contrary contained herein, the Holder acknowledges that the Company’s execution of this Amendment shall not be construed as an admission or acknowledgement by the Company that: (A) any event, occurrence, fact, condition or change has occurred or occurs that constitutes a Material Adverse Effect, or (B) the Holder has a right to assert that an Event of Default has occurred pursuant to Section 2.1(s) of the Note, and the Company’s execution of this Amendment shall be deemed to be without prejudice to the Company in this regard. In addition, the Holder hereby waives any Event of Default which has occurred prior to the date hereof as a result of any failure by the Company to comply with the covenant contained in Section 2.1(r) of the Note through and including the date hereof, including any obligation by the Company to notify the Holder of any such Event of Default (provided, for the avoidance of doubt, that such waiver shall not apply to the Company’s obligations with respect to Section 2.1(r) of the Note from and after the date hereof).
4. Effectiveness. This Amendment is effective as of the date hereof. From and after the effectiveness of this Amendment, each reference to “hereof”, “hereunder”, “herein” and “hereby” and each other similar reference and each reference to “this Note” and each other similar reference contained in the Note shall refer to the Note, as amended hereby. Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the parties under the Note, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Note.
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5. Governing Law. This Amendment shall be governed by and construed in accordance with the Laws of the State of New York, without reference to principles of conflict of laws or choice of laws.
6. Counterparts. This Amendment may be executed in two identical counterparts, both of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. Signature pages delivered by facsimile or e-mail shall have the same force and effect as an original signature.
[Signature Page Follows]
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The parties hereto have executed this Amendment No. 6 to Convertible Promissory Note as of the date first written above.
| THE company: | ||
| SEELOS THERAPEUTICS, INC. | ||
| By: | /s/ Raj Mehra, Ph.D. | |
| Name: Raj Mehra, Ph.D. | ||
| Title: President and Chief Executive Officer | ||
| THE HOLDER: | ||
| LIND GLOBAL ASSET MANAGEMENT V, LLC | ||
| By: | /s/ Jeff Easton | |
| Name: Jeff Easton | ||
| Title: Managing Member | ||
[SIGNATURE PAGE TO AMENDMENT NO. 6 TO CONVERTIBLE PROMISSORY NOTE]
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Cover |
Apr. 30, 2024 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Apr. 30, 2024 |
| Entity File Number | 000-22245 |
| Entity Registrant Name | Seelos Therapeutics, Inc. |
| Entity Central Index Key | 0001017491 |
| Entity Tax Identification Number | 87-0449967 |
| Entity Incorporation, State or Country Code | NV |
| Entity Address, Address Line One | 300 Park Avenue |
| Entity Address, Address Line Two | 2nd Floor |
| Entity Address, City or Town | New York |
| Entity Address, State or Province | NY |
| Entity Address, Postal Zip Code | 10022 |
| City Area Code | 646 |
| Local Phone Number | 293-2100 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock, $0.001 par value |
| Trading Symbol | SEEL |
| Security Exchange Name | NASDAQ |
| Entity Emerging Growth Company | false |