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.
On March 8, 2024, Calidi Biotherapeutics, Inc. (the “Company,” “we” or “our”) entered into a settlement agreement (the “Settlement Agreement”) with an investor who previously entered into a series of related agreements including (i) an agreement with Calidi Cure, LLC, an affiliate of the Company, in connection with an equity financing to fund the purchase of Series B Convertible Preferred Stock of Calidi Biotherapeutics (Nevada), Inc. (formerly Calidi Biotherapeutics, Inc.), a Nevada corporation and our wholly-owned subsidiary (“Calidi”); (ii) a Non-Redemption Agreement with the Company; (iii) an OTC Equity Prepaid Forward Purchase Agreement with the Company; and (iv) a Subscription Agreement with the Company (items (i) through (iv) collectively “the Supplemental Funding Agreements”) for the purpose of satisfying the “Minimum Cash Condition” required under the Business Combination agreement between First Light Acquisition Group, Inc., and Calidi, among others, which was consummated on September 12, 2023.
Pursuant to the Settlement Agreement, (i) the investor purchased a $2.0 million convertible note from the Company for cash and (ii) the Company issued to the investor a $1.5 million convertible note in consideration for the settlement of all claims related to the Supplemental Funding Agreements. The $2.0 million convertible note and $1.5 million convertible note are collectively herein referred to as the “Convertible Notes”. The Settlement Agreement also includes a mutual release of all claims by both parties.
The Convertible Notes bear semiannual interest at 10.0% per annum and each mature on March 8, 2028, unless due earlier due to an event of a default. After the earlier of 180 days or the effective date of a registration statement registering the Company’s common stock underlying the Convertible Notes, the Company may prepay the Convertible Notes, including any interest earned thereon, without penalty. The Convertible Notes also provide the investor a right to convert in whole or in part, the Principal Amount (as defined in the Convertible Notes) and accrued interest into shares of our common stock at an initial note conversion price equal to 94% of the 10-day VWAP ending the business day preceding execution of the Convertible Notes subject to a reset note conversion price equal to 94% of 10-day VWAP ending on the thirtieth (30th) day after the effective date of the registration statement registering the common stock underlying the Convertible Notes. In the event the Company completes a financing (i) of at least $8 million in an offering registered with the Securities and Exchange Commission (the “SEC”); or (ii) of at least $2 million with a non-affiliated purchaser at an effective price of at least 150% of the initial note conversion price, then the Convertible Notes will be subject to mandatory conversion at the lower of the initial note conversion price and reset note conversion price.
On March 11, 2024, the Company entered into an amendment to the $1.5 million convertible note (the "Note Amendment"), which amended Section 1(c) pertaining to conditions to closing, by deleting Section 1(c)(iii) in its entirety, which previously provided that the Principal Amount be wired to the Company’s bank account. As disclosed above, the $1.5 million convertible note was issued by the Company to the investor in consideration for the settlement of all claims related to the Supplemental Funding Agreements.
The foregoing description of the Settlement Agreement, the Convertible Notes and Note Amendment do not purport to be complete and is qualified in their entirety by reference to the full text of the Settlement Agreement, the Convertible Notes and the Note Amendment, which are attached hereto as Exhibits 10.1, 10.2, 10.3 and 10.4 respectively, and incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement.
Pursuant to the terms of the Settlement Agreement as described in Item 1.01, which is incorporated herein by reference, upon the execution of the Settlement Agreement, all outstanding obligations of the Supplemental Funding Agreements were terminated.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information included in Item 1.01 of this Current Report is incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities
The information set forth under Item 1.01 in this Form 8-K is incorporated herein by reference.
The issuance of the Convertible Notes and the shares of common stock that may be issuable upon conversion of the Convertible Notes (the “Securities”) were made to an accredited investor in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act, as amended (the “Securities Act”) as provided in Rule 506(b) of Regulation D promulgated thereunder. The offering of the Securities was not conducted in connection with a public offering, and no public solicitation nor advertisement was made or relied upon by the investor in connection with the offering.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits |
| Exhibit No. | Description | |
| 10.1† | Settlement Agreement dated March 8, 2024 | |
| 10.2 | Form of Convertible Promissory Note ($2,000,000) | |
| 10.3 | Form of Convertible Promissory Note ($1,500,000) | |
| 10.4 | Form of Amendment to Convertible Note | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
† Certain information contained in this exhibit has been omitted because it is both (i) not material and (ii) is the type that the Company treats as private or confidential.
SIGNATURE
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.
| Calidi Biotherapeutics, Inc. | ||
| Dated: March 12, 2024 | ||
| By: | /s/ Wendy Pizarro | |
| Name: | Wendy Pizarro | |
| Title: | Chief Legal Officer | |