Item
1.01 | Entry
into a Material Definitive Agreement. |
Registered
Direct Offering of Shares
On
December 30, 2022, Palisade Bio, Inc. (the “Company”) entered into securities purchase agreements (the “Purchase Agreements”)
with certain institutional and accredited investors (the “Purchasers”), pursuant to which the Company agreed to sell and
issue, in a registered direct offering, an aggregate of (i) 476,842 shares (the “Shares”) of the Company’s common stock,
par value $0.01 per share (the “Common Stock”), at a purchase price per share of $2.375, and (ii) registered prefunded warrants
(the “Registered Prefunded Warrants”) to purchase up to 37,000 shares of Common Stock at a purchase price of $2.3749 per
Registered Prefunded Warrant (the “Registered Offering”).
Each
Registered Prefunded Warrant is exercisable immediately, has a perpetual term, an exercise price per share of Common Stock of $0.0001,
and is subject to adjustment in the event of stock splits, dividends, subsequent rights offerings, pro rata distributions, and certain
fundamental transactions, as more fully described in the Registered Prefunded Warrants. The Registered Prefunded Warrants do not contain
any price protection provisions with respect to future securities offerings of the Company.
The
Shares and Registered Prefunded Warrants (and shares underlying the Registered Prefunded Warrants) are being offered by the Company pursuant
to an effective shelf registration statement on Form S-3, which was originally filed with the Securities and Exchange Commission (the
“SEC”) on March 18, 2022, as amended, and was declared effective on April 26, 2022 (File No. 333-263705) (the “Registration
Statement”) and a prospectus supplement thereunder.
A copy of the opinion of the Silvestre Law
Group, P.C. relating to the validity of the Shares of Common Stock and Registered Prefunded Warrants issued in the Registered Direct
Offering is filed herewith as Exhibit 5.01.
Concurrent
Private Placements
Private
Placement of Prefunded Warrants
In
addition to the sale of Shares and Registered Prefunded Warrants, pursuant to the Purchase Agreements, the Company also issued
certain Purchasers, subject to certain beneficial ownership limitations, unregistered prefunded warrants to purchase up to 538,789 shares
of Common Stock (the “Unregistered Prefunded Warrants”) with the same terms as the Registered Prefunded Warrants except that
the Unregistered Prefunded Warrants are not registered pursuant to the Registration Statement (the “Concurrent Prefunded Warrant
Private Placement”).
Private
Placement of Common Stock Purchase Warrants
Pursuant
to the Purchase Agreements, in a concurrent private placement, the Company has also agreed to sell and issue to each Purchaser that purchased
any (i) Shares, (ii) Registered Prefunded Warrants, and / or (iii) Unregistered Prefunded Warrants, warrants to purchase such number
of shares of Common Stock equal to the number of Shares, Registered Prefunded Warrants or Unregistered Prefunded Warrants that a Purchaser
purchased pursuant to the Purchase Agreement (the “Private Warrants”). In aggregate, pursuant to the Purchase Agreements,
the Company will issue Private Warrants to purchase up to 1,052,631 shares of Common Stock, each with a per share exercise price of $2.375
(the “Concurrent Warrant Private Placement”). The Private Warrants are exercisable immediately and expire five (5) years
from the date of issuance. The Private Warrants are subject to adjustment in the event of stock splits, dividends, subsequent rights
offerings, pro rata distributions, and certain fundamental transactions, as more fully described in the Private Warrants. The Private
Warrants do not contain any price protection provisions with respect to future securities offerings of the Company.
The
Purchase Agreements contain customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification
obligations of the Company, including for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”),
other obligations of the parties, and termination provisions. The representations, warranties and covenants contained in the Purchase
Agreements were made only for the purposes of such agreement and as of the specific dates, were solely for the benefit of the parties
to such agreement and may be subject to limitations agreed upon by the contracting parties.
The
Registered Offering, the Concurrent Prefunded Warrant Private Placement, and the Concurrent Warrant Private Placement (collectively together,
the “Offering”) is expected to close on or about January 4, 2022, subject to customary closing conditions for aggregate gross
proceeds to the Company of approximately $2.5 million, before deducting fees payable to the placement agent and other estimated offering
expenses payable by the Company.
The
Unregistered Prefunded Warrants, the Private Warrants, and the shares of Common Stock issuable upon exercise of the Unregistered Prefunded
Warrants and Private Warrants (collectively, the “Warrant Shares”) have not been registered under the Securities Act pursuant
to the Registration Statement and are instead being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities
Act and Rule 506(b) promulgated thereunder. In connection with each Purchaser’s execution of a Purchase Agreement, each such Purchaser
represented to the Company that it is either an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7),
(a)(8), (a)(9), (a)(12) or (a)(13) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act, among other items.
The
Company also entered into a registration rights agreements with the Purchasers, whereby the Company agreed to file a registration statement
on Form S-3 within 30 days of the closing of the Offering, which shall provide for the resale by holders of the Warrants Shares
and to have such registration statement declared effective by February 14, 2023, and to use best efforts to keep such registration statement
effective at all times until such date that the Warrant Shares either (i) have been sold, or (ii) may be sold without volume or manner-of-sale
restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information
requirement under Rule 144.
The
closing of the Offering is subject to satisfaction of customary closing conditions set forth in the Purchase Agreements. The representations,
warranties and covenants contained in the Purchase Agreements were made solely for the benefit of the parties to the Purchase Agreements.
In addition, such representations, warranties and covenants (i) are intended as a way of allocating the risk between the parties to the
Purchase Agreements and not as statements of fact, and (ii) may apply standards of materiality in a way that is different from what may
be viewed as material by stockholders of, or other investors in, the Company. Accordingly, the Purchase Agreements are filed with this
report only to provide investors with information regarding the terms of transaction, and not to provide investors with any other factual
information regarding the Company. Moreover, information concerning the subject matter of the representations and warranties may change
after the date of the Purchase Agreements, which subsequent information may or may not be fully reflected in public disclosures.
Placement
Agent Agreement
In
connection with the Offering, we entered into a placement agent agreement (“Engagement Agreement”) with Ladenburg Thalmann
& Co. Inc. (“Placement Agent”) whereby the Placement Agent receives (i) an aggregate cash fee equal to 7.75% of the gross
proceeds received by the Company from the sale of the securities, (ii) payment of up to $105,000 for certain expenses incurred in the
Offering, and (iii) warrants to purchase up to 6.0% of the aggregate amount of the total Shares, Registered Prefunded Warrants, and Unregistered
Prefunded Warrants sold in the Offering, or 63,158 warrants (the “Placement Agent Warrants”). The Placement Agent
Warrants have substantially the same terms as the Private Warrants, except that the exercise price of the Placement Agent Warrant is
$2.9688 per share.
The
foregoing summaries of each of the Purchase Agreement, Registered Prefunded Warrants, the Unregistered Prefunded Warrants, the Private
Warrants, the Registration Rights Agreement, and the Placement Agent Warrants are qualified in their entirety by reference to the full
text of each such document, a copy of the form of each is attached hereto as Exhibits 10.01, 10.02, 10.03, 4.01, and 4.02, respectively,
and each of which is incorporated herein in its entirety by reference.