| Item 1.01 | Entry into a Material Definitive Agreement. |
On August 10, 2023, Carmell Corporation (the “Company”) announced it had entered into that certain First Amendment to Agreement and Plan of Merger (the “Amendment”) which amended certain terms of the previously announced Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Aztec Merger Sub, Inc. (“First Merger Sub”) and Axolotl Biologix, Inc. (“Axolotl”). The Merger Agreement provides for, among other things, the merger of Axolotl with and into Merger Sub, with Axolotl being the surviving corporation of the merger and a direct, wholly owned subsidiary of the Company (the “Acquisition”). The Amendment changes the structure of the Acquisition to provide that, following the merger of Axolotl with and into Merger Sub, with Axolotl surviving, Axolotl shall merge with and into Axolotl Biologix, LLC (“Second Merger Sub”), with Second Merger Sub being the surviving corporation of the merger and a direct, wholly owned subsidiary of the Company, and waives the condition requiring Axolotl to deliver its audited financial statements upon closing in exchange for the $8.0 million of cash consideration otherwise payable upon closing pursuant to the Merger Agreement (the “Closing Cash Consideration”) becoming payable and contingent upon receipt of such audited financial statements.
The foregoing summary of the terms of the Amendment does not purport to be complete and is subject to and qualified in its entirety by the full text of the Amendment which is filed herewith as Exhibit 10.1 and incorporated herein by reference.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
On August 9, 2023, the Company completed the closing of the Acquisition (the “Closing”). As a result, the business of Axolotl will be conducted by Second Merger Sub, a wholly-owned subsidiary of the Company.
In connection with the closing of the Acquisition, the Company issued 3,845,337 shares of its common stock, par value $0.0001 per share (“Common Stock”), and 4,243 shares of a newly designated series of Series A Convertible Voting Preferred Stock, $0.0001 par value per share (the “Preferred Stock”), in exchange for all the issued and outstanding shares of Axolotl as part of the consideration paid in connection with the Acquisition.
In addition to the shares of Common Stock and the Preferred Stock described above, the consideration includes the Closing Cash Consideration, payable upon delivery of the audited financial statements, as well as up to $9.0 million in cash and up to $66.0 million in shares of Common Stock that are subject to a performance based earn-out.
The number of shares of Common Stock issued at the Closing is limited to 19.99% of the total number of shares of the Company’s Common Stock issued and outstanding immediately prior to the Closing (the “Share Cap”).
| Item 3.02 | Unregistered Sales of Equity Securities. |
On August 9, 2023, the Company completed the Closing. In connection with the closing of the Acquisition, the Company issued the shares of Common Stock and Preferred Stock described in the second paragraph of Item 2.01 above.
Pursuant to the Certificate of Designation (as defined in Item 5.03 below), each share of Preferred Stock will automatically convert into one thousand (1,000) shares of Common Stock upon stockholder approval of the issuance of the shares of Common Stock in excess of the Share Cap issuable upon such conversion and shall cease to have any rights other than with respect to conversion.
The Common Stock and Preferred Stock consideration issued in connection with the Acquisition was issued in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(a)(2) thereof and/or Regulation D thereunder, as a transaction by an issuer not involving a public offering.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year |
In connection with the Closing, on August 9, 2023, the Company filed the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Voting Preferred Stock (the “Certificate of Designation”) with the Secretary of State of Delaware in accordance with Section 151(a) of the Delaware General Corporation Law.
