Cingulate reports unregistered share issuances to a lender in exchange for debt

Cingulate Inc. (Nasdaq: CING) reported on July 25, 2025 that it issued common stock to a lender in three transactions, each in exchange for part of the debt owed to that lender. The company filed a Form 8-K under Item 3.02, which covers unregistered sales of equity securities. The report covers issuances from March 31, 2025 through July 21, 2025. Shane J. Schaffer, Chief Executive Officer, signed it.

Who arranged the issuances

The 8-K names no bank, placement agent, underwriter or financial adviser for any of these transactions, and no counsel. It refers to the counterparty only as a lender. The 2024 annual report describes a Note Purchase Agreement and a note that Cingulate issued to the same creditor in December 2024, which it also calls Lender, but the 8-K does not connect the two and gives no name.

The share issuances

On May 12, 2025, the company issued 7,538 shares of common stock at a value of $4.36 a share to a service provider. The 8-K says the issuance was exempt from registration under Section 4(a)(2) of the Securities Act.

On July 8, 2025, it granted an officer an option to buy 30,000 shares at an exercise price of $4.51, as an inducement grant. The option vests over four years: 25% on the one-year anniversary of the grant date, and the rest in roughly equal monthly installments over the following thirty-six months, provided the officer stays employed through each vesting date. The grant was also exempt under Section 4(a)(2).

The three lender transactions were each exempt under Section 3(a)(9). On July 10, 2025, Cingulate issued 5,986 shares at a value of $4.18 a share. On July 14, 2025, it issued 57,471 shares at $4.35 a share. On July 21, 2025, it issued 73,068 shares at $4.79 a share. Each issuance was made to the lender in exchange for part of the debt owed to it, so no cash came into the company. The 8-K gives no figure for the debt that remains.

The note's terms

The 2024 annual report says the Note Purchase Agreement restricts Cingulate while the note is outstanding. It bars the company from entering into an arrangement that prohibits a variable rate transaction until July 1, 2025, subject to certain exceptions. The report also says the lender may receive more favorable terms if the company later issues a debt security with economic terms that were not provided to it under the note.

The report describes a more serious term. After an event of default under the note, the lender may seek and receive injunctive relief from a court or arbitrator that would prevent Cingulate from issuing its common or preferred stock. The lender may also seek to block a fundamental transaction unless the note is paid in full or the lender consents in writing.

The company's position

Cingulate describes itself in its 2024 annual report as a biopharmaceutical company that uses its proprietary Precision Timed Release drug delivery platform. Its initial focus is attention deficit hyperactivity disorder and anxiety. Its two product candidates are CTx-1301 (dexmethylphenidate) and CTx-1302 (dextroamphetamine), both stimulant medications designed to act within 30 minutes and last the full active day without a booster dose.

The auditor's report in the annual report, from KPMG LLP, includes a going-concern paragraph. It says the company has incurred losses and negative cash flows from operations since inception and will need additional funding. The accumulated deficit was about $108.5 million at December 31, 2024.

What the filing leaves open

The 8-K shows the company paying a creditor in shares at prices between $4.18 and $4.79, while its auditor has raised substantial doubt about its ability to keep operating. The filing does not give the remaining debt balance or the number of shares outstanding after these issuances.

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