GENEREX BIOTECHNOLOGY CORPORATION (OTCMKTS:GNBT) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Item 3.02. Unregistered Sales of Equity Securities.
On February 15, 2019, Generex Biotechnology Corporation (the “Company”) entered into, and on February 22, 2019, Generex closed under a Securities Purchase Agreement with an investor to which the Company agreed to sell and sold a convertible note bearing interest at 10% per annum (the “Note”) in the principal amount of $750,000. The purchase price of the Note was $712,500 and the remaining $37,500 of principal amount represents original issue discount. to the Securities Purchase Agreements, the Company also sold to the Investor warrants to purchase up to an aggregate 57,143 shares of common stock.
Subject to certain ownership limitations, the Note will be convertible at the option of the holder at any time into shares of the Company’s common stock at an effective conversion price determined as follows: the lesser of
| • | A price determined as of the date of closing; and |
| • | 70% of the lowest volume weighted average trading price of the common stock on the ten days prior to conversion. |
The conversion price of the Note and the exercise of the warrants will be subject to adjustment in the case of stock splits, stock dividends, combinations of shares, similar recapitalization transactions and certain pro-rata distributions to common stockholders. The conversion price will also be adjusted if the Company sells or grants any shares of common stock or securities convertible into, or rights to acquire, common stock at an effective price per share that is lower than the then conversion price, except in the event of certain exempt issuances. In the event of a fundamental transaction, such as a merger, consolidation, sale of substantially all assets and similar reorganizations or recapitalizations, the holders of convertible preferred stock will be entitled to receive, upon conversion of their shares, any securities or other consideration received by the holders of the Company’s common stock to the fundamental transaction.
The Company is subject to significant cash penalties in the event that the Company fails to timely deliver certificates for shares of common stock issuable upon conversion of Note (“conversion shares”).
The conversion price of the Note will be reduced to a lower percentage of the volume weighted average trading price in the event the Company’s stock ceases to be DTC eligible, there is a DTC “chill,” or the Note cannot be converted into free trading stock within 181 days after issuance of a Note.
The Company is required to file a registration statement with the SEC within 60 days after the closing of the sale of the Notes and have the registration statement become effective within 120 days after closing.
Subject to certain ownership limitations, the warrants will be exercisable at any time through the third anniversary of issuance at an exercise price of $3.50 per share of common stock. The exercise price of the warrants and, in some cases, the number of shares issuable upon exercise, are subject to adjustment in the case of stock splits, stock dividends, combinations of shares, similar recapitalization transactions and certain pro-rata distributions to common stockholders. In addition, the warrant holders will be entitled to receive any securities or rights to acquire securities or property granted or issued by the Company pro rata to the holders of its common stock to the same extent as if such holders had exercised all of their warrants. In the event of a fundamental transaction, such as a merger, consolidation, sale of substantially all assets and similar reorganizations or recapitalizations, the warrant holders will be entitled to receive, upon exercise of their warrants, any securities or other consideration received by the holders of the Company’s common stock to the fundamental transaction.
The investor will have a pro rata right of first refusal in respect of participation in any private debt or equity financings undertaken by the Company during the 12 months following the closing of the transaction.
The Company has the right to prepay the Note at a premium within 180 days after issuance. If the Note is prepaid within 90 days, he Company will pay 120% of the principal amount; if the Note is prepaid after 90 days but prior to 180 days, the Company will pay 135% of the principal amount.
The net cash proceeds to the Company from the sale of the Note, after deducting the finders’ fees and the Company’s estimated offering expenses, and excluding the proceeds, if any, from the exercise of the warrants issued in the offering, is expected to be approximately $702,000. The Company will pay PAG Group, Inc., a consulting fee of approximately $43,000 from such amount in connection with these transactions
The Note, warrants, and the shares of common stock underlying the Note and warrants, were offered privately to Section 4(3) of, and Rule 506 of Regulation D under, the Securities Act of 1933. The Company and the investors have entered into a registration rights agreement to which the Company has agreed to file a registration statement with the Securities and Exchange Commission covering the public resale of the common stock issuable upon conversion of the Note and exercise of the warrants. The Company has agreed to file the registration statement within 360 days after closing and to use its best efforts to have the registration statement declared effective within 120 days after closing. If these deadlines are not met, the Company will be in default of the Note.
The foregoing description of the terms of the Note, the securities purchase agreements, the form of warrants, and the registration rights agreement are subject to, and qualified in their entirety by, such documents attached hereto as Exhibits 4.1 through 4.4, and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The list of exhibits called for by this Item is incorporated by reference to the Exhibit Index filed with this report.
GENEREX BIOTECHNOLOGY CORP Exhibit
EX-4.1 2 ex4_1.htm EXHIBIT 4.1 SECURITIES PURCHASE AGREEMENT This SECURITIES PURCHASE AGREEMENT (the “Agreement”),…
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About GENEREX BIOTECHNOLOGY CORPORATION (OTCMKTS:GNBT)
Generex Biotechnology Corporation is a development-stage company. The Company is engaged primarily in the research and development of drug delivery systems and technologies. The Company is focused on its technology for the administration of formulations of large molecule drugs to the oral (buccal) cavity using a hand-held aerosol applicator. Its buccal delivery technology is a platform technology that has application to various large molecule drugs and provides a non-invasive way to administer such drugs. The Company focuses its development efforts on Generex Oral-lyn, an insulin formulation administered as a fine spray into the oral cavity using its hand-held aerosol spray applicator known as RapidMist. Its subsidiary, Antigen Express, Inc., focuses on developing vaccine formulations that work by stimulating the immune system to either attack offending agents, such as cancer cells, bacteria and viruses, or to stop attacking benign elements, such as self proteins and allergens.
