The notes carry an annual interest rate of 6% and are convertible into shares of the company’s common stock at a conversion price of $0.20 per share. In connection with the private placement of the notes, the company issued to purchasers of the notes an aggregate of 75 million five-year warrants to purchase shares of its common stock at an exercise price of $0.25 per share. The lead investor in the private placement was Pope Investments.
Genesis intends to use a significant portion of the net proceeds from this private placement to pay for the rights to manufacture and distribute a new Chinese Class I drug, Ligustrazine Ferulic Acid Acetate (LFAA), and for the marketing expenses associated with the launch of LFAA.
The company also intends to use a significant portion of the net proceeds from the private placement to purchase manufacturing equipment and upgrade the company’s facilities.