On July 15, 2021, Generex Biotechnology Corporation (the "Company") reported that it closed on a funding transaction by entering into a Securities Purchase Agreement with an investor pursuant to which the Company agreed to sell and sold a secured convertible promissory note bearing interest at 8% per annum with a 12-month maturity date (the "Note") in the aggregate principal amount of $1,085,000 (Filing, 8-K, Generex, JUL 15, 2021, View Source [SID1234585012]). The purchase price of the Note was $1,000,000 with $70,000 of principal amount represented original issue discount, along with the issuance of 705,173 shares of the Company’s common stock, as inducement shares. Pursuant to the Securities Purchase Agreement, the Company also sold to the Investor warrants to purchase up to an aggregate 904,167 shares of common stock.

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Subject to certain ownership limitations, the Note will be convertible at the option of the holder six months from the issue date into shares of the Company’s common stock at an effective conversion price of the lower of (i) $0.60 and (ii) 75% of the lowest VWAP during the 30 consecutive trading days immediately preceding the delivery of the conversion. Subject to certain ownership limitations, the warrants will be exercisable after the six-month anniversary of the initial exercise date through the fifth anniversary of issuance at an exercise price of $0.60 per share of common stock.

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. If the Company defaults on a timely repayment, then 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.

The Company is required to file a registration statement with the SEC by July 26, 2021, and have the registration statement become effective within 90 days of closing.

The Company has the right to prepay the Note at a premium after issuance. If the Note is prepaid within 60 days, the Company will pay 105% of the principal amount; if the Note is prepaid after 60 days but prior to 90 days, the Company will pay 110% of the principal amount. If the Note is prepaid after 90, the Company will pay 120% of the principal amount.

The net cash proceeds to the Company from the sale of the Note, after deducting 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 $1,000,000.

The Note, warrants, and the shares of common stock underlying the warrants, were offered privately pursuant to Rule 506 of Regulation D under the Securities Act of 1933.