Non-convertibles to be sold over two years for product development
By Jennifer Chiou
New York, Jan. 3 - Elite Pharmaceuticals, Inc. announced that it has entered into a securities purchase agreement with Socius CG II, Ltd., a subsidiary of Socius Capital Group, to sell up to $5 million of non-convertible series F preferred stock over a two-year period.
The preferreds will accrue dividends at a rate of 10% per year, payable in kind.
The securities may be sold in multiple tranches.
The release noted that Elite may not deliver a tranche purchase notice to Socius if the closing bid price of Elite's common stock is less than $0.07.
Elite will also issue warrants with an exercise price of $0.07, a portion of which will vest and be automatically exercised in an amount equal to 35% of the dollar amount of the series F preferreds being purchased and an additional investment right to purchase Elite's common stock at $0.07 per share.
Upon automatic exercise of the warrant and additional investment right, Socius must pay for the underlying shares, at its option, in cash or by delivering a full-recourse secured promissory note, the release added.
Proceeds will be used for product development, including the scale-up of products using Elite's abuse deterrent technology.
"With the completion of this transaction, for the first time in a long time, management believes that it can focus its time on growing the company and enhancing shareholder value without having to expend an inordinate amount of time contemplating where the capital required for growth will come from," chief executive officer Jerry Treppel said in a news release.
Based in Northvale, N.J., Elite develops oral controlled-release products.
| Issuer: | Elite Pharmaceuticals, Inc.
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| Issue: | Series F non-convertible preferred stock
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| Amount: | $5 million (maximum)
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| Warrant strike price: | $0.07
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| Investor: | Socius CG II, Ltd.
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| Announcement date: | Jan. 3
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| Stock symbol: | Amex: ELI
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| Stock price: | $0.20 at close Jan. 3
|
| Market capitalization: | $5.66 million
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