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Biostar Pharmaceuticals, Inc. Message Board

  • gpgfdg gpgfdg Nov 19, 2009 4:26 PM Flag

    8-K raising a little more money for something




    Unregistered Sale of Equity Securities, Financial Statements and Ex

    Item 3.02. Unregistered Sales of Equity Securities
    Securities Purchase Agreement

    On November 18, 2009 (the "Closing Date"), Biostar Pharmaceuticals, Inc. (the "Company") entered into and closed on a securities purchase agreement (the "Purchase Agreement") with certain accredited investors (the "Investors") pursuant to which the Investors purchased 1,000,000 shares of our series B convertible preferred stock ("Series B Preferred Stock") for an aggregate purchase price of $2,120,000 (the "Purchase Price"). The Series B Preferred Stock is convertible into 1,000,000 shares of our common stock. The Series B Preferred Stock does not pay annual dividends and shall not have any voting rights except as required by law.

    The Series B Preferred Stock is subject to full ratchet and anti-dilution adjustment for subsequent lower price issuances by the Company and the conversion price of the Series B Preferred Stock is subject to customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like. The full ratchet and anti-dilution protection provided for in the Series B Preferred Stock for subsequent lower price issuances shall be null and void and shall have no further force or effect if EITF 07-5, as such may amended, supplemented or modified by any accounting guidance and/or announcement(s) issued by the Financial Accounting Standards Board, the Emerging Issues Task Force or any other regulatory authority, will adversely effect the Company's financial condition as a result of such provision.

    The Investors have contractually agreed to restrict their ability to convert the Series B Preferred Stock and receive shares of our common stock such that the number of shares of the Company common stock held by them and their affiliates after such conversion does not exceed 9.9% of the Company's then issued and outstanding shares of common stock.

    The Investors have also agreed that they shall convert the Series B Preferred Stock so that at all times after the Closing Date they shall collectively own 9.9% of the Company's outstanding voting securities, provided, that the Investors will not be required to comply with such provision if, in the aggregate, they collectively hold less that 9.9% of the Company's outstanding voting securities after conversion of all the Series B Preferred Stock.

    The Company will use the net proceeds from the sale of the Series B Preferred Stock, after payment of legal fees and other closing costs, for the purchase of assets through its wholly-owned subsidiary, Shaanxi Biostar Biotech Ltd.

    The securities were offered and sold to the Investors in a private placement transaction made in reliance upon exemptions from registration pursuant to
    Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated under Regulation D thereunder. The Investors are accredited investors as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

    The foregoing information is a summary of the agreements involved in the transactions described above, is not complete, and is qualified in its entirety by reference to the full text of such agreements, a copy of which are attached as an exhibit to this Current Report on Form 8-K. Readers should review such agreement for a complete understanding of the terms and conditions associated with this transaction.

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