PharmaDrug Inc, which focuses on the research, development and commercialization of controlled substances and natural medicines such as psychedelics, revealed that it has raised $650,000 through the sale of debenture units.
The Toronto-based specialty pharmaceutical company said each unit comprises a $1,000 principal amount convertible secured debenture and 20,000 common share purchase warrants.
Each debenture bears interest at a rate of 15% per annum payable monthly in arrears, matures one year from the date of issue and is convertible into common shares at a price of $0.05, said the firm. Each debenture is secured by a general security agreement from the company and its wholly owned subsidiary, Sairiyo Therapeutics Inc.
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Each subscriber is entitled to a closing fee of 8% of their aggregate subscription price which was paid by way of a set off against the $1,000 unit purchase price. The company has agreed that 50% of the proceeds realized from the sale of Pharmadrug GmbH to Khiron Life Sciences Corp. (OTCQX:KHRNF, TSX-V:KHRN) will be paid to the holders of the debentures until such time that the debentures are repaid.
As previously announced, the firm has agreed to sell 100% of the securities of Pharmadrug Production GMBH for 5.50 million common shares in the capital of Khiron and a non-interest-bearing promissory note in the amount of $1.10 million which will be payable a year from the date of issue.
PharmaDrug explained that the debentures will work as bridge financing until such time that the transaction closes and PharmaDrug can monetize the shares and debenture. The sale is scheduled to close this week, said the company.
Each warrant entitles the holder to acquire one share at a price of $0.05 per share for a period of two years. The net proceeds from the offering will be used for working capital purposes.
The company also said that it will be issuing 2.09 million common shares to the holders of its 12% convertible debentures as an agreed payment to delay current interest payments due by 12 months and 200,000 common shares for the satisfaction of an outstanding payable. The shares will be issued at a deemed price of $0.05, said the company.
PharmaDrug CEO Daniel Cohen will be receiving 883,219 of the common shares issued. The company said it believes that the payment of the penalty to alleviate cash constraints is in the best interests of the company.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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