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.
Item
9.01. Financial Statements and Exhibits.
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Exhibit
Number
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Description
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3.1
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Certificate
of Designation for the Series B Convertible Preferred Stock as filed with
the Secretary of State of Maryland on November 2, 2009 (filed as Exhibit
3.1 to the Company’s Form 8-K, dated November 2, 2009 and incorporated
herein by reference)
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99.1
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
BIOSTAR
PHARMACEUTICALS, INC.
Dated:
November 18, 2009
By: /s/
Ronghua Wang
Name:
Ronghua Wang
Title:
Chief Executive Officer