RGRX RegeneRX Biopharmaceuticals Inc (CE)

Item 3.02 Unregistered Sales of Equity Securities.

Private Placement of Convertible Notes and Warrants

On February 27, 2019, RegeneRx Biopharmaceuticals, Inc. (the “ Company ”) completed a private placement of convertible notes (the “ Notes ”) with nine accredited investors (each, an “ Investor ,” collectively, the “ Investors ”), raising an aggregate of $1,300,000 in gross proceeds, that will be payable in two tranches -- $650,000 received within two days of closing of the financing on February 27, 2019 and $650,000 to be received upon enrollment of the first patient into the trial anticipated in the first quarter of 2019.   The Notes were issued pursuant to a Convertible Note and Warrant Purchase Agreement (the “ Security Purchase Agreement ”), between the Company and the Investors.

Convertible Promissory Notes and Warrants.   The key terms of the Notes are summarized below.  The Notes will pay interest at a rate of 5% per annum, mature 60 months after their date of issuance and are convertible into shares of our common stock at a conversion price of $0.12 per share (subject to adjustment as described in the Notes) at any time prior to repayment, at the election of the Investor.  In the aggregate, the Notes are initially convertible into up to 10,833,333 shares of our common stock.  In connection with the issuance of the Notes, the Investors also received warrants to purchase 8,125,000 shares of our common stock at an exercise price of $0.18 per share.

At any time prior to maturity of the Notes, with the consent of the holders of a majority in interest of the Notes, we may prepay the outstanding principal amount of the Notes plus unpaid accrued interest without penalty.  Upon the commission of any act of bankruptcy by the Company, the execution by the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of 90 days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company, the outstanding principal and all accrued interest on the Notes will accelerate and automatically become immediately due and payable.

Investors . The Investors in the offering included our President, Chief Executive Officer and director, JJ Finkelstein, and four other members of the board of directors of the Company, Allan L. Goldstein, the Company’s Chairman and chief scientific officer, Joseph C. McNay, Don Elsey and Mauro Bove. The principal amounts of their respective Notes are as set forth below:

Use of Proceeds.    Based on current estimates, we anticipate that our existing financial resources, including the net proceeds from this offering, will be adequate to continue to conduct our business over the next 12 months.  We will need to raise additional capital prior to the maturity date to repay the Notes and to continue operating our business.

Securities Act Exemption.   The offering was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) in accordance with Section 4(a)(2) under the Securities Act and Rule 506 promulgated thereunder as an offering made solely to “accredited investors” as defined under the Securities Act.  The Company obtained representations and warranties from the Investors in the Security Purchase Agreement to support the Company’s reliance on this exemption.