BOSTON and SYDNEY – 1 July 2019 – GI Dynamics® Inc. (ASX: GID) (the Company) medical device company that is developing EndoBarrier® for patients with type 2 diabetes and obesity confirms that, following the holding of its 2019 Annual Meeting of Stockholders, it has issued certain warrants associated with the convertible note and warrant financings as announced on 18 March 2019 (March 2019 Warrant) and 8 May 2019 (May 2019 Warrant) to Crystal Amber Fund Limited (Crystal Amber) following stockholder approval.

In addition to the issue of the relevant warrants, the conversion feature under each convertible note issued to Crystal Amber on 18 March 2019 (March 2019 Convertible Note) and 8 May 2019 (May 2019 Convertible Note), which was subject to obtaining stockholder approval, has also been approved by stockholders. The Company confirms that the obtaining of this approval now permits Crystal Amber to convert each relevant convertible note (including the principal amount and any accrued interest thereon) into CHESS Depositary Interests (CDIs) or shares of common stock, should it wish to do so, further in accordance with the terms of each of the March 2019 Convertible Note and the May 2019 Convertible Note.

Further details of the March 2019 Convertible Note, March 2019 Warrant, May 2019 Convertible Note and May 2019 Warrant are provided in the attached Appendix 3B and also under the relevant headings below.

“We are pleased to have the continued support of our stockholders,” said Scott Schorer, president and chief executive officer of GI Dynamics. “It is imperative that GI Dynamics continues to progress towards a successful STEP-1 study and India trial to
advance EndoBarrier for a patient population that is in need of a safe and effective treatment option. To do so, we need the continued support of our stockholders and future investors.”

 

Notice of Conversion of Convertible Notes

The Company further confirms that following obtaining the relevant approval of the conversion features under the March 2019 Note and the May 2019 Note, Crystal Amber has provided notice to the Company that it will exercise its voluntary conversion option for the convertible note issued on 30 May 2018 (May 2018 Convertible Note) as well as the March 2019 Convertible Note and the May 2019 Convertible Note into the relevant number of CDIs (being all principal and accrued interest in respect of each convertible note).

The Company will review the notices of conversion and will provide a further update once the relevant CDIs have been issued. The referenced CDI issuance is expected to occur within the next few days.

The conversion notices received relate to the 2018 Convertible Note, the March 2019 Convertible Note and the May 2019 Convertible Note only (and not to the convertible note issued to Crystal Amber in 2017 or to any warrants that have been issued to
Crystal Amber).

 

March 2019 Convertible Note and March 2019 Warrants

The US$1,000,000 March 2019 Convertible Note (plus any accrued interest) is convertible into CDIs at a conversion price of US$0.0127 per CDI. The March 2019 Warrants entitle Crystal Amber to subscribe for up to 78,984,823 CDIs (representing 1,579,696 shares of common stock of the Company) at an exercise price of US$0.0127 per CDI. Both the conversion price under the convertible note and the exercise price under the Warrant are subject to adjustment as set forth in the convertible note and the warrant documentation, respectively.

Any CDIs issued upon the conversion of the March 2019 Convertible Note or upon exercise of the March 2019 Warrants shall rank equally in all respects with all other CDIs on issue from the time of their allotment.

The funds raised by issuing the March 2019 Convertible Note have been used by GI Dynamics to fund the continued development of EndoBarrier and for general working capital purposes.

 

May 2019 Convertible Note and May 2019 Warrants

The US$3,000,000 May 2019 Convertible Note (plus any accrued interest) is convertible into CDIs at a conversion price of US$0.0127 per CDI. The May 2019 Warrants entitles Crystal Amber to subscribe for up to 236,220,480 CDIs (representing 4,724,409 shares of common stock of the Company) at an exercise price of US$0.0127 per CDI. Both the conversion price under the May 2019 Convertible Note and the exercise price under the May 2019 Warrant are subject to adjustment as set forth in the convertible note and the warrant documentation, respectively.

Any CDIs issued upon the conversion of the May 2019 Convertible Note or upon exercise of the May 2019 Warrants shall rank equally in all respects with all other CDIs on issue from the time of their allotment.

The funds raised by issuing the May 2019 Convertible Note are being used by GI Dynamics to fund the continued development of EndoBarrier and for general working capital purposes.

 

Restrictions on Resale of Securities in the United States

No convertible note, nor any warrant, nor any of the securities issuable under the convertible notes or the warrants have not been registered under the Securities Act of 1933, as amended (Act), or any state securities laws, and until so registered may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Act and applicable state securities laws.

This announcement is not an offer to sell, nor a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which the offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction or an applicable exemption therefrom.

 

About GI Dynamics

GI Dynamics®, Inc. (ASX:GID) is the developer of EndoBarrier®, the first endoscopically-delivered device therapy for the treatment of type 2 diabetes and obesity. EndoBarrier is not approved for sale and is limited by federal law to investigational use only. Founded in 2003, GI Dynamics is headquartered in Boston, Massachusetts. For more information please visit www.gidynamics.com.

 

Forward-Looking Statements

This announcement may contain forward-looking statements. These statements are based on GI Dynamics management’s current estimates and expectations of future events as of the date of this announcement. Furthermore, the estimates are subject to several risks and uncertainties that could cause actual results to differ materially and adversely from those indicated in or implied by such forward-looking statements.

These risks and uncertainties include, but are not limited to, risks associated with our ability to continue to operate as a going concern; our ability to raise sufficient additional funds to continue operations and to conduct the planned pivotal trial of EndoBarrier in the United States (STEP-1); our ability to execute STEP-1 under FDA’s Investigational Device Exemption; our ability to enlist clinical trial sites and enroll patients in accordance with STEP-1; the risk that the FDA stops STEP-1 early as a result of the occurrence of certain safety events or does not approve an expansion of STEP-1; our ability to maintain compliance with our obligations under our existing convertible note and warrant agreements executed with Crystal Amber, including our obligations to make payment on the Note that is due on 1 October 2019; our ability to restructure the terms of the Note with Crystal Amber that is due on 1 October 2019 if we are unable to raise sufficient funds to enable us to fully repay such note when due; obtaining and maintaining regulatory approvals required to market and sell our products; the possibility that future clinical trials will not be successful or confirm earlier results; the timing and costs of clinical trials; the timing of regulatory submissions; the timing, receipt and maintenance of regulatory approvals; the timing and amount of other expenses; the timing and extent of third-party reimbursement; intellectual-property risk; risks related to excess inventory; risks related to assumptions regarding the size of the available market; the benefits of our products; product pricing; timing of product launches; future financial results; and other factors, including those described in our filings with the U.S. Securities and Exchange Commission.

Given these uncertainties, one should not place undue reliance on these forward-looking statements. We do not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or otherwise, unless we are required to do so by law.

 

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