Generex Biotechnology Corporation (OTCPK:GNBT) entered into a letter of intent to acquire 51% stake in Emmaus Life Sciences, Inc. for approximately $230 million on January 16, 2017. The purchase price for the Emmaus Shares will consist of $10 million in cash and $215 million worth of shares of Generex Biotechnology Corporation's common stock. Generex Biotechnology Corporation has paid Emmaus an initial portion of the cash consideration in the amount of $0.5 million and will pay Emmaus $1.5 million within three weeks of January 16, 2017. In addition, upon signing of a definitive purchase agreement Generex Biotechnology Corporation will pay Emmaus $2 million. The remaining $6 million of the cash portion of the consideration will be paid at the closing. As part of the transaction, Emmaus shall have the right to earn back up to 36% of its capital stock (out of the total of 51%), subject to approval of FDA by July 7, 2017 or securing a contractual agreement with a pharmaceutical company to which Emmaus receives an upfront payment from the pharmaceutical company, at an exercise price of $100 for each 1% of the Emmaus capital stock. Under the terms of the letter of intent, once Emmaus achieves the required approvals, Emmaus will have the option and right of spinning off as a public or private company of file as quickly as possible with the Securities and Exchange Commission and effectuate an S-1 filing according to the United States Security Act to spin off Emmaus for a listing on a major U.S. Exchange (i.e. NASDAQ or NYSE), without any further consent of Generex. Additionally, Generex will grant Emmaus an option to purchase for cash an additional 5% of Emmaus' capital stock at valuation equal to the then current fair market value less a 10% discount, which will be exercisable upon the occurrence of the spin off.

Upon closing, Yutaka Niihara, Chief Executive Officer of Emmaus, shall be elected to serve as the Executive Chairman of the Generex Board, the existing Board of Directors of Emmaus shall continue to be the directors of Generex for a period of three years and a representative of Generex will be elected as a Director of Emmaus. As of February 9, 2017, Emmaus granted to Generex an extension of the payment date for an interim cash consideration payment in the amount of $1.5 million to February 16, 2017. As of February 24, 2017, Generex was unable to make the payment of $1.5 million even after Emmaus granted Generex, a further extension by a letter amendment dated February 16, 2017 for the payment date of February 24, 2017. Additionally the date for the second additional deposit, for the sum of $2 million is extended to March 20, 2017. On March 3, 2017, the Generex and Emmaus entered into a further waiver and amendment to the letter of intent. Emmaus and Generex will use best efforts to negotiate and sign a definitive formal purchase agreement no later than March 30, 2017. Generex must provide a $0.5 million deposit on or prior to March 6, 2017. The consummation of the acquisition is subject to the execution of the formal purchase agreement, listing and approval of new shares in the stock exchange and satisfactory completion of the due diligence by the parties. The transaction is expected to close within 60 days of January 16, 2017. The closing date is extended to the date which is five trading days after the filing date upon which Generex files the amendment with the Delaware Secretary of State, provided the filing date is not later than May 1, 2017 and the closing date is not later than May 8, 2017.