News – Omni Wraps Up $3M First Tranche

Omni Nutraceuticals Inc. and wholly owned Internet subsidiary HealthZone.com recently raised $3 million in the first closing of a possible $5 million investment by two investors, according to a Securities and Exchange Commission filing.

American Equities LLC and Corporate Financial Enterprises Inc. purchased three million Omni Nutraceuticals preferred shares for $2 million and 222,222 HealthZone common shares for $1 million.

The preferred shares, which are convertible into common stock, carry a 5% dividend payable semi-annually.

The investment also included a seven-year warrant to purchase 775,000 shares of Omni common stock at $2.25 per share and a seven-year warrant to purchase 37,000 shares of HealthZone common stock at the lesser of $1 or 70% of the lowest price per share received by HealthZone or Omni in any sale or issuance of HealthZone common stock.

The second closing, which can occur up to 200 days from the first transaction, allows the investors to purchase an additional $2 million of Omni preferred stock.

The preferred shares are convertible into an aggregate of 3 million shares of common stock.

Proceeds from sale of the securities will be used to repay debt, fund working capital and develop HealthZone’s business.

Based in Los Angeles, Omni Nutraceuticals is a leading formulator and supplier of natural health, herbal and nutritional supplement products and sales of $30.5 million in 1998.