Deal includes warrants at 84.08% discount; proceeds used to pay loans
By Susanna Moon
Chicago, Feb. 6 - HealthWarehouse.com, Inc. completed private placements of units for proceeds of $3.5 million. As a part of the placement, Lalit Dhadphale, the company's president and chief executive officer, purchased 500,000 units.
The company sold 3,501,975 units of one share and one warrant at a price of $1.00 per unit. Each warrant is exercisable at $0.25 per share for five years after Feb. 1.
The warrant strike price is an 84.08% discount to the company's closing price on Jan. 31.
Proceeds were used to satisfy all of its loan obligations.
In connection with the placement, Dhadphale entered into repurchase agreements with each other purchaser of units, under which he agreed to repurchase one-half of each holder's units at a purchase price of $1.00 per unit if the company's closing price is less than $0.25 on five consecutive trading days at any time within one year of closing.
Cape Bear Partners, LLC, which holds a substantial equity position in the company, entered into repurchase agreements with each purchaser, other than Dhadphale, that are substantially similar to Dhadphale's agreements, except that Cape Bear's obligations are secured by a lien over real estate.
Repaying notes, staying afloat
The company said on Jan. 7 that it lacked resources to repay its 7% convertible promissory notes and 7% promissory notes and that it was considering alternatives.
The alternatives included seeking additional financing and negotiating with the noteholders.
As noted before, the company was supposed to pay $1 million of principal and $180,000 of accrued interest on the convertibles on Dec. 31 but failed to do so. The convertibles were issued to two investors under a Nov. 9, 2010 agreement.
The same investors purchased the 7% promissory notes under an agreement dated Sept. 2, 2011. On Jan. 15, $2 million of principal and $193,000 of accrued interest is due on the 2011 notes.
On Dec. 31, the investors told the company's board of directors that all amounts owed under the 2010 agreement had matured and were immediately due. They also alleged that the company was in violation of some covenants, including the covenants prohibiting the incurrence of additional debt and the existence of liens over the collateral for the convertibles. The investors said they planned to pursue all rights and remedies available to them.
All of the notes are secured by a first-priority security interest in substantially all the assets of the company and its subsidiaries, including inventory and the equipment the company uses to fill prescriptions, according to previous 8-K filing. The agreements also require the company to pay the investors all costs and expenses (including legal fees) incurred in connection with the enforcement and collection of its obligations under the agreement.
The company previously said the investors had not yet taken any action to exercise their remedies. If they did so, the company said it may no longer be able to operate. In particular, if the investors took action against the company's inventory or equipment, the company would not be able to fill customer orders, and it would be required by law to transfer those prescriptions to other pharmacies. In addition, the company noted that its suppliers and other vendors may be unwilling to provide it goods and services until it has satisfied its obligations under the 2010 and 2011 agreements.
HealthWarehouse.com is a retail mail-order pharmacy based in Florence, Ky.
| Issuer: | HealthWarehouse.com, Inc.
|
| Issue: | Units of one common share and a warrant
|
| Amount: | $3,501,975
|
| Units: | 3,501,975
|
| Price: | $1.00
|
| Warrants: | One warrant per unit
|
| Warrant expiration: | Five years
|
| Warrant strike price: | $0.25
|
| Investor: | Lalit Dhadphale for $500,000
|
| Settlement date: | Feb. 1 and Feb. 6
|
| Stock symbol: | Pink Sheets: HEWA
|
| Stock price: | $1.57 at close Jan. 31
|
| Market capitalization: | $21.69 million
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
