healthwarehouse.com inc (HEWA) Snapshot

On May 7, 2013, a putative shareholder derivative action was filed in the Court of Chancery of the State of Delaware against HealthWarehouse.com, Inc. and certain directors and an officer of the company alleging claims for breach of fiduciary duty, entrenchment and corporate waste. The derivative complaint seeks unspecified compensatory damages and other relief.

On April 29, 2013, John Backus submitted a letter addressed to the board of directors of HealthWarehouse.com, Inc. in which he informed the company of his resignation as a director on the board, effective immediately.

On March 28, 2013, HealthWarehouse.com, Inc., Hwareh.com, Inc. and Hocks.com, Inc. entered into a promissory note and a security agreement with Melrose Capital Advisors, LLC. Under the terms of the note, the company borrowed $500,000 from the Melrose on March 28, 2013. The proceeds of the loan will be used by the company for working capital purposes. The loan bears interest at a floating rate equal to the prime rate plus 4.25% per annum. Interest is payable monthly beginning May 1, 2013. The maturity date of the Loan is March 1, 2015. Under the terms of the security agreement, the company granted the Lender a first priority security interest in all of the company’s assets, in order to secure the company’s obligation to repay the loan. The note and security agreement contain customary affirmative and negative covenants, including covenants restricting the company’s ability to take certain actions without the Melrose’s consent, such as incurring additional indebtedness, transferring or encumbering assets, paying dividends or making certain other payments, and acquiring other businesses. The payment of the loan may be accelerated prior to its maturity date upon certain specified events of default, including failure to pay, bankruptcy, breach of covenant, and breach of representations and warranties. In consideration of the loan, the company granted the Lender a warrant to purchase 750,000 shares of HealthWarehouse.com, Inc.’s $0.001 par value common stock at a purchase price of $0.35 per share. The warrant may be exercised in whole or in part and from time to time for a term of five years from its grant date. The warrant contains a cashless exercise feature and certain customary anti-dilution adjustment provisions. The warrant is transferable in whole or in part, so long as the transfer complies with applicable securities laws. The lender exercised the warrant on April 1, 2013 in a “cashless” transaction, and will receive 573,826 “net” shares of common stock.