EX1SA-6 MAT CTRCT 2 tm2226607d1_ex6-3.htm EXHIBIT 6.3

Exhibit 6.3

 

FIRST AMENDMENT TO REVENUE LOAN AND SECURITY AGREEMENT

 

This first amendment (this “Amendment”) to that certain Revenue Loan and Security Agreement dated April 29, 2020 (the “Agreement”), by and among NowRx, Inc., a Delaware corporation (the “Company”), Cary Breese (the “Key Person”), and Decathlon Alpha IV, L.P., a Delaware limited partnership (“Lender”), is effective May 5, 2021 (the “First Amendment Date”). Capitalized terms used but not defined herein have the meanings given to them in the Agreement.

 

The Company desires to obtain from Lender a Subsequent Advance in the amount of $1,000,000 but has not satisfied the conditions to a Subsequent Advance required by the Agreement. In connection with and as a material inducement to Lender to make such Subsequent Advance, Company desires to make certain amendments to the Agreement as provided herein.

 

The Company and the Lender agree as follows:

 

1.             Subsequent Advance. Pursuant to Section 2.1(b) of the Agreement, the Company hereby requests from Lender a Subsequent Advance in the amount of $1,000,000. In connection with and as a further condition to the advancement of the requested Subsequent Advance by Lender to the Company, the Company hereby certifies to Lender:

 

1.1.            the amount of all Advances previously advanced to the Company by Lender plus the additional Subsequent Advance requested hereby does not exceed the Revenue Loan Amount;

 

1.2.            the amount of all previous Subsequent Advances plus the new Subsequent Advance requested does not exceed the amount of Subsequent Advances for the applicable Advance Period;

 

1.3.            all information contained in the most recent Certificate of Perfection delivered by the Company to Lender is accurate and complete as of the date hereof;

 

1.4.            (i) Company is not in default and no Event of Default has occurred and (ii) all representations and warranties of Company in Article 3 are true as of the date hereof; and

 

1.5.            except as provided in Section 3 of this Amendment, the Company has performed and complied with all covenants, agreements, obligations and conditions contained in the Agreement that are required to be performed or complied with by it on or before receiving the Subsequent Advance requested hereby.

 

2.Amendments.

 

2.1.            Schedule 11.3. An amended and restated Schedule 11.3 to the Agreement is attached hereto as Schedule 11.3.

 

3.             Limited Waiver. Lender acknowledges that Company has not satisfied the Subsequent Advance conditions set forth in paragraphs 6 through 9 of Schedule 2.1(b) of the Agreement. Lender hereby waives the Company’s obligation to comply with such conditions solely for the purpose of making the Subsequent Advance requested hereby. The foregoing acknowledgement and waiver by Lender is not intended to be, and shall not be construed as, a waiver of (i) any Event of Default or other breach of the Agreement (including the Company’s failure to make monthly payments as required by Section 2.3(b) of the Agreement or any future Event of Default or other breach of the Agreement), (ii) any of the rights or remedies of Lender, (iii) any obligations of Company under the Agreement, or (iv) any other current or future conditions set forth in the Agreement (including conditions to any requests for any additional Subsequent Advances).

 

 

 

 

4.             Transaction Costs. Pursuant to Section 12.7 of the Agreement and in connection with the Subsequent Advance contemplated by this Amendment, the Company will reimburse Lender for all fees and expenses incurred by Lender relating to this Amendment and the making of the contemplated Subsequent Advance. Lender will withhold $500 of the Subsequent Advance requested hereby and apply it towards Company’s obligation to pay Lender’s fees and expenses incurred in connection with this Amendment.

 

5.             No Other Changes. In all other respects, the Agreement remains in full force and effect.

 

[Signatures on following page]

 

2

 

 

The parties have executed this Amendment as of the First Amendment Date.

 

COMPANY:  
   
NOWRX, INC.  
   
By:  
  Cary Breese, Chief Executive Officer  
   
   
LENDER:  
   
DECATHLON ALPHA IV, L.P.  
   
By: Decathlon Alpha GP IV, LLC  
Its: General Partner  
   
By:  
  John Borchers, Managing Director  
   
   
KEY PERSON:  
   
By:  
  Cary Breese  

 

[Signature page to First Amendment to Revenue Loan and Security Agreement]

 

 

 

SCHEDULE 11.3

MINIMUM INTEREST

 

(a)

 

Subject to adjustment as provided in the Agreement (including without limitation pursuant to parts (b) and (c) below), the “Minimum Interest” means the amount shown below in the column headed Minimum Interest opposite the applicable period during which the Payoff Date occurs:

 

Period During Which the Payoff
Date Occurs
Minimum Interest
On or before 6 months after the Effective Date 0.35 times the Amount Advanced
After 6 months and on or before 12 months after the Effective Date 0.45 times the Amount Advanced

After 12 months and on or before 18 months after the Effective Date

0.55 times the Amount Advanced
After 18 months and on or before 24 months after the Effective Date 0.65 times the Amount Advanced

After 24 months and on or before 30 months after the Effective Date

0.80 times the Amount Advanced
After 30 months after the Effective Date 1.00 times the Amount Advanced

 

For the avoidance of doubt, any increases to the Minimum Interest made pursuant to Section 8.2 of the Agreement will be cumulative and will apply throughout the remainder of the term of the Agreement for each period set forth in the table above.

 

(b)

 

If the Revenue or Reported Revenue is not equal to at least 75% of Projected Revenue (the “MI Threshold”) for any Revenue Test Period, then the Minimum Interest multiple will increase, automatically and without notice from Lender, by 0.10 throughout the remainder of the term of the Agreement for each period set forth in the table in part (a) of this Schedule 11.3. For each incremental 10% that the Projected Revenue is lower than the MI Threshold, the Minimum Interest multiple will increase, automatically and without notice from Lender, by an additional 0.05 throughout the remainder of the term of the Agreement for each period set forth in the table in part (a) of this Schedule 11.3.

 

If Company fails to meet the MI Threshold for two or more Revenue Test Periods, the adjustments made pursuant to part (b) of this Schedule 11.3 will be cumulative. There is no limit to the number of adjustments that may be made pursuant to part (b) of this Schedule 11.3.

 

(c)

 

Attached to the end of this Schedule 11.3 is an addendum containing the Company’s cash flow projections through March 31, 2022. If the Company’s Actual Burn Rate during the Burn Rate Period exceeds its Projected Burn Rate for the same period (i.e., if the Company’s financial performance is worse than projected), then each of the Minimum Interest multiples set forth in the table in part (a) of this Schedule 11.3 will increase, automatically and without notice from Lender, by 0.01 times the Amount Advanced for each month occurring in whole or in part during the Burn Rate Period.

 

 

 

For example, if the Company completed a Qualified Financing during August 2021, then (i) each of the Minimum Interest multiples set forth in the table in part (a) of this Schedule 11.3 would increase by 0.03 times the Amount Advanced (i.e., a 0.01x increase for each of June, July, and August) if the Actual Burn Rate exceeded the Projected Burn Rate for the Burn Rate Period, and (ii) there would be no increase to the Minimum Interest multiples pursuant to this part (c) if the Actual Burn Rate was less than the Projected Burn Rate for the Burn Rate Period.

 

For purposes of this Schedule 11.3, the following terms have the meanings set forth below:

 

Actual Burn Rate” means the Company’s actual operating losses during the Burn Rate Period after payment to Lender of the monthly payments required by Section 2.3(b) of the Agreement.

 

Burn Rate Period” means the period beginning June 2021 and ending on the earlier of (i) March 31, 2022 and (ii) the date on which the Company completes a Qualified Financing. The “Burn Rate Period” includes the partial month during which the Company completes the Qualified Financing.

 

Projected Burn Rate” means the amount of the Company’s projected operating losses set forth under the row titled “Net Cash Burn” of the addendum attached to the end of this Schedule 11.3 for the Burn Rate Period.

 

Qualified Financing” means a sale of equity securities of the Company that results in the Company receiving at least $10,000,000 in gross proceeds at the closing.

 

 

 

Addendum to Schedule 11.3

Projected Net Cash Burn Rate

 

See attached.

 

 

 

NowRx                                                            
Cash Flow Projections                                                            
4-15-2021  2021   2022 
   Forecast   Forecast 
   Jan   Feb   Mar   Apr   May   Jun   July   Aug   Sep   Oct   Nov   Dec   Jan   Feb   Mar 
Pharmacy Sales                                                            
MTNV  680,000   707,200   735,488   764,908   795,504   827,324   860,417   894,834   930,627   967,852   1,006,566   1,046,829   1,088,702   1,132,250   1,177,540 
SJCE  240,000   249,600   259,584   269,967   280,766   291,997   303,677   315,824   328,457   341,595   355,259   369,469   384,248   399,618   415,602 
IRVN  250,000   260,000   270,400   281,216   292,465   304,163   316,330   328,983   342,142   355,828   370,061   384,864   400,258   416,268   432,919 
BURL  185,000   192,400   200,096   208,100   216,424   225,081   234,084   243,447   253,185   263,313   273,845   284,799   296,191   308,039   320,360 
Total Existing Locations  1,355,000   1,409,200   1,465,568   1,524,191   1,585,158   1,648,565   1,714,507   1,783,088   1,854,411   1,928,588   2,005,731   2,085,960   2,169,399   2,256,175   2,346,422 
Phoenix/Mesa  25,000   35,000   50,000   55,000   60,500   66,550   73,205   80,526   88,578   97,436   107,179   117,897   129,687   142,656   156,921 
Pleasanton  1,000   5,000   15,000   25,000   35,000   50,000   70,000   77,000   84,700   93,170   102,487   112,736   124,009   136,410   150,051 
Hayward  0   0   5,000   15,000   25,000   35,000   50,000   70,000   77,000   84,700   93,170   102,487   112,736   124,009   136,410 
Van Nuys  0   0   5,000   15,000   25,000   35,000   50,000   70,000   77,000   84,700   93,170   102,487   112,736   124,009   136,410 
Total New Locations  26,000   40,000   75,000   110,000   145,500   186,550   243,205   297,526   327,278   360,006   396,006   435,607   479,168   527,085   579,793 
                                                             
Total Sales  1,381,000   1,449,200   1,540,568   1,634,191   1,730,658   1,835,115   1,957,712   2,080,613   2,181,689   2,288,593   2,401,737   2,521,567   2,648,566   2,783,259   2,926,215 
                                                             
Pharmacy COGS                                                            
                                                             
Gross Profit  207,150   188,396   200,274   212,445   224,986   238,565   274,080   291,286   305,436   320,403   336,243   378,235   397,285   417,489   438,932 
                                                             
Pharmacy Operating Expenses                                                            
                                                             
Total Pharmacy Operating Expenses  489,000   495,224   501,356   512,385   538,303   541,167   580,353   564,225   577,733   626,790   600,952   606,790   611,773   618,044   623,388 
                                                             
Pharmacy Operations Profit (Loss)                                                            
MTNV  (17,000)  (28,288)  (25,742)  (22,947)  (19,888)  (18,615)  (9,895)  (8,948)  (7,445)  (6,291)  (5,033)  5,234   6,532   6,793   8,243 
SJCE  (34,000)  (37,552)  (36,254)  (39,904)  (38,500)  (42,040)  (37,485)  (35,785)  (39,016)  (37,177)  (35,264)  (29,580)  (27,363)  (25,057)  (22,660)
IRVN  (32,500)  (36,200)  (34,848)  (38,442)  (36,980)  (40,459)  (35,714)  (33,942)  (37,100)  (35,184)  (33,191)  (27,270)  (24,961)  (22,560)  (20,062)
BURL  (32,250)  (39,988)  (38,988)  (37,947)  (36,865)  (40,739)  (37,228)  (35,917)  (34,554)  (38,136)  (36,662)  (32,280)  (30,571)  (28,794)  (26,946)
SPEC                                                            
Phoenix/Mesa  (46,250)  (45,450)  (48,500)  (47,850)  (47,135)  (46,349)  (44,751)  (48,726)  (47,599)  (46,359)  (44,995)  (42,315)  (40,547)  (38,602)  (36,462)
Pleasanton  (49,850)  (49,350)  (48,050)  (46,750)  (45,450)  (43,500)  (40,200)  (39,220)  (38,142)  (36,956)  (35,652)  (33,090)  (31,399)  (29,538)  (27,492)
Hayward  (30,000)  (35,000)  (34,350)  (33,050)  (36,750)  (35,450)  (38,000)  (35,200)  (34,220)  (38,142)  (36,956)  (34,627)  (33,090)  (31,399)  (29,538)
Van Nuys  (30,000)  (35,000)  (34,350)  (33,050)  (36,750)  (35,450)  (38,000)  (35,200)  (34,220)  (38,142)  (36,956)  (34,627)  (33,090)  (31,399)  (29,538)
                                                             
Total Pharmacy Operations Profit (Loss)  (271,850)  (306,828)  (301,082)  (299,940)  (298,318)  (302,602)  (281,273)  (272,939)  (272,296)  (276,387)  (264,709)  (228,555)  (214,488)  (200,555)  (184,456)
                                                             
Corporate Expenses                                                            
G&A  (150,000)  (155,000)  (155,000)  (155,000)  (155,000)  (155,000)  (155,000)  (155,000)  (170,000)  (185,000)  (200,000)  (215,000)  (225,000)  (225,000)  (225,000)
R & D  (175,000)  (175,000)  (175,000)  (175,000)  (175,000)  (175,000)  (175,000)  (225,000)  (275,000)  (325,000)  (375,000)  (375,000)  (375,000)  (375,000)  (375,000)
Sales & Mktg  (176,634)  (189,134)  (189,134)  (189,134)  (189,134)  (189,134)  (189,134)  (189,134)  (189,134)  (198,591)  (208,520)  (218,946)  (229,894)  (241,388)  (253,458)
Other Income/Expenses  35,000   35,000   35,000   35,000   35,000   35,000   35,000   35,000   35,000   35,000   35,000   35,000   35,000   35,000   35,000 
Total Corporate Expenses  536,634   554,134   554,134   554,134   554,134   554,134   554,134   604,134   669,134   743,591   818,520   843,946   864,894   876,388   888,458 
                                                             
Operating Net Income/Loss  (818,484)  (860,962)  (855,216)  (854,074)  (867,452)  (856,736)  (860,407)  (877,073)  (941,430)  (1,049,978)  (1,083,229)  (1,072,501)  (1,079,382)  (1,076,943)  (1,072,914)
                                                             
Decathlon Payment  (31,073)  (32,607)  (34,663)  (36,769)  (38,940)  (41,290)  (44,049)  (46,814)  (49,088)  (51,493)  (54,039)  (56,735)  (59,593)  (62,623)  (65,840)
                                                             
Net Cash Burn  (849,557)  (893,569)  (889,879)  (890,844)  (906,391)  (898,026)  (904,456)  (923,887)  (990,518)  (1,101,471)  (1,137,268)  (1,129,237)  (1,138,974)  (1,139,567)  (1,138,754)
                                                             
Series C Funding                              100,000,000                             
Cash - Ending Balance  8,046,305   7,152,736   6,262,858   5,372,014   4,465,623   3,567,597   2,663,141   101,739,254   100,748,735   99,647,264   98,509,996   97,380,759   96,241,785   95,102,218   93,963,464