Business Context and Reporting Period
This Form 8-K was filed by Trxade Group, Inc. on June 3, 2016, reporting events occurring on June 2, 2016. The filing details a material modification to a previously executed convertible promissory note purchase agreement with an existing investor.
Key Financial Metrics
The filing does not provide current revenue, profit, cash flow, or liquidity metrics. It references a specific debt instrument with the following terms:
- Total Principal Amount: $950,000 (delivered in two tranches of $450,000 and $500,000).
- Interest Rate: 25% of net profit from sales of specific pharmaceutical products by the subsidiary, Westminster Pharmaceuticals, LLC.
- Payment Frequency: Quarterly.
- Original Term: Three years.
Material Changes
On June 2, 2016, the Company executed a material amendment to the Note Purchase Agreement:
- Term Extension: The maturity date for each note was extended from three years to four years.
- Security Interest: The Investor was granted a first priority lien on all assets of Trxade Group, Inc. and its wholly-owned subsidiary, Westminster Pharmaceuticals, LLC.
Outlook, Risks, and Contingencies
The filing does not contain forward-looking guidance, management commentary on future operations, or a discussion of general risks. The primary contingency noted is the increased security interest held by the investor, which now covers all company assets.
Investor Verification Checklist
- Verify the full text of the "Amendment to the Convertible Promissory Note Purchase Agreement and Note" filed as Exhibit 10.1.
- Confirm the current status of the $950,000 principal and any accrued interest payments.
- Assess the impact of the first priority lien on the Company's ability to secure future financing or sell assets.
- Review the profitability of Westminster Pharmaceuticals, LLC, as interest payments are contingent on net profit from specific product sales.