Digital Health (NASDAQ:DHAC) announced in an 8-K this morning that it has amended its previously announced backstop agreement in connection to its business combination with telehealth software firm VSee and digital healthcare provider iDoc.

On January 18, the company entered into a backstop agreement with its sponsor to purchase up to $2 million of shares of Series A Preferred Stock and accompanying PIPE warrants that remain unpurchased by the investors.

Digital Health amended this backstop agreement yesterday to increase the financing from $2 million to up to an additional $7 million, to clarify that its sponsor and/or its designees may purchase the backstop commitment and to include a form of a lock-up agreement.

As part of the amendment, the aggregate number of shares of Series A Preferred Stock issuable will not be able to exceed 15,000. Additionally, the form of the PIPE warrant was amended so that Digital Health can redeem the warrants for cash or securities upon a change of control of the company. Certain closing conditions for the PIPE financing were also revised.

As a refresher, DHAC entered into an amended and restated securities purchase agreement on October 6, 2022, with certain accredited investors to have the participation right in subsequent offerings of the company’s equity securities. The PIPE investors agreed to purchase convertible preferred stock of the company designated as Series A Convertible Preferred Stock and warrants exercisable for shares of DHAC common stock for proceeds of at least $8M.  Prior to the closing of the business combination, DHAC intended to offer the PIPE investors the right to purchase up to an additional $2M of shares of its Series A Preferred Stock, or the additional PIPE shares, and accompanying warrants.

Back in August 2022, DHAC entered into a PIPE Securities Purchase Agreement with certain institutional and accredited investors for promissory notes convertible into shares of its common stock, and warrants exercisable for shares of its common stock for proceeds of at least $10M.

The SPAC did not originally include a PIPE at its deal announcement in June 2022, but brought in $115 million into the transaction from its trust, which was later reduced to just $7.05 million after seeing 93.96% redemptions in an October 2022 meeting. 

The deal had already featured a lock-up agreement for the company, at 50% six months after the close and 50% after 12 months after the close, and for the sponsor, at 6 months from the closing, but the parties decided to also include a PIPE Lock-Up Agreement through the securities purchase agreement in August.

California-based VSee provides a no code and low code SaaS platform to help physicians set up telehealth applications and Houston-based iDoc has a set of neurological telehealth tools to treat patients suffering from strokes or other brain injuries.