Grow Capital, Inc. signed a letter of intent to acquire Grow Capital, Inc. in a reverse merger transaction.
May 15, 2019
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Bombshell Technologies, LLC signed a letter of intent to acquire Grow Capital, Inc. (OTCPK:GRWC) in a reverse merger transaction on March 12, 2019. Bombshell Technologies, LLC entered into an agreement to acquire Grow Capital, Inc. (OTCPK:GRWC) in a reverse merger transaction on June 26, 2019. Under the terms of the letters of intent, Grow Capital, Inc will tender shares of its stock for Bombshell Technologies. As per the agreement, in exchange for unregistered restricted shares of Grow Capital's common stock, 100% of the outstanding shares of Bombshell would be acquired. Upon closing, the shares of Bombshell common stock outstanding immediately prior to the effective time of exchange shall be converted solely into the right to receive 11.1 million shares of Grow Capital common stock on a pro rata basis. Additionally, pursuant to the agreement, the Bombshell holders will be eligible to receive earn-out consideration of up to $3 million in shares of Grow Capital common stock earnable in $1 million increments in the second, third and fourth years after the closing, based on whether Bombshell is able to meet certain EBIT thresholds in each year as set forth in the agreement. The number of earn-out shares to be issued would not exceed 36.8 million.
As per the agreement, Bombshell shall become a wholly-owned subsidiary of Grow Capital. The agreement is terminable by Grow Capital or Bombshell, if the closing has not occurred by October 31, 2019 and the terminating party is not in breach. A due diligence review is underway and a final determination regarding this acquisition is anticipated within weeks. The final closing of the transaction is subject to customary closing conditions, which are expected to be satisfied in July 2019. Other conditions include the receipt of any necessary regulatory approvals and third party consents, Grow Capital and the Bombshell Holders entering into the registration rights agreement and there being no material adverse change in the business, condition (financial or otherwise), capitalization, assets, operations or financial performance of Bombshell or Grow Capital. Shareholders of Bombshell approved the agreement. The transaction is expected to close on October 31, 2019. Mark Coffin of Seyfarth Shaw LLP acted as legal advisor to Grow Capital, Inc. Glenn H. Truitt of Ideal Business Partners acted as legal advisor to Bombshell Technologies, LLC.
Grow Capital, Inc. is a software, technology and financial services holding company. The Company identifies, acquires, and incubates upstarts in the financial technology sector (FinTech) to provide its shareholders access to investment opportunities in small and medium-sized businesses. The Companyâs segments include Bombshell Technologies and Corporate, PERA and Appreciation. Bombshell Technologies and Corporate segment provides software which delivers customized back-office compliance, multi-pay commission processing, and new client application submission system, along with digital engagement marketing services centric to financial services. PERA segment provides leads for insurance agents to connect retirement professionals and public employees to trusted insurance advisors. Appreciation segment provides full-service retirement planning. The Companyâs subsidiaries include Resort at Lake Selmac, Inc. and Bombshell Technologies, Inc.