UGRO Technologies, Inc. Files Form 8-K: Material Agreement and Exchange of Securities

Key Highlights

• UGRO Technologies (trading symbol: UGRO on NASDAQ) has entered into a Material Definitive Agreement that includes a Forbearance Agreement and an Exchange Agreement.
• The agreements relate to the exchange of outstanding indebtedness for equity securities, which may have a direct impact on the company’s capital structure and shareholder value.
• The exchange is being made under the exemption from securities registration provided by Section 3(a)(9) of the Securities Act of 1933, indicating the transaction involves the issuance of securities without a public offering.
• This filing could be price sensitive as it affects the company’s obligations, capital structure, and potentially its liquidity and solvency position.

Details of the Material Agreements

Forbearance Agreement

UGRO Technologies has entered into a Forbearance Agreement with Agile Capital Funding, LLC and other parties. This agreement likely provides UGRO with relief from immediate repayment or enforcement of certain debt obligations, giving the company time to address its financial position or restructure its debts.

The company affirms it has been compliant with its filing obligations under Section 13 or 15(d) of the Exchange Act for at least 90 days and has filed all required reports and submitted all interactive data files electronically for the past 12 months.

Exchange Agreement

The company is effecting an exchange of outstanding notes (debt) for equity securities (“Exchange Shares”) with Agile Capital Funding, LLC. The transaction is structured to comply with all requirements of Section 3(a)(9) of the Securities Act. This means:

• No public offering is being made, and the shares received are subject to restrictions on resale unless an exemption or registration is available.
• The counterparty, Agile Capital Funding, LLC, is an “accredited investor” as defined under Rule 501(a) of the Securities Act.
• The agreement includes investment representations and transfer restrictions for the Exchange Shares.

Potential Impact for Shareholders

• Capital Structure Change: The conversion of debt to equity will impact the company’s capitalization, potentially reducing leverage and increasing outstanding shares. This could result in dilution for existing shareholders but may improve the company’s solvency.
• Financial Health: The forbearance and exchange agreements may provide UGRO with needed financial flexibility, reducing short-term liquidity pressures and supporting ongoing operations.
• Regulatory Compliance: The company confirms all filings with the SEC have been made timely, including financial statements and certifications required under the Sarbanes-Oxley Act. No stop orders or suspensions are in effect for their registration statements.
• No Emerging Growth Company Status: UGRO has indicated it is not an emerging growth company, which affects the regulatory framework it operates under.
• No Finder’s Fees or Brokerage Commissions: The company confirms no such liabilities have been incurred in connection with this transaction.
• No Material Nonpublic Information: The company confirms no material, nonpublic information has been shared with Agile or other related parties in this transaction.
• NASDAQ Listing: UGRO’s common stock continues to be listed on NASDAQ, with all required listing and maintenance standards being met.

Risks and Considerations

• Share Dilution: The issuance of new equity to replace debt may dilute existing shareholders’ interests.
• Market Reaction: The market may react positively to the reduction in debt, or negatively to dilution or concerns about the company’s financial health.
• Ongoing Obligations: Failure to comply with the terms of the agreements, or any future financial distress, could result in further actions by creditors or adverse effects on the share price.
• No Material Adverse Effect: The company represents there has been no material adverse effect since its last audited financials, and it has conducted business as usual.

Conclusion

UGRO’s announcement of a debt-for-equity exchange and a forbearance agreement is significant. It addresses the company’s balance sheet and liquidity, and may reduce default risk. However, shareholders should weigh the benefits of improved solvency against the potential dilution of their ownership. This transaction could have a meaningful impact on the share price, depending on investor interpretation of the company’s financial health and its prospects.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should perform their own due diligence and consult their financial advisors before making investment decisions. The information is based on the company’s public filings as of the date specified and may be subject to change.

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