Item 8.01. Other Events
On January 8, 2021, Western Capital Resources, Inc., a Delaware corporation
(OTCQB: WCRS), entered into a Merger Agreement with Swisher Acquisition, Inc., a
Delaware corporation, and certain of Swisher Acquisition security holders.
Swisher Acquisition is a manufacturer of lawn and garden power equipment and
emergency safety shelters, and provider of turn-key manufacturing services to
third parties. Pursuant to the Merger Agreement, on January 8, 2021, Western
Capital Resources became the owner of all the equity interests of Swisher
Acquisition pursuant to a merger of a wholly-owned subsidiary of Western Capital
Resources with and into Swisher Acquisition.
In the merger, Western Capital Resources issued 408,000 shares of its common
stock under a private placement exemption under Section 4(2) of the Securities
Act of 1933, as amended, and paid cash, to the security holders of Swisher
Acquisition. The security holders of Swisher Acquisition include Richard Miller,
who is a director of Western Capital Resources, and BCP II Swisher, LLC, an
affiliate of the controlling stockholders of Western Capital Resources, who
received 16,801 and 390,596 shares of Western Capital Resources' common stock,
respectively. Based on the closing sale price of Western Capital Resources'
common stock of $6.75 per share on January, 7, 2021, the day before the merger,
the value of the shares and cash received by Mr. Miller and BCP II Swisher, LLC
was approximately $140,000 and $3.3 million, respectively. In addition, Western
Capital Resources guaranteed a $2.5 million Note payable by Swisher Acquisition,
Inc. to Blackstreet Capital Management, LLC, which is also controlled by
affiliates of Western Capital Resources' controlling stockholders.
To address the conflicts of interest of Mr. Miller and directors affiliated with
Western Capital Resources' controlling stockholders and Blackstreet Capital
Management, the Board of Directors of Western Capital Resources appointed a
special committee to consider the approval of the merger. The special
committee's sole member, Ellery Roberts, is independent and does not have a
conflict with respect to the merger. When it approved the merger, the committee
considered a number of factors, including the fairness opinion of Lincoln
International LLC, which determined that the consideration paid by Western
Capital Resources in the merger is fair, from a financial point of view, to
Western Capital Resources.
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