Indicate by check
mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth
company, indicate by check mark if the registrant has elected not
to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section
13(a) of the Exchange Act. ☒
Item
1.01Entry into a Material Definitive
Agreement.
Item
2.01Completion of Acquisition or Disposition of
Assets.
Item
3.02 Unregistered Sales of Equity
Securities.
Item
8.01 Other Information.
Acquisition of DTI
Services Limited Liability Company (doing business as RCA
Commercial Electronics)
On December 9, 2021,
Alpine 4 Holdings, Inc., a Delaware corporation (the “Parent”), and
A4 Technologies, Inc., a Delaware corporation (the “Buyer”) and
wholly owned subsidiary of the Parent, entered into a Membership
Interest Purchase Agreement (the “MIPA”) with DTI Services Limited
Liability Company (doing business as RCA Commercial Electronics),
an Indiana limited liability company (“DTI”), Direct Tech Sales
LLC, (also having an assumed business name of RCA Commercial
Electronics), an Indiana limited liability company (“Direct Tech”),
PMI Group, LLC, an Indiana limited liability company (“PMI”),
Continu.Us, LLC, an Indiana limited liability company
(“Continu.Us”), Solas Ray, LLC, an Indiana limited liability
company (“Solas”), Kirby Goedde, an individual (“Goedde”), and
Andrew Spence, an individual (“Spence” and with Goedde, each a
“Seller” and collectively, the “Sellers”). DTI, Direct Tech,
PMI, Continu.Us, and Solas are each a “Company” and collectively,
the “Companies,” and also referred to in the MIPA collectively as
“RCA.” Pursuant to the MIPA, the Buyer acquired all of the
outstanding membership interests of the Companies from the Sellers,
which is referred to herein as the “Transaction.”
Prior to the
Transaction, the Sellers owned all of the issued and outstanding
membership interests in the Companies (collectively, the “Acquired
Interests”). Pursuant to the Transaction, the Buyer acquired
all of the Acquired Interests and became the sole owner of the
Companies.
The parties to the
Transaction met all of the required conditions to closing on
December 13, 2021, and the Transaction closed on that day.
The purchase price
for the Acquired Interests (the “Purchase Price”) consisted of a
cash payment (the “Cash Payment”); the issuance of promissory notes
(the “Notes”); shares of the Parent’s Class A Common Stock (the
“Stock Payment”); and warrants to purchase additional shares of the
Parent’s Class A Common Stock (the “Warrants”), on the following
terms:
-Cash
Payment – The Buyer paid an aggregate of fourteen million
dollars ($14,000,000) to the two sellers.
-Notes
– The Buyer made and issued to the Sellers two promissory
notes, one in the amount of $1,800,000 to Mr. Goedde, and the
second in the amount of $200,000 to Mr. Spence. Each of the
Notes accrues interest at a rate of 3.75%, with a 10-year
amortization, and with a three-year balloon payment of the
remaining principal. The Notes are secured by the Parent’s
corporate guaranty (the “Guaranty”).
-The
Stock Payment – The Parent issued to the Sellers 1,587,301
shares of the Parent’s restricted Class A Common Stock (the
“Transaction Shares”) equal to $4,000,000, valued per share at the
Variable Weighted Average Price averaged over the three Trading
Days prior to the Closing Date (“VWAP”). The Transaction Shares
were issued to the Sellers as follows: Kirby Goedde 1,428,571
Transaction Shares, equal to 90% of the total number of shares of
Common Stock; and Andrew Spence 158,730 Transaction Shares, equal
to 10% of the total number of shares of Common Stock. The
Transaction Shares are restricted stock subject to a Rule 144
restriction against sale for 6 months, and sales of the Transaction
Shares by each Seller after the 6 months restriction will be
limited to 25% of the number of Transaction Shares every 90
days.
-Warrants
– The Parent also issued to the Sellers time-restricted
Warrants to purchase up to 396,825 additional shares of the
Parent’s Class A Common Stock equal to $1,000,000 in shares
(“Warrant Payment”) valued per share at the VWAP as defined above.
The Warrants were issued to the Sellers as follows: Kirby Goedde:
357,143 Warrants, representing 90% of the total Warrant Payment,
and Andrew Spence: 39,682 Warrants, representing 10% of the total
Warrant Payment. The exercise price of the warrants is $2.52, which
was the VWAP.
The
Transaction Shares and the Warrants were issued in connection with
the Transaction described above without registration under the 1933
Act in reliance on Section 4(a)(2) of the 1933 Act and the rules
and regulations promulgated thereunder.
Business of RCA
Commercial Electronics
RCA Commercial
Electronics is the continuance of the US-based legacy conglomerate
RCA Corporation which dominated the electronics industry in the
20th century. DTI acquired the rights to the RCA brand in
2006 to design and build products for the Hospital, Lodging,
Education, and Institutional markets. In 2018, DTI acquired
the entire lighting division of LG including all IP for smart
lighting products, also now sold under the RCA banner.
The RCA Corporation,
an American electronics company, was founded as the Radio
Corporation of America in 1919 and headquartered in Indiana. It was
initially a patent trust owned by General Electric (GE),
Westinghouse, AT&T Corporation, and United Fruit Company. As a
company whose beginnings derived from patents, it quickly became
the gold standard of innovation around the world. As the
dominant electronics and communications firm in the United States
for over five decades, RCA was at the forefront of the rapidly
growing radio industry in the early 1920s as a major manufacturer
of radio receivers and the exclusive manufacturer of the first
superheterodyne sets. Additionally, RCA created the first
nationwide American radio network, the National Broadcasting
Company (NBC). The company was also a pioneer in the introduction
and development of television, both black and white and especially
color. RCA became the leader in consumer satellite technology and
is the legacy system that is now known as DirectTV.
In the 1970s, RCA
diversified into a multinational conglomerate, and in December
1985, it was announced that GE would reacquire its former
subsidiary for $6.28 billion in cash, or $66.50 per share of stock.
The sale was completed the next year, and despite initial
assurances that RCA would continue to operate as a mostly
autonomous unit, it was revealed that GE's main motivation in
purchasing RCA was to acquire the NBC Television Network which RCA
owned; GE proceeded to sell off most of the other RCA assets.
In 2004, the RCA brand was sold off to Technicolor SA,
a French conglomerate. One of the largest TV distributors of
RCA's former TV division, and one of RCA's lead engineers
approached Technicolor to license the name from Technicolor to
continue on the RCA brand as RCA Commercial.
Employment
Agreements
Pursuant to the MIPA
and in connection with the Transaction, the Parent and the Buyer
entered into employment agreements with Mr. Goedde, Mr. Spence, and
Mr. Kingston.
Goedde Employment
Agreement
Pursuant to the
employment agreement with Mr. Goedde (the “Goedde Employment
Agreement”), Mr. Goedde was engaged to serve as the Senior Vice
President of Technology of DTI Services Limited Liability Company,
Direct Tech Sales LLC, PMI Group, LLC, Continu.us LLC, and Solas
Ray, LLC (collectively, the “Subsidiaries”). Mr. Goedde will
report to the COO and CEO of the Parent, and Mr. Goedde’s duties
are further outlined in the Goedde Employment Agreement. The
term of the Goedde Employment Agreement runs from the closing of
the Transaction for an initial term of three years, and shall be
automatically extended for additional one-year terms unless either
Mr. Goedde or the Buyer gives notice no less than 60 days prior to
the expiration of the then-current term that the Goedde Employment
Agreement will not be extended. Mr. Goedde will receive an
annual salary of $200,000, and may receive bonuses for the
development of new products or new markets. Mr. Goedde will also
receive time off, paid holidays, and other employment benefits as
outlined in the Goedde Employment Agreement.
Spence Employment
Agreement
Pursuant to the
employment agreement with Mr. Spence (the “Spence Employment
Agreement”), Mr. Spence was engaged to serve as the Senior Vice
President of Sales of the Subsidiaries. Mr. Spence will
report to the COO and CEO of the Parent, and Mr. Spence’s duties
are further outlined in the Spence Employment Agreement. The
term of the Spence Employment Agreement runs from the closing of
the Transaction for an initial term of three years, and
shall be
automatically extended for additional one-year terms unless either
Mr. Spence or the Buyer gives notice no less than 60 days prior to
the expiration of the then-current term that the Spence Employment
Agreement will not be extended. Mr. Spence will receive an
annual salary of $200,000, and may receive bonuses for the
development of new products or new markets. Mr. Spence will also
receive time off, paid holidays, and other employment benefits as
outlined in the Spence Employment Agreement.
Kingston Employment
Agreement
Pursuant to the
employment agreement with Mr. Kingston (the “Kingston Employment
Agreement”), Mr. Kingston was engaged to serve as the President of
the Subsidiaries. Mr. Kingston will report to the COO and CEO
of the Parent, and Mr. Kingston’s duties are further outlined in
the Kingston Employment Agreement. The term of the Kingston
Employment Agreement runs from the closing of the Transaction for
an initial term of three years, and shall be automatically extended
for additional one-year terms unless either Mr. Kingston or the
Buyer gives notice no less than 60 days prior to the expiration of
the then-current term that the Kingston Employment Agreement will
not be extended. Mr. Kingston will receive an annual salary
of $300,000, and may receive bonuses for the development of new
products or new markets. Mr. Kingston will also receive time off,
paid holidays, and other employment benefits as outlined in the
Kingston Employment Agreement.
Promissory
Notes
As discussed above,
the Buyer issued promissory Notes to Mr. Goedde and Mr. Spence in
the amounts of $1,800,000 and $200,000, respectively. The
Parent agreed to guarantee the payment of the notes pursuant to a
Corporate Guaranty which is included as an exhibit to each of the
Notes. Each of the Notes accrues interest at a rate of 3.75%,
with a 10-year amortization, and with a three-year balloon payment
of the remaining principal. The Buyer has the right to prepay
either or both Notes in full or in part without payment of any
penalty or fee or premium any time before the maturity date.
The foregoing
summaries of the terms of the MIPA, the Employment Agreements, and
the Notes are subject to, and qualified in their entirety by the
forms of the MIPA, the Employment Agreements, and the Notes, which
are incorporated herein by reference.
Press
Release
On December 13, 2021,
the Company announced the Transaction and the agreements disclosed
above in a press release. The press release is included as
Exhibit 99 to this Current Report.
Item
9.01 Financial Statement and Exhibits.
(d)Exhibits.
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Alpine 4 Holdings,
Inc.
By: /s/ Kent B.
Wilson
Kent
B. Wilson
Chief Executive Officer, President
(Principal Executive Officer)
Date: December
14, 2021
