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.
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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
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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.
Exhibit Number Description
10.1 Membership Interest Purchase Agreement
10.2 Goedde Employment Agreement
10.3 Spence Employment Agreement
10.4 Kingston Employment Agreement
10.5 Goedde Warrant
10.6 Spence Warrant
10.7 Goedde Note
10.8 Spence Note
99 Press Release
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