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Subsequent Events
9 Months Ended
Sep. 30, 2022
Subsequent Events  
Subsequent Events

16. Subsequent Events

 

Business Combination

 

Acquisition of Allegiant Networks, LLC

 

On October 17, 2022, the Company entered into an Acquisition Agreement with Allegiant Networks, LLC, a Kansas limited liability company (the “Allegiant Networks”). The Company shall acquire from Seller one hundred percent (100%) of the membership interests of Allegiant Networks in exchange for (i) a cash payment at closing in the amount of $2.0 million, (ii) a three-year promissory note by the Company in favor of Seller in the amount of $1.1 million, which shall be subject to offsets for breach of representations or other offsets as detailed in the Acquisition Agreement, and (iii) 2,461,538 shares of the Company’s common stock, par value $0.001 per share. The Company Shares shall be issued pursuant to a valid exemption from registration under the Securities Act of 1933, as amended. Shares issued in the transaction shall be fully restricted for a period of 6 months from the date of issuance and subject to lock-up thereafter. Pursuant to the lock-up agreement, after 6 months, 25% of the shares will be permitted to be sold, with an additional 25% permitted to be sold every 6-month period thereafter. On November 1, 2022, the Company closed the transaction, and the Company issued the seller cash consideration of $2.0 million, a three-year promissory note for $1.1 million, and 2,461,538 shares of the Company’s common stock, par value $0.001 per share valued at $2.57 per share, for an aggregate purchase price of approximately $9.4 million.

 

Because the acquisition occurred subsequent to September 30, 2022, no results of operations of Allegiant Networks are included in our unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2022. The Company incurred $8,000 and $8,000 of acquisition related costs for the three and nine months ended September 30, 2022, respectively, which are reflected in general and administrative costs in the unaudited condensed consolidated statement of operations. The acquisition qualifies as a significant business combination and will be accounted for using the acquisition method of accounting. For additional information, please find Allegiant’s historical audited financial statements for the year ended December 31, 2021, unaudited financial statements for the six months ended June 30, 2022, and pro forma financial information on file with the SEC on Form 8-K/A as of November 10, 2022.