The accompanying notes are an integral part of these unaudited consolidated financial statements.

(1) Current and prior period results have been adjusted to reflect the one-for-eight stock split effected in May 2023. See Note 6, Stockholders' Equity for details.

~~Alpine~~

ALPINE 4 ~~Technologies Ltd.~~HOLDINGS, INC., AND SUBSIDIARIES

~~Consolidated Statements of Operations~~CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Revenues, net	$	28,022,026	$	25,271,126	$	52,383,739	$	50,863,280
Cost of revenues	20,234,936		19,110,583		39,380,193		39,065,280
Gross profit	7,787,090		6,160,543		13,003,546		11,798,000

Operating expenses:
General and administrative expenses	9,893,454		9,216,398		20,136,477		18,418,080
Research and development	1,612,530		394,835		1,726,436		586,765
Gain on sale of property	—		(5,822,450)		—		(5,822,450)
Total operating expenses	11,505,984		3,788,783		21,862,913		13,182,395
Income (loss) from operations	(3,718,894)		2,371,760		(8,859,367)		(1,384,395)

Other income (expenses)
Interest expense	(1,108,745)		(962,474)		(2,107,615)		(1,571,435)
Other income	15,906		258,660		59,106		291,379
Total other expenses	(1,092,839)		(703,814)		(2,048,509)		(1,280,056)

Income (loss) before income tax	(4,811,733)		1,667,946		(10,907,876)		(2,664,451)

Income tax (benefit)	(259,867)		128,140		(586,867)		(204,697)

Net income (loss)	$	(4,551,866)	$	1,539,806	$	(10,321,009)	$	(2,459,754)

Weighted average shares outstanding(1):
Basic	25,103,271		22,899,822		25,076,452		22,890,560
Diluted	25,103,271		22,899,822		25,076,452		22,890,560

Basic income (loss) per share	$	(0.18)	$	0.07	$	(0.41)	$	(0.11)

Diluted income (loss) per share	$	(0.18)	$	0.07	$	(0.41)	$	(0.11)

Three month period
Successor Successor

Three Months
Ended
September 30,
2017

Three Months
Ended
September 30,
2016

Revenue $ 2,221,533 $ 2,258,099
Cost of revenue (exclusive of depreciation) 1,520,224 1,410,772
Gross Profit 701,309 847,327

Operating expenses:
General and administrative expenses 1,001,921 937,449
Depreciation 173,693 104,455
Amortization 31,354 10,901
Total operating expenses 1,206,968 1,052,805
Loss from operations (505,659 ) (205,478 )

Other expenses
Interest expense 423,986 366,825
Gain on derivative liabilities (72,361 ) -
Other (income) (47,880 ) (49,173 )
Total other expenses 303,745 317,652

Loss before income tax (809,404 ) (523,130 )

Income tax expense (benefit) 8,303 (964 )

Net loss $ (817,707 ) $ (522,166 )

Weighted average shares outstanding :
Basic 23,829,713 22,842,265
Diluted 23,829,713 22,842,265

Loss per share
Basic $ (0.03 ) $ (0.02 )
Diluted $ (0.03 ) $ (0.02 )

The accompanying notes are an integral part of these unaudited consolidated financial statements.

(1) Current and prior period results have been adjusted to reflect the one-for-eight stock split effected in May 2023. See Note 6, Stockholders' Equity for details.

~~Alpine~~

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ALPINE 4 ~~Technologies Ltd.~~HOLDINGS, INC., AND SUBSIDIARIES

~~Consolidated Statements of Operations~~CONSOLIDATED STATEMENTS CHANGES IN STOCKHOLDERS' EQUITY (1)

(Unaudited)


	Series B Preferred Stock			Class A Common Stock			Class B Common Stock			Class C Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balance, December 31, 2022	5	$	5	22,303,333	$	2,230	1,068,512	$	107	1,529,888	$	153	$	141,723,921	$	(71,734,395)	$	69,992,021
Conversion of Class C Common Stock to Class A Common Stock	—	—		1,428	—		—	—		(1,428)	—		—		—		—
Series B Preferred Share removal	(1)	(1)		—	—		—	—		—	—		1		—		—
Share-based compensation expense	—	—		—	—		—	—		—	—		182,589		—		182,589
Net loss	—	—		—	—		—	—		—	—		—		(5,769,143)		(5,769,143)
Balance, March 31, 2023	4	4		22,304,761	2,230		1,068,512	107		1,528,460	153		141,906,511		(77,503,538)		64,405,467

Conversion of Class B Common Stock to Class A Common Stock	—	—		162,500	16		(162,500)	(16)		—	—		—		—		—
Conversion of Series B Preferred Stock to Class A Common Stock	(1)	(1)		1	—		—	—		—	—		1		—		—
Issuance of shares of common stock and warrants for convertible note payable and accrued interest	—	—		1,477,400	148		—	—		—	—		1,000,661		—		1,000,809
Adjustment for additional shares issued in connection with the reverse stock split	—	—		29,995	3		—	—		73	—		—		—		3
Share-based compensation expense	—	—		—	—		—	—		—	—		165,289		—		165,289
Net loss	—	—		—	—		—	—		—	—		—		(4,551,866)		(4,551,866)
Balance, June 30, 2023	3	$	3	23,974,657	$	2,397	906,012	$	91	1,528,533	$	153	$	143,072,462	$	(82,055,404)	$	61,019,702

Balance, December 31, 2021	5	$	5	20,224,938	$	2,022	1,068,512	$	107	1,562,635	$	156	$	130,348,267	$	(58,859,082)	$	71,491,476
Issuance of shares of common stock for compensation	—	—		4,924	—		—	—		—	—		99,248		—		99,248
Conversion of Series D preferred stock to Class A	—	—		7,989	1		—	—		—	—		365,463		—		365,464
Conversion of Series C preferred stock to Class A	—	—		1,031	—		—	—		—	—		34,622		—		34,622
Share-based compensation expense	—	—		—	—		—	—		—	—		93,197		—		93,197
Net loss	—	—		—	—		—	—		—	—		—		(3,999,560)		(3,999,560)
Balance, March 31, 2022	5	5		20,238,882	2,023		1,068,512	107		1,562,635	156		130,940,797		(62,858,642)		68,084,447

Issuance of shares of common stock for compensation	—	—		21,482	2		—	—		—	—		132,307		—		132,309
Shares issued from ATM	—	—		9,515	1		—	—		—	—		55,136		—		55,137
Share-based compensation expense	—	—		—	—		—	—		—	—		172,183		—		172,183
Net loss	—	—		—	—		—	—		—	—		—		1,539,806		1,539,806
Balance, June 30, 2022	5	$	5	20,269,879	$	2,026	1,068,512	$	107	1,562,635	$	156	$	131,300,423	$	(61,318,836)	$	69,983,882

Nine month period
Successor Successor Predecessor

Nine Months
Ended
January, 1,
2017 to
September 30,
2017

Six Months
Ended
April, 1,
2016 to
September 30,
2016

Three Months
Ended
January, 1,
2016 to
March 31,
2016

Revenue $ 7,044,806 $ 4,294,535 $ 1,788,654
Cost of revenue (exclusive of depreciation) 4,661,163 2,730,395 1,383,031
Gross Profit 2,383,643 1,564,140 405,623

Operating expenses:
General and administrative expenses 3,238,927 2,858,163 533,894
Depreciation 498,732 175,625 33,492
Amortization 69,060 21,734 -
Total operating expenses 3,806,719 3,055,522 567,386
Loss from operations (1,423,076 ) (1,491,382 ) (161,763 )

Other expenses
Interest expense 1,080,476 627,515 456
Gain on derivative liabilities (72,361 ) - -
Other (income) (181,444 ) (101,121 ) -
Total other expenses 826,671 526,394 456

Loss before income tax (2,249,747 ) (2,017,776 ) (162,219 )

Income tax expense (benefit) 8,670 7,411 (31,770 )

Net loss $ (2,258,417 ) $ (2,025,187 ) $ (130,449 )

Weighted average shares outstanding :
Basic 23,589,017 22,760,422 -
Diluted 23,589,017 22,760,422 -

Loss per share
Basic $ (0.10 ) $ (0.09 ) $
Diluted $ (0.10 ) $ (0.09 ) $

The accompanying notes are an integral part of these unaudited consolidated financial statements.

(1) Current and prior period results have been adjusted to reflect the one-for-eight stock split effected in May 2023. See Note 6, Stockholders' Equity for details.

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ALPINE 4 HOLDINGS, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2023		2022
OPERATING ACTIVITIES:
Net loss	$	(10,321,009)	$	(2,459,754)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,498,572		1,564,357
Amortization	1,614,567		1,454,099
Gain on sale of property	—		(5,822,450)
Stock compensation expense	348,029		496,957
Income tax benefit	(654,442)		(204,697)
Amortization of debt discounts	96,729		—
Non-cash lease expense	703,055		224,422
Write off of inventory	276,898		71,552
Bad debt expense	330,544		115,835
Changes in current assets and liabilities:
Accounts receivable	180,652		(1,257,649)
Inventory	962,458		672,426
Contract assets	10,781		(608,743)
Prepaid expenses and other assets	456,180		(765,887)
Accounts payable	7,199,003		1,084,278
Accrued expenses	(179,383)		1,257,019
Contract liabilities	570,411		(2,846,166)
Operating lease liability	(615,344)		(213,041)
Net cash provided by (used) in operating activities	2,477,701		(7,237,442)

INVESTING ACTIVITIES:
Capital expenditures	(1,856,996)		(756,870)
Proceeds from sale of building	—		12,454,943
Net cash provided by (used) in investing activities	(1,856,996)		11,698,073

FINANCING ACTIVITIES:
Proceeds from the sale of common stock, net of offering costs	—		55,144
Proceeds from issuances of notes payable, non-related party	1,029,145		—
Proceeds from issuances of note payable, related party	555,000		—
Net proceeds/(repayments) from lines of credit	(1,947,538)		3,436,740
Proceeds from issuance of convertible notes, non-related party	2,090,000		—
Debt issuance costs	(651,533)		—
Repayment of building mortgage	—		(4,642,043)
Repayments of notes payable, non-related parties	(182,111)		(2,540,390)
Cash paid on financing lease obligations	(358,246)		(317,150)
Net cash provided by (used) in financing activities	534,717		(4,007,699)

NET INCREASE IN CASH	1,155,422		452,932

CASH, BEGINNING BALANCE	2,673,541		3,715,666

CASH, ENDING BALANCE	$	3,828,963	$	4,168,598

CASH PAID FOR:
Interest	$	2,107,615	$	1,224,984

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
ROU asset and operating lease obligation recognized	$	—	$	8,725,000
Equipment purchased on note payable	$	—	$	243,843
Series B Preferred Share Removal	$	2	$	—
Conversion of Series D preferred stock for common stock	$	—	$	400,092

The accompanying notes are an integral part of these unaudited consolidated financial statements.

~~Alpine~~

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ALPINE 4 ~~Technologies Ltd.~~HOLDINGS, INC. AND SUBSIDIARIES

~~Consolidated Statements of Cash Flows~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Nine month period
Successor Successor Predecessor
Nine Months Ended January, 1, 2017 to September 30, 2017 Six Months Ended April, 1, 2016 to September 30, 2016 Three Months Ended January, 1, 2016 to March 31, 2016
OPERATING ACTIVITIES:
Net loss $ (2,258,417 ) $ (2,025,187 ) $ (130,449 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 498,732 175,625 33,492
Amortization 69,060 21,734 -
Loss on disposal of fixed assets 7,949 - -
Gain on derivatives (72,361 ) - -
Employee stock compensation 69,290 1,062,500 -
Stock issued for services 21,170 406,740 -
Amortization of debt issuance 22,500 4,493 -
Amortization of debt discounts 76,322 226,913 -
Change in current assets and liabilities:
Accounts receivable (194,192 ) (303,735 ) 47,578
Inventory (269,457 ) 179,293 (14,062 )
Prepaids (90,370 ) (110,748 ) (41,040 )
Accounts payable 621,216 149,813 16,468
Accrued expenses 508,149 244,388 56,723
Deferred tax (304 ) - (41,645 )
Deferred revenue 117,744 (998 ) -
Net cash provided by (used in) operating activities (872,969 ) 30,831 (72,935 )

INVESTING ACTIVITIES:
Capital expenditures (183,125 ) (169,500 ) -
Proceeds from insurance claim on Automobiles & Trucks 86,807 - -
Acquisition, net of cash acquired (1,937,616 ) (2,800,000 ) -
Net cash used in investing activities (2,033,934 ) (2,969,500 ) -

FINANCING ACTIVITIES:
Proceeds from issuances of notes payable, related party 105,500 - -
Proceeds from issuances of notes payable, non-related party 1,952,392 - -
Repayments of notes payable, non-related party (289,195 ) - -
Proceeds from Line of Credit 7,156,259 2,499,847
Repayments on Line of Credit (6,736,589 ) (1,834,482 )
Repayments of notes payable, related party (123,500 ) (1,535 ) (10,000 )
Repayments of convertible notes (66,370 ) (43,323 ) (59,461 )
Proceeds from convertible notes payable 389,000 12,500 -
Proceeds from the sale of common stock 15,000 6,000 -
Net Proceeds from financing obligation lease, net of commissions and financing charges - 2,704,260
Change in restricted cash 373,899 (532,969 ) -
Cash paid for rent deposit on lease of building - (46,667 )
Cash paid on financing lease obligation (15,615 ) (49,966 ) -
Net cash provided by (used in) financing activities 2,760,781 2,713,665 (69,461 )

NET INCREASE (DECREASE) IN CASH (146,122 ) (225,004 ) (142,396 )

CASH, BEGINNING BALANCE 209,494 342,786 365,221

CASH, ENDING BALANCE $ 63,372 $ 117,782 $ 222,825

CASH PAID FOR:
Interest $ 570,614 $ 217,791 $ 456
Income taxes $ 1,104 $ - $ 47,500

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Common stock issued for convertible note payable and accrued interest $ 57,320 $ 159,830 $ -
Issuance of Convertible Note for acquisition of QCA $ - $ 2,000,000 $
Purchase of building from lease proceeds $ - $ 3,895,000 $
Issuance of Convertible Note for acquisition of HWT $ 1,500,000 $ - $ -
Issuance of Note Payable for acquisition of HWT $ 300,000 $ - $ -
Issuance of Warrants for acquisition of HWT $ 40,941 $ - $ -
Issuance of Redeemable Common Stock for acquisition of HWT $ 1,439,725 $ - $ -
Debt discount from convertible note payable $ 30,000 $ 113,810 $ -
Debt discount due to derivative liabilities $ 115,000 $ - $ -
Reclassification of warrants embedded conversion options as derivative liability $ 132,693 $ - $ -

~~The accompanying notes are an integral part of these unaudited consolidated financial statements.~~

~~Alpine 4 Technologies Ltd.~~

~~Notes to Unaudited Consolidated Financial Statements~~

~~For the Three Months Ended September 30, 2017~~

~~(Unaudited)~~

Note 1 – Organization and Basis of Presentation

The unaudited consolidated financial statements were prepared by Alpine 4 ~~Technologies Ltd. (the~~Holdings, Inc. ("we,” “our,” or the "Company"), pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") were omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on ~~April 14, 2017.~~May 5, 2023. The results for the ~~three and nine~~six months ended ~~September~~June 30, ~~2017,~~2023, are not necessarily indicative of the results to be expected for the year ending December 31, ~~2017.~~2023.

~~Description of Business~~

~~Alpine 4 Technologies Ltd. ("we" or the "Company")~~The Company was incorporated under the laws of the State of Delaware in April 2014. We are a publicly traded conglomerate that acquires businesses that fit into our disruptive DSF business model of Drivers, Stabilizers, and Facilitators.

Basis of presentation

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Certain reclassifications have been made that have no impact on ~~April 22, 2014.~~net earnings and financial position.

Liquidity

The Company’s financial statements are prepared in accordance with U.S. GAAP applicable to a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued. In accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued (further detail in the Going Concern sub-section below).

As shown in the accompanying consolidated financial statements, the Company has incurred significant recurring losses but has positive cash flows from operations for the current year. Although the Company has experienced net losses of $10.3 million and $2.5 million for the six months ended June 30, 2023 and 2022, respectively, net cash flows provided by operating activities improved to $2.5 million for the six months ended June 30, 2023, from $7.2 million used in operating activities for the six months ended June 30, 2022.

As of June 30, 2023, the Company had positive working capital of $1.6 million, which was a decrease of $14.0 million compared to December 31, 2022. The Company has bank financing totaling $35.0 million ($35.0 million in lines of credit including $0.5 million in capital expenditures lines of credit availability) of which $4.4 million was ~~formed~~available and unused as of June 30, 2023. There are three lines of credit that are set to ~~serve~~mature during the next twelve months. These three lines of credit total $13.7 million, of which $8.7 million was used as of June 30, 2023, and are shown as a ~~vehicle~~current liability on the consolidated balance sheet. These factors raise substantial doubt about the Company's ability to ~~affect~~continue as a going concern.

The Company plans to continue to generate additional revenue, improve cash flows from operations, and improve gross profit performance across all of its subsidiaries. The Company also may raise funds through debt financing, securing additional lines of credit, and the sale of shares in public or private offerings.

Going Concern

The accompanying financial statements have been prepared on a going concern basis. While the working capital deficiency of prior years has improved, and working capital of the Company is currently positive, continued operating losses cause doubt as to the ability of the Company to continue. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's plan of operations, and its ultimate transition to profitable operations are necessary for the Company to

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continue. The uncertainty that exists with these factors raises substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

In order to mitigate the risk related to the going concern uncertainty, the Company has a three-fold plan to resolve these risks. First, the operating subsidiaries of Quality Circuit Assembly ("QCA"), Quality Circuit Assembly - Central ("QCA-C"), Identified Technologies ("IDT"), Thermal Dynamics International ("TDI"), and RCA Commercial ("RCA") plan to expand their revenues and profits yielding increased cash flow in those operating segments. This plan will allow for an ~~asset acquisition, merger, exchange~~increased level of ~~capital stock,~~cash flow to the Company. Second, the Company has expanded its credit facilities at the subsidiary level over the past twelve months to allow for greater borrowing accessibility if needed for the expansion of product lines and sales opportunities and plans to extend or ~~other business combination with a domestic or foreign business.~~refinance any lines of credit coming due over the next twelve months in order to provide additional financing. Finally, operating companies hard hit by the supply-chain related price increases such as Morris Sheet Metal ("MSM"), Alternative Laboratories ("Alt Labs"), and Excel Construction ("Excel") have begun to experience an easing in the procurement and cost overruns of limited product supply. This subsequently has added to increased cash flow to those entities and less reliance on the Company to fund those activities. Although this plan is in place to mitigate the risk related to the going concern uncertainty, substantial doubt remains due to uncertainty around the growth projections and lack of control of many of the factors included in the Company’s plan.

Entity level risks

Our operations and performance may depend on global, regional, economic and geopolitical conditions. Russia’s invasion and military attacks on Ukraine have triggered significant sanctions from North American and European leaders. As of the date of this Report, those events were continuing to escalate and create increasingly volatile global economic conditions. Resulting changes in North American trade policy could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a “trade war.” A trade war could result in increased costs for raw materials that we use in our manufacturing and could otherwise limit our ability to sell our products abroad. These increased costs would have a negative effect on our financial condition and profitability. Furthermore, the military conflict between Russia and Ukraine is increasing supply interruptions and further hindering our ability to find the materials we need to make our products. If the conflict between Russia and Ukraine continues for a long period of time, or if other countries become further involved in the conflict, we could face significant adverse effects to our business and financial condition. The Company is ~~a technology holding company owning three companies (ALTIA, LLC, Quality Circuit Assembly, Inc. ("QCA");~~not able to fully quantify the impact that these factors will have on the Company’s financial results during 2023 and Horizon Well Testing, LLC ("HWT")). For 2016, QCA made up most of the revenue disclosed in the consolidated financial statements. HWT was not acquired until January 1, 2017, so it is not combined in our 2016 financial statements.beyond.

~~Acquisition Reporting~~

~~As discussed in Note 9, the Company entered into a stock purchase transaction with QCA in which the Company purchased 100% of QCA's outstanding stock.~~

The consolidated financial statements herein are presented under predecessor entity reporting and, because the acquiring entity had nominal operations as compared with the acquired company, QCA, prior historical information of the acquirer is not presented.

This new basis of accounting was created on April 1, 2016, the effective date for financial reporting purposes of the stock purchase agreement. In the following discussion, the results of the operations and cash flows for the periods ended on or prior to March 31, 2016 are referred to as "Predecessor" financial information, and the results of operations and cash flows of the Company for periods beginning April 1, 2016 and the financial position of the Company as of April 1, 2016 and subsequent balance sheet dates are referred to herein as "Successor" consolidated financial information.

Note 2 -– Summary of Significant Accounting Policies

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of ~~September~~June 30, ~~2017,~~2023, and December 31, ~~2016, significant~~2022. Significant intercompany balances and transactions have been eliminated.

~~Basis~~Use of ~~presentation~~

estimates

The ~~accompanying~~consolidated financial statements ~~present the balance sheets, statements of operations, stockholders' deficit and cash flows of the Company. The financial statements have been~~are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.

~~Use~~ Preparation of ~~estimates~~

~~The preparation of~~these financial statements ~~in conformity with U.S. GAAP~~ requires ~~the Company~~us to make estimates and ~~judgments~~assumptions that affect the reported amounts of assets, ~~and~~ liabilities, ~~revenues~~revenue, costs and expenses and related ~~disclosures of contingent assets and liabilities. These~~disclosures. The Company bases its estimates ~~and judgments are based~~ on historical ~~information, information that is currently available to the Company~~experience and on various other assumptions that ~~the Company~~it believes to be ~~reasonable under the circumstances.~~reasonable. This applies in particular to useful lives of long-lived assets, reserves for accounts receivable and inventory, valuation allowance for deferred tax assets, fair values assigned to intangible assets acquired, and impairment of long-lived assets. Actual results could differ significantly from ~~those~~our estimates. To the extent that there are material differences between these estimates and actual results, the Company’s future financial statement presentation, financial condition, results of operations and cash flows will be affected.

~~Reclassification~~

~~Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position.~~

~~Advertising~~

Advertising costs are expensed when incurred. All advertising takes place at the time of expense. We have no long-term contracts for advertising. Advertising expense for all periods presented were under $10,000.

Cash

Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. ~~Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. The carrying value of those investments approximates fair value.~~ As of ~~September~~June 30, ~~2017,~~2023, and December 31, ~~2016,~~2022, the Company had no cash equivalents.

The FDIC insures up to $250,000 per account with any excess amount in each account being uninsured. Total bank balances were $3.9 million and $3.2 million as of June 30, 2023, and December 31, 2022, respectively. Of this amount,

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$2.5 million and $2.0 million were uninsured as of June 30, 2023, and December 31, 2022, respectively. All uninsured amounts are held with J.P. Morgan Chase.

Major Customers & Vendors

The Company had no customers which made up over 10% of total Company accounts receivable as of June 30, 2023, or December 31, 2022.

For ~~three months ended March 31, 2016 (Predecessor) and~~ the six months ended ~~September~~June 30, ~~2016 (Successor),~~2023, the Company had ~~two~~no customers ~~that~~which made up ~~approximately 50%~~over 10% of total Company revenues. For the ~~three~~six months ended ~~September~~June 30, ~~2017 (Successor), and nine months ended September 30, 2017 (Successor),~~2022, the Company had one customer ~~that~~within the A4 Technology - RCA segment, which made up ~~approximately 43% and 37%~~12% of total ~~revenues, respectively. All other customers were less than 10% each of total revenues in each period.~~Company revenues.

For ~~three months ended March 31, 2016 (Predecessor) and~~ the six months ended ~~September~~June 30, ~~2016 (Successor)~~2023 and 2022, the Company received 10% and 10%, respectively, of total Company revenues from prime contractors.

For the six months ended June 30, 2023, the Company had ~~two customers that~~no vendors, which made up ~~approximately 50%~~over 10% of ~~outstanding accounts receivable.~~total Company purchases. For the ~~three~~six months ended ~~September~~June 30, ~~2017 (Successor), and nine months ended September 30, 2017 (Successor),~~2022, the Company had ~~two customers that~~one vendor within the A4 Technology - RCA segment, which made up ~~approximately 54% of outstanding accounts receivable. All other customers were less than 10% each~~17% of total ~~accounts receivable~~Company purchases.

Inventory

Inventory for ~~each period presented.~~

~~Accounts Receivable~~

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. As of September 30, 2017, and December 31, 2016, allowance for bad debt was $177,470 and $0, respectively.

~~Inventory~~

~~Inventory~~all subsidiaries is valued at ~~the lower of the inventory's cost (weighted~~weighted average ~~basis) or market.~~cost. Management compares the cost of inventory with its ~~market~~net realizable value and an allowance is made to write down inventory to ~~market~~net realizable value, if lower. Inventory is segregated into ~~four~~three areas, raw materials, ~~WIP,~~work-in-process and finished ~~goods, and In-Transit. Below is a breakdown of how much inventory was in each area as of September~~goods. Inventory at June 30, ~~2017,~~2023, and December 31, ~~2016.~~2022, consisted of:


	June 30, 2023		December 31, 2022
Raw materials	$	9,726,538	$	9,116,824
Work in process	3,528,187		3,165,876
Finished goods	10,764,288		12,975,669
Inventory	$	24,019,013	$	25,258,369

Inventory
Sep 30, 2017 Dec 31, 2016
Raw materials $ 607,818 $ 527,599
WIP 389,586 193,525
Finished goods 189,167 195,990
In Transit 13,000 13,000
$ 1,199,571 $ 930,114

~~Property and Equipment~~

Property and equipment are carried at cost less depreciation. Depreciation and amortization are provided principally on the straight-line method over the estimated useful lives of the assets, which range from ten years to 39 years as follows:

~~Automobiles & Trucks~~	~~10 to 20 years~~
~~Buildings~~	~~39 years~~
~~Leasehold Improvements~~	~~15 years or time remaining on lease (whichever is shorter)~~
~~Equipment~~	~~10 years~~

~~Maintenance and repair costs are charged against income as incurred. Significant improvements or betterments are capitalized and depreciated over the estimated life of the asset.~~

~~Below is a table of Property and Equipment:~~

Property and Equipment
Sep 30, 2017 Dec 31, 2016
Automobiles & Trucks $ 1,354,435 $ -
Machinery & Equipment 4,492,235 1,263,941
Office furniture & fixtures 7,057 -
Building 3,945,952 3,895,000
Land 126,347 -
Leasehold Improvements 294,524 219,045
Less: Accumulated Depreciation (674,585 ) (175,853 )
$ 9,545,965 $ 5,202,133

During the three months ended September 30, 2017 we had an impairment on Automobiles & Trucks of $86,807 which was offset by proceeds from the insurance claim on the damaged Automobiles & Trucks. We also had a loss on Machinery & Equipment of $62,787 due to fire which was offset by an insurance claim of $54,838 for a net loss of $7,949.

~~Purchased Intangibles and Other Long-Lived Assets~~

~~The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between five and fifteen years as follows:~~

~~Customer List~~	~~15 years~~
~~Non-compete agreements~~	~~5 years~~
~~Software development~~	~~5 years~~

~~Below are tables for Intangibles and Other Long-Lived Assets:~~

Intangibles
Sep 30, 2017 Dec 31, 2016
Software $ 255,724 $ 191,300
Noncompete 100,000 100,000
Customer Lists 531,187 531,187
Less: Accumulated Amortization (134,019 ) (64,959 )
$ 752,892 $ 757,528

Other Long-Lived Assets
Sep 30, 2017 Dec 31, 2016
Restricted Cash $ 255,709 $ 630,270
Deposits 58,596 57,934
$ 314,305 $ 688,204

Restricted cash consists of deposit account collateralizing letters of credit in favor of the counterparty in our lease financing obligation. Changes in restricted cash are reflected as financing activities because the cash is being used in conjunction with financing activities.

Impairment of Long-Lived Assets

The Company accounts for long-lived assets in accordance with the provisions of ~~Financial Accounting Standards Board ("FASB")~~ASC Topic 360, ~~"Accounting~~Accounting for the Impairment of Long-Lived Assets." This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when the estimated future cash flows from the use of the asset ~~are~~is less than the carrying amount of that asset.

During ~~all periods presented,~~the six months ended June 30, 2023, there ~~have been~~were no events or changes in circumstances that indicated a quantitative impairment analysis was necessary and as such, no impairment ~~losses~~.was recorded.

Goodwill

In financial reporting, goodwill is not amortized, but is tested for impairment annually ~~in the fourth quarter of the fiscal year~~ or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Events that result in an impairment review include significant changes in the business climate, declines in our operating results, or an expectation that the carrying amount may not be recoverable. We assess potential impairment by considering present economic conditions as well as future expectations. All assessments of goodwill impairment are conducted at the individual reporting unit level. As of ~~September~~June 30, ~~2017,~~2023, and December 31, 2022, the ~~only~~ reporting units with goodwill were QCA, MSM, Alt Labs, TDI, IDT, Elecjet, and ~~HWT.~~RCA. Consistent with our prior year assessment, the Elecjet reporting unit is considered an at-risk reporting unit. Our methods and assumptions were consistent with those discussed below in the Fair Value Measurement subsection. This reporting unit is primarily considered at-risk as it is a start-up subsidiary with minimal to no revenue to offset its research & development expenses. The DCF model includes revenue growth assumptions of us executing large new customer and/or supplier agreements within the next two years and then steadily increasing revenue at a more normalized rate thereafter. Any failure to execute these customer and/or supplier arrangements would negatively impact the key growth assumptions.

Fair value measurements

~~The Company used qualitative factors according to~~ Accounting Standards Codification ("ASC") ~~350-20-35-3 to determine whether it is more likely than not that the~~820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most

Table of ~~goodwill is less than its carrying amount. Based~~Contents

advantageous market for the asset or liability in an orderly transaction between market participants on the ~~qualitative criteria~~measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the ~~company believes there not~~use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be ~~any triggers~~corroborated by observable market data for ~~potential impairment~~substantially the full term of ~~goodwill~~the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and ~~therefore~~that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the ~~Company has recorded no impairment~~determination of ~~goodwill in any period presented.~~fair value requires significant judgment or estimation.

~~Fair Value Measurement~~

We apply the provisions of fair value measurement to various nonrecurring measurements for our financial and nonfinancial assets and liabilities. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, ~~convertible~~ notes ~~notes~~payable and ~~line~~lines of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches. For ~~additional information, please see~~ ~~Note 11 – Derivative Liabilities~~the income approach, we use a discounted cash flow models developed in connection with our third-party valuation specialists that include the following assumptions, among others: projections of revenues, expenses, and ~~Fair Value Measurements.~~
related cash flows based on assumed long-term growth rates; and estimated discount rates. For the market approach, we use analyses based primarily on market comparables. We base these assumptions on historical data and experience, industry projections, and general economic conditions.

~~Redeemable Common Stock~~

The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. As ~~discussed in Note 9 below 379,403 shares~~ of ~~Class A common stock~~June 30, 2023, and December 31, 2022, the Company had no financial assets or liabilities that were ~~issued~~required to be fair valued on a recurring basis, as ~~consideration~~all of our financial assets and liabilities were Level 1.

Equity Method Investments

In February 2023, the Company made a $0.3 million investment for a 10% equity interest in a battery materials company, which includes a seat on its board of directors, and participation rights in future funding rounds. The investment is accounted for as an equity method investment as the ~~HWT acquisition contain a redemption feature which~~board representation allows ~~for~~us to have significant influence over the ~~redemption of common stock at the option~~operating and financial policies of the ~~holder. In accordance~~battery materials company. The investment is presented in other non-current assets on the consolidated balance sheet with ~~ASC 480, redemption provisions not solely within~~ the ~~control~~value of the investment being adjusted in arrears on a quarterly basis based on its financial performance. In June 2023, a subsequent funding round was held, in which the Company ~~require the security~~waived its participation rights, that decreased our equity investment to ~~be classified outside of permanent equity. Accordingly, at September 30, 2017, 379,403 shares of Class A common stock were classified outside of permanent~~an 8% equity ~~at its redemption value.~~interest.

~~Revenue Recognition~~

~~ALTIA~~

Research and Development

The Company ~~accounts for its revenue per the guidance in ASC 605-25-25 by allocating the total contract amount between the product~~focuses on quality control and ~~service elements. When a vehicle is sold to the driving consumer who purchases the 6~~^th ~~Sense Auto service, the cost~~development of ~~the service is added to the price of the car~~new products and the ~~amount collected by~~improvement of existing products. All costs related to research and development activities are expensed as incurred. During the dealership for this service is remitted to the Company. At the time the vehicle is purchased, the Company recognizes the service portion of the contract over the service period of generally 12 to 36 months.six months ended June 30, 2023 and 2022, research and development costs totaled $1.7 million and $0.6 million, respectively.

~~Quality Circuit Assembly~~

The Company accounts for its revenue per the guidance in ASC 605-25-25 by allocating the total contract amount between the product and service elements. Revenue is recognized when either the product has completely been built and shipped or the service has been completed. If a deposit for product or service is received prior to completion the payment is recorded to deferred revenue until such point the product or services meets our revenue recognition policy. Management assesses the materiality and likelihood of warranty work and returns, and records reserves as needed. For all periods presented, management determined that the warranty and returns would be immaterial.

~~Horizon Well Testing~~

~~Revenue is recognized when the contract has been performed in completion. Contracts range from one day to 30 days in length.~~

~~Deferred Revenue~~

~~Due to how the Company recognizes revenue deferred revenue can be present. Deferred revenue greater than 12 months is classified as long-term, anything less is classified as short-term.~~

~~ALTIA~~

For the period ending September 30, 2017 deferred revenue is $89,078 for short-term and $53 for long-term. There was no deferred revenue for the period ending December 31, 2016. The increase is due to the sale of the 6^th ~~Sense product into two new dealerships. The install at these dealerships took place in October 2017.~~

~~Quality Circuit Assembly~~

For the period ending September 30, 2017 deferred revenue is $41,149 for short-term and $0 for long-term. For the period ending December 31, 2016 deferred revenue was $12,536 for short-term and $0 for long-term. The increase is due to the timing of sales with prepay customers.

~~Horizon Well Testing~~

~~There is no deferred revenue for any periods presented.~~

~~Leases~~

~~Leases are reviewed by management and examined to see if they are required to be categorized as an operating lease, a capital lease or a financing transaction.~~

Earnings (loss) per share

~~Basic earnings~~The Company presents both basic and diluted net income (loss) per ~~common~~share on the face of the consolidated statements of operations. Basic net income (loss) per share is computed by dividing net income (loss) ~~available to common shareholders~~ by the ~~weighted-average~~weighted average number of shares of common stock outstanding during the period. Diluted ~~earnings~~ per ~~common~~ share ~~is computed by dividing income available~~calculations give effect to ~~common shareholders by the weighted-average number of~~all potentially dilutive shares of common stock outstanding during the period, ~~increased to include~~including stock options and warrants, using the ~~number~~treasury-stock method. If antidilutive, the effect of ~~additional~~potentially dilutive shares of common stock ~~that would have been outstanding if potentially dilutive securities had been issued.~~is ignored. The amount of anti-dilutive shares related to stock options and warrants as of June 30, 2023 and 2022 was 2,894,897 and 1,098,050. respectively. The following table illustrates the computation of basic and diluted earnings per share (“EPS”) inclusive of all classes of

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common stock as the only ~~potentially dilutive securities outstanding during~~difference between the ~~periods presented were the convertible debentures, but they~~classes of common stock are ~~anti-dilutive due~~related to the ~~net loss incurred. All earnings (loss) per common share have been adjusted retroactively~~voting rights for ~~all periods presented to reflect changes in number of shares as~~the three and six months ended June 30, 2023 and 2022:


	For the Three Months Ended June 30, 2023						For the Three Months Ended June 30, 2022
	Net Loss		Shares		Per Share Amount		Net Income		Shares		Per Share Amount
Basic EPS
Net income (loss)	$	(4,551,866)	25,103,271		$	(0.18)	$	1,539,806	22,899,822		$	0.07
Effect of Dilutive Securities
Stock options and warrants	—		—		—		—		—		—
Dilute EPS
Total	$	(4,551,866)	$	25,103,271	$	(0.18)	$	1,539,806	$	22,899,822	$	0.07

	For the Six Months Ended June 30, 2023						For the Six Months Ended June 30, 2022
	Net Loss		Shares		Per Share Amount		Net Loss		Shares		Per Share Amount
Basic EPS
Net loss	$	(10,321,009)	25,076,452		$	(0.41)	$	(2,459,754)	22,890,560		$	(0.11)
Effect of Dilutive Securities
Stock options and warrants	—		—		—		—		—		—
Dilute EPS
Total	$	(10,321,009)	25,076,452		$	(0.41)	$	(2,459,754)	22,890,560		$	(0.11)

Revenue Recognition

The Company recognizes revenue under ASC Topic 606, Revenue from contract with Customers ("Topic 606"). The following is a ~~result~~summary of the ~~reverse stock split amount.~~revenue recognition policy for each of the Company’s subsidiaries.

~~Stock-based compensation~~Revenue is recognized under Topic 606, at a point in time and over a period of time, in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:

–executed contract with the Company's customers that it believes are legally enforceable;

–identification of performance obligations in the respective contract;

–determination of the transaction price for each performance obligation in the respective contract;

–allocation of the transaction price to each performance obligation; and

–recognition of revenue only when the Company satisfies each performance obligation.

The following tables presents our revenues disaggregated by type for the three months ended June 30, 2023 and 2022:


	Three Months Ended June 30, 2023
	Construction Services		Manufacturing		Defense		Technologies		Aerospace		Total
Sale of goods	$	—	$	12,886,116	$	—	$	8,660,465	$	—	$	21,546,581
Sale of services	3,660,886		—		2,413,363		—		401,196		6,475,445
Total revenues	$	3,660,886	$	12,886,116	$	2,413,363	$	8,660,465	$	401,196	$	28,022,026

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	Three Months Ended June 30, 2022
	Construction Services		Manufacturing		Defense		Technologies		Aerospace		Total
Sale of goods	$	—	$	7,530,475	$	—	$	9,255,658	$	—	$	16,786,133
Sale of services	5,669,259		—		2,472,207		—		343,527		8,484,993
Total revenues	$	5,669,259	$	7,530,475	$	2,472,207	$	9,255,658	$	343,527	$	25,271,126

The following tables presents our revenues disaggregated by type for the six months ended June 30, 2023 and 2022:


	Six Months Ended June 30, 2023
	Construction Services		Manufacturing		Defense		Technologies		Aerospace		Total
Sale of goods	$	—	$	22,206,937	$	—	$	16,216,383	$	—	$	38,423,320
Sale of services	7,806,890		—		5,383,450		—		770,079		13,960,419
Total revenues	$	7,806,890	$	22,206,937	$	5,383,450	$	16,216,383	$	770,079	$	52,383,739


	Six Months Ended June 30, 2022
	Construction Services		Manufacturing		Defense		Technologies		Aerospace		Total
Sale of goods	$	—	$	16,178,570	$	—	$	19,049,646	$	—	$	35,228,216
Sale of services	9,725,463		—		5,160,188		—		749,413		15,635,064
Total revenues	$	9,725,463	$	16,178,570	$	5,160,188	$	19,049,646	$	749,413	$	50,863,280

Note 3 – Leases

The Company ~~accounts for equity instruments issued~~determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in ~~exchange~~the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.

As of June 30, 2023, the future minimum finance and operating lease payments were as follows:


Twelve Months Ending June 30,	Finance Leases		Operating Leases
2024	$	1,938,360	$	2,412,039
2025	1,944,246		2,304,494
2026	1,848,756		1,784,228
2027	1,890,900		1,823,449
2028	1,932,830		1,646,961
Thereafter	13,879,717		12,457,744
Total payments	23,434,809		22,428,915
Less: imputed interest	(8,474,940)		(6,462,880)
Total obligation	14,959,869		15,966,035
Less: current portion	(764,267)		(1,518,842)
Non-current financing leases obligations	$	14,195,602	$	14,447,193

Finance Leases

As of June 30, 2023, all finance leases in the table above were related to property and equipment. Depreciation expense associated with the finance leases within property and equipment, net was $625,908 and $625,908 for the ~~receipt~~six months ended June 30, 2023 and 2022, respectively. Of this amount $89,006 and $0 is recorded within cost of ~~goods or services from other than employees~~revenues with the remainder recorded in ~~accordance with FASB ASC 718-10, Compensation – Stock Compensation,~~general & administrative expenses on the consolidated statements of operations for the six months

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ended June 30, 2023 and 2022, respectively. Interest expense on finance leases for the six months ended June 30, 2023, and 2022 was $607,895 and $633,610, respectively, and is recorded in interest expense on the consolidated statements of operations. At June 30, 2023, the weighted average remaining lease terms were 11.5 years, and the conclusions reached by FASB ASC 505-50, Equity – Equity-Based Payments to Non-Employees. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment is reached or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.weighted average discount rate was 8.01%.

~~Income taxes~~

Operating Leases

The ~~Company records income taxes under~~table below presents the ~~asset and liability method, whereby deferred tax~~operating lease related assets and liabilities ~~are recognized based~~recorded on the ~~future tax consequences attributable to temporary differences between~~Company’s consolidated balance sheets as of June 30, 2023, and December 31, 2022:


		June 30, 2023		December 31, 2022
Assets
Operating lease assets	Operating lease right of use assets	$	15,704,511	$	16,407,566
Total lease assets		$	15,704,511	$	16,407,566

Liabilities
Current liabilities
Operating lease liability	Current operating lease liability	$	1,518,842	$	1,318,885
Noncurrent liabilities
Operating lease liability	Long-term operating lease liability	14,447,193		15,262,494
Total lease liability		$	15,966,035	$	16,581,379

The lease expense for the ~~financial statement carrying amounts~~six months ended June 30, 2023 and 2022, were $1,292,535 and $253,121, respectively. Of this amount $372,352 and $0 were recorded within cost of ~~existing assets~~revenues with the remainder recorded in general and liabilities and their respective tax bases, and attributable to operating loss and tax credit carry forwards. Accounting standards regarding income taxes requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if basedadministrative expense on the ~~available evidence, it is more likely than not that such assets will not be realized. Accordingly,~~consolidated statements of operations for the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a more-likely-than-not realization threshold. This assessment considers, among other matters,six months ended June 30, 2023 and 2022, respectively. The cash paid under operating leases during the ~~nature, frequency~~six months ended June 30, 2023 and ~~severity of current~~2022, were $789,282 and ~~cumulative losses, forecasts of future profitability,~~$251,398, respectively. At June 30, 2023, the ~~duration of statutory carry forward periods,~~weighted average remaining lease terms were 11.5 years, and the ~~Company's experience with operating loss and tax credit carry forwards not expiring unused, and tax planning alternatives.~~weighted average discount rate was 6.01%.

Note 4 – Debt

The ~~Company recorded valuation allowances on~~outstanding balances for the ~~net deferred tax assets. Management will reassess the realization~~loans as of ~~deferred tax assets based on the accounting standards for income taxes each reporting period. To the extent that the financial results~~June 30, 2023, and December 31, 2022, were as follows:


	June 30, 2023		December 31, 2022
Lines of credit, current portion	$	8,699,609	$	7,426,814
Equipment loans, current portion	76,072		68,410
Related party term notes, current portion	555,000		—
Term notes, current portion	6,094,400		3,132,726
Total current	15,425,081		10,627,950
Lines of credit, net of current portion	4,058,411		7,215,520
Long-term portion of equipment loans and term notes	2,144,048		4,266,350
Total notes payable and lines of credit	$	21,627,540	$	22,109,820

Table of ~~operations improve, and it becomes more likely than not that the deferred tax assets~~Contents

Future scheduled maturities of outstanding debt are ~~realizable,~~as follows:


Twelve Months Ending June 30,
2024	$	15,425,081
2025	1,743,815
2026	669,034
2027	123,428
2028	3,594,396
Thereafter	71,786
Total	$	21,627,540

In August 2020, the Company ~~will be able to reduce~~filed a lawsuit against Alan Martin regarding his note payable. As of June 30, 2023 and 2022, the ~~valuation allowance.~~

~~Significant judgment is required~~note had a balance of $2.9 million, and accrued interest and late fees of $2.0 million, which are reflective in ~~evaluating~~current liabilities. The default rate was 10% and the Company's tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely, based solely on the technical merits, of being sustained on examinations. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately anticipate actual outcomes.

~~Embedded Conversion Features~~

The Company evaluates embedded conversion features within convertible debt under ASC 815 "Derivatives and Hedging" to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 "Debt with Conversion and Other Options" for consideration of any beneficial conversion features.

~~Related Party Disclosure~~

FASB ASC 850, "Related Party Disclosures" requires companies to include in their financial statements disclosures of material related party transactions. The Company discloses all material related party transactions. Related parties are defined to include any principal owner, director or executive officer ofdaily late charge was $575. On July 31, 2023, the Company and ~~any immediate family members~~Mr. Martin agreed to a settlement agreement to resolve litigation surrounding this matter (See a description of the Company’s ongoing legal proceedings relating to this transaction in Note 8, Commitments and Contingencies, below).

During May 2023, the Company issued a ~~principal owner, director or executive officer.~~$0.2 million nine-month note payable to an outside investor with an annual interest rate of 15%, with the proceeds to be used for general corporate purposes.

~~Recent Accounting Pronouncements~~

In June 2023, Morris entered into a Forbearance agreement with its banking partner that extended the maturity of the line of credit to July 21, 2023 from May ~~2014,~~31, 2023. In July 2023, Morris entered into an Amended Forbearance agreement extending the ~~FASB issued Accounting Standards Update ("ASU") No. 2014-09 (ASU 2014-09),~~ ~~Revenue~~forbearance period until August 31, 2023.

In June 2023, Quality Circuit Assembly entered into the third amendment on its loan and security agreement that increased the maximum limit to $7 million from ~~Contracts~~$5 million.

During 2023, the Company had four revolving lines of credit in the aggregate of $35.0 million, including one capital expenditures line of credit of $0.5 million. The revolving lines of credit used as of June 30, 2023, totaled $12.8 million with ~~Customers. ASU 2014-09 will eliminate transaction-~~interest rates ranging from WSJ prime plus 2.50% - 4.25% and ~~industry-specific revenue recognition guidance under current US GAAP~~terms ranging from one to five years. Accounts receivable, inventory, and ~~replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based~~property and equipment are pledged as collateral on the ~~value~~various lines of ~~transferred goods or services as they occur~~credit. As of June 30, 2023, the Company had $4.4 million in ~~the contract.~~additional funds available to borrow. The ~~ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts,~~Company is required to maintain covenants including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively orfinancial ratios as a ~~cumulative-effect adjustment~~condition of the line of credit agreements. As of the date of this Report, the Company was in technical non-compliance with these covenants. However, the Company received waivers from the banking institutions regarding these failed covenants. As such, the Company was in compliance with the covenants as of the date of ~~adoption.~~this report.

Note 5 - Convertible Debt

In ~~August 2015,~~May 2023, the ~~FASB~~Company issued ~~ASU No. 2015-14, Revenue from Contracts~~a one-year $0.4 million convertible note payable to an outside investor with ~~Customers (Topic 606): Deferral~~an annual interest rate of 12% with the proceeds to be used for general corporate purposes. In connection with this convertible note payable, the Company issued 13,750 restricted shares of Class A Common Stock to the investor as additional consideration for the purchase of the ~~Effective Date. The amendment in this ASU defers the effective date~~note and 196,250 restricted shares of ASU No. 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods with that reporting period.

~~Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting.~~

~~In February 2015, the FASB issued ASU No. 2015-02,~~ ~~Consolidation (Topic 810): Amendments to the Consolidation Analysis.~~ ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015.

~~In November 2015, the FASB issued ASU No. 2015-17,~~ ~~Balance Sheet Classification of Deferred Taxes. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance,~~Class A Common Stock, which shall be ~~classified as noncurrent on the balance sheet. This update is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.~~ ~~The Company adopted this ASU, and all financial periods presented herein reflect this. There were no significant impacts on our financial position, results of operations, or cash flows.~~

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842). The guidance in ASU No. 2016-02 supersedes the lease recognition requirements in ASC Topic 840,~~ ~~Leases (FAS 13)~~. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, ~~2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its financial statements.~~

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements.

~~Note 3 – Going Concern~~

The accompanying financial statements have been prepared on a going concern basis. The working capital of the Company is currently negative and causes doubt of the ability for the Company to continue. The Company requires capital for its operational and marketing activities. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

~~In order to mitigate the risk related with this uncertainty, the Company has a three-fold plan to resolve these risks. First, the acquisition of QCA has allowed for an increased level of cash flow~~returned to the Company if timely repayments are made against the note. The convertible note was issued with an original issue discount of $24,500. The fair value of the shares issued was determined based on the closing stock price on the date of issuance and after allocating the proceeds was $243,529, which was recorded as ~~demonstrated in~~debt issuance cost. The carrying value of the ~~sales~~note as of June 30, 2023 was $185,476 and is recorded as convertible debt on the consolidated balance sheet.

In June 2023, the Company issued a one-year $1.7 million convertible note payable to an outside investor with an annual interest rate of 12% with the proceeds to be used for general corporate purposes. In connection with this convertible note payable, the Company issued 67,400 restricted shares of Class A Common Stock to the investor as additional consideration for the ~~second~~purchase of the note and ~~third quarters~~1,200,000 restricted shares of ~~2016. Second,~~Class A Common Stock, which shall be returned to the Company ~~has acquired HWT~~if timely repayments are made against the note. The convertible note was issued with an original issue discount of $242,120. The fair value of the shares issued was determined based on the closing stock price on the date of issuance and after allocating the proceeds was $757,280, which was recorded as debt issuance cost. Further, the Company issued

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200,000 warrants to purchase common stock to the investor and 3,579 warrants as a finders fee. The Company calculated the fair value of the warrants using a Black-Scholes option pricing model (Note 6) to be $378,000 and $6,764, respectively, which was recorded as a debt issuance cost. As the warrants have a change of control redemption feature, the warrants are classified as a liability within accrued expenses on the consolidated balance sheet. The carrying value of the note as of June 30, 2023 was $285,836 and is ~~considering other potential acquisition targets that, like QCA, should increase income and cash flow to~~recorded as convertible debt on the Company. Third, the Company plans to issue additional shares of common stock for cash and services during the next 12 months and has engaged MCAP, LLC to provide advisory services in connection with that capital raise.consolidated balance sheet.

~~Note 4 – Leases~~

~~As of September 30, 2017, the future minimum capital lease and financing transaction payments, net of amortization of~~All convertible debt ~~issuance costs, are~~is classified as ~~follows:~~

Fiscal Year
2017 $ 143,500
2018 584,763
2019 599,382
2020 614,366
2021 629,725
Thereafter 7,961,289
Total 10,533,025
Less: Current capital leases and financing transaction (24,133 )
Less: imputed interest (3,962,247 )
Noncurrent capital leases and financing transaction $ 6,546,645

~~The Company also has~~ a ~~commitment to pay $276,000 towards Leasehold Improvements, of which $276,000 has been satisfied and reflected~~current liability on the balance sheet ~~as of September 30, 2017.~~and matures within the next twelve months.

The money received from the sale of the building was used to purchase Quality Circuit Assembly. Because this is a financing transaction, the sale is recorded under "financing lease obligation" on the Balance Sheet and amortized over the 15-year term of the lease.

~~The term of the lease has been extended through September 30, 2032 at a monthly rate of approximately $69,000. These payments are reflected in the table above.~~

~~A letter of credit of $1,000,000 is to be provided to landlord, of which $255,709 had been satisfied as of September 30, 2017.~~

~~Operating Leases~~

The company also had three operating leases as of September 30, 2017 (Successor), for its location in San Jose, CA (QCA), Phoenix, AZ (Alpine) and Oklahoma City, OK (HWT). Approximate monthly rent obligations are $21,500, $2,800, and $5,000 respectively.

~~The five-year minimum rent payments for each location are as follows~~

Fiscal Year San Jose, CA Phoenix, AZ
Oklahoma City,
OK

2017 $ 64,596 $ 5,600 $ 15,000
2018 266,134 - 60,000
2019 274,118 - 35,000
2020 282,342 - -
2021 290,812 - -
Thereafter - - -
Total 1,178,002 5,600 110,000

The San Jose, CA, rent agreement expires at the end of 2021, the Phoenix, AZ, rent agreement expired at the end of May 2017 and went to a monthly rent agreement and the Oklahoma City, OK rent agreement expires end of August 2019.

~~Note 5 – Notes Payable~~

During the three months ended March 31, 2016 (Predecessor), QCA paid off $10,000 of related party notes and $59,461 of unrelated party notes that were collateralized by vehicles prior to the purchase of QCA by Alpine 4. There was no monthly payment on the related party notes. The aggregate monthly payments on the unrelated party notes were $1,808.

During the nine months ended September 30, 2017, the Company secured a line of credit with a third-party lender, Crestmark. The line of credit is collateralized by HWT's outstanding accounts receivable, up to 85% with maximum draws of $2,000,000 and a variable interest rate. The Company also secured a five-year fixed rate (10.14%) term loan with Crestmark Equipment Finance which is collateralized by HWT's equipment. Both are guaranteed by the Company.

During the nine months ended September 30, 2017 the company also entered into four fixed rate (30.00%) term notes with maturity dates of two, three and six months for a total of $80,000, of which $70,000 has been repaid as of September 30, 2017.

~~As of September 30, 2017, the outstanding balances for all notes payable are as follows:~~

September 30, 2017 (Successor) Alpine 4 QCA HWT
LOC current $ - $ 1,717,937 $ 4,648
Equipment current - 154,635 1,674,758
Term notes 10,000 - -
Total Current $ 10,000 $ 1,872,572 $ 1,679,406
Equipment noncurrent - - -
Total Notes $ 10,000 $ 1,872,572 $ 1,679,406

~~The QCA and HWT equipment notes are classified as current due to the notes being in default and fully callable by the lender.~~

~~Note 6 – Notes Payable, Related Parties~~

During the nine months ended September 30, 2017, the Company made payments to related parties for notes payable of $123,500, and borrowed $405,500 of which $300,000 was associated with the HWT acquisition described in Note 9.

~~At September 30, 2017, and December 31, 2016, notes payable consisted of the following:~~

Dec 31, 2016 Borrowings Payments Sep 30, 2017
Note payable; non-interest bearing; due upon demand; unsecured $ 15,000 $ - $ (15,000 ) $ -
Note payable; non-interest bearing; due upon demand; unsecured 15,000 - (15,000 ) -
Note payable; interest bearing; due May 31, 2017; unsecured 5,000 - (5,000 ) -
Notes payable; non-interest bearing; due upon demand; unsecured - 6,000 (1,500 ) 4,500
Note payable; interest bearing; due January 10, 2017; unsecured 60,000 - (60,000 ) -
Note payable; interest bearing; due March 2, 2017; unsecured - 10,000 (10,000 ) -
Note payable; interest bearing; due March 14, 2017; unsecured - 12,000 (12,000 ) -
Note payable; interest bearing; due April 11, 2017; unsecured - 2,500 (2,500 ) -
Note payable; interest bearing; due May 26, 2017; unsecured - 43,500 - 43,500
Note payable; interest bearing; due June 30, 2017; unsecured 10,000 - (2,500 ) 7,500
Note payable; interest bearing; due May 31, 2017; secured 100,000 - - 100,000
Note payable; interest bearing; due July 31, 2017; secured
- 300,000 - 300,000
Note payable; interest bearing; due March 3, 2018; unsecured - 11,500 - 11,500
Note payable; interest bearing; due April 27, 2018; unsecured - 20,000 - 20,000
$ 205,000 $ 405,500 $ (123,500 ) $ 487,000

During the nine months ended September 30, 2017, a note with a related party was amended with a due date of January 30, 2017, to May 31, 2017. Also, a note with due date of April 30, 2017, was amended to July 31, 2017. These notes are now due upon demand.

~~The secured note for $100,000 is secured by real estate in the HWT purchase agreement. The secured note for $300,000 is subordinated debt secured by all assets of HWT.~~

~~Note 7 – Convertible Notes Payable~~

During the nine months ended September 30, 2017 (Successor), the Company entered into fixed convertible note agreements with investors and as consideration for an acquisition. The fixed convertible notes are unsecured; bear interest at 5-20% annually, and are due from April 27, 2016, to July 1, 2019. All the fixed convertible notes payable contain a provision that allows the note holder to convert the outstanding balance into shares of the Company's Class A common stock. Notes are convertible at $1.00 per share, except for those issued for the HWT and QCA business acquisitions, which are convertible at $8.50 and $10.00 per share. The debt discount, which arises from a beneficial conversion feature ("BCF") on the $1 per share investor notes, is being amortized over the terms of the convertible notes payable. Total BCF discount recognized is $30,000 for the nine months ended September 30, 2017. For the nine months ended September 30, 2017 (Successor), the Company recognized interest expense of $28,406 related to the amortization of the debt discount. The unamortized balance for these notes was $9,015 as of September 30, 2017.

During the nine months ended September 30, 2017 (Successor), the Company entered into two convertible note agreements with investors for $20,000 and $10,000. The convertible notes are unsecured; bear interest at 10% annually, and are due on January 19 and January 23, 2018, respectively. They are convertible to the Company's Class A common stock at $1 per share.

During the nine months ended September 30, 2017 (Successor), the Company entered into five variable convertible note agreements with investors. The variable convertible notes are unsecured; bear interest at 10-12% annually, and are due from January 21to September 5, 2018.

~~On April 17, 2017, the Company entered into a variable convertible note with unrelated 3~~^rd party for $58,500 with net proceeds of $55,000. The note is due January 30, 2018, and bears interest at 12% per annum. After 180 days, the note is convertible to the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. The Company can prepay the convertible note up to 180 days from April 17, 2017. The prepayment penalty is equal to 10% to 27% of the outstanding note amount, depending on when prepaid.

~~On June 15, 2017, the Company entered into a variable convertible note with unrelated 3~~^rd party for $60,000 with net proceeds of $57,000. The note is due June 15, 2018 and bears interest at 10% per annum. After 180 days, the note is convertible to the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. The Company can prepay the convertible note up to 180 days from June 15, 2017. The prepayment penalty is equal to 10% to 25% of the outstanding note amount depending on when prepaid.

~~On July 13, 2017, the Company entered into a variable convertible note with unrelated 3~~^rd party for $43,000 with net proceeds of $40,000. The note is due April 30, 2018, and bears interest at 12% per annum. After 180 days, the note is convertible to the Company's Class A common stock at a discount of 38% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. The Company can prepay the convertible note up to 180 days from July 13, 2017. The prepayment penalty is equal to 10% to 27% of the outstanding note amount, depending on when prepaid.

~~On July 19, 2017, the Company entered into a variable convertible note with unrelated 3~~^rd party for $115,000 with net proceeds of $107,000. The note is due January 21, 2018 and bears interest at 10% per annum. , The note is immediately convertible to the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. The Company can prepay the convertible note up to 180 days from July 19, 2017. The Company issued 500,000 shares of Class A common stock to the note holder which are returnable if no event of default has occurred and the note is paid in full within 180 days of the note date. Management has determined that it is probable that the Company will meet the conditions under the note and therefore it more likely than not that the Company will not be in default as defined in the note and the note will be paid in full within 180 days of the note date. As a result, management has concluded that it is probable that the shares would be returned and therefore the cost of issuance has not been recorded as of September 30, 2017. The Company will reassess the likelihood of such at each period end. This is accounted for as a derivative liability, so a debt discount from derivative liabilities of $115,000 was recognized. The Company recognized interest expense of $47,917 related to the amortization of debt discounts. The unamortized balance for this note was $67,083 as of September 30, 2017. Please see Note 11 – Derivative Liabilities and Fair Value Measurements for more details.

~~On September 5, 2017, the Company entered into a variable convertible note with unrelated 3~~^rd party for $105,000 with net proceeds of $100,000. The note is due September 5, 2018 and bears interest at 10% per annum. After 180 days, the note is convertible to the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. The Company can prepay the convertible note up to 180 days from September 5, 2017. The prepayment penalty is equal to 10% to 25% of the outstanding note amount depending on when prepaid.

~~Convertible notes payable at September 30, 2017, and December 31, 2016, consisted of the following:~~

Sep 30, 2017 Dec 31, 2016
Convertible Note - current

$
2,118,830

$
254,780

Debt discount

(76,098
)

(7,421
)
Net current

$
2,042,732

$
247,359

Convertible Note - noncurrent

1,694,627

1,760,198

Total Convertible Note

$
3,737,359

$
2,007,557

~~A roll forward of the convertible notes payable is provided below:~~

~~Convertible Notes Rollforward~~
~~Balance 12/31/16~~	~~2,007,557~~
~~Issuance of convertible notes payable for acquisition~~	~~1,500,000~~
~~Issuance of convertible notes payable for cash~~	~~411,500~~
~~Notes paid~~	~~(66,370~~	)
~~Conversion of notes payable to common stock~~	~~(46,650~~	)
~~Discount from beneficial conversion feature~~	~~(30,000~~	)
~~Discount from derivative liabilities~~	~~(115,000~~	)
~~Amortization of debt discounts~~	~~76,322~~
~~Balance 9/30/17~~	~~3,737,359~~

~~Principal maturities associated with debt obligations with due dates as of September 30, 2017, are as follows:~~

Payments due by Period

Less than
One Year

One to
Three Years

Three to
Five Years

More Than
Five Years
Total
Notes payable, related parties $ 487,00 $ - $ - $ - $ 487,000
Notes payable, non-related parties 3,561,978 - - - 3,561,978
Convertible notes payable 2,118,830 1,694,627 3,813,457
Total $ 6,167,808 $ 1,694,627 $ - $ - $ 7,862,435

~~Minimum payments on Notes payable, non-related parties is $43,717 per month. Other loans have no monthly payments.~~

Note 86 – Stockholders' Equity

~~Preferred Stock~~

~~The Company is authorized~~On May 12, 2023, a Certificate of Amendment was filed to ~~issue 5,000,000~~effect a one-for-eight (1-for-8) reverse split (the “Reverse Split”) of the shares of ~~$.0001 par value preferred stock. As of September 30, 2017, and November 14, 2017, no shares of preferred stock were outstanding.~~

~~Common Stock~~

~~Pursuant to~~ the ~~Second Amended and Restated Certificate of Incorporation,~~Company’s the ~~Company is authorized to issue two classes of common stock:~~ Class A, ~~common stock, which will have one vote per share,~~Class B, and Class ~~B common stock, which will have ten votes per share. Any holder~~C Common Stock, and to decrease the number of ~~Class B common stock may convert his or her shares at any time into~~ shares of Class A ~~common stock~~Common Stock from 295,000,000 shares to 200,000,000 shares (the “Class A Common Stock Decrease”). The Reverse Split and the Class A Common Stock Decrease became effective on May 12, 2023. As a result of the Reverse Split, every eight shares of the Company’s issued and outstanding Class A Common Stock automatically converted into one share of Class A Common Stock, without any change in the par value per share, and began trading on a ~~share-for-share basis. Otherwise~~post-split basis under the ~~rights~~Company’s existing trading symbol, “ALPP,” when the market opened on May 15, 2023. Additionally, every eight shares of the ~~two classes~~Company’s issued and outstanding Class B Common Stock automatically converted into one share of Class B Common Stock, without any change in the par value per share, and every eight shares of the Company’s issued and outstanding Class C Common Stock automatically converted into one share of Class C Common Stock, without any change in the par value per share. The Reverse Split affected all holders of Class A, Class B, and Class C Common Stock uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares. A total of 180,037,350 shares of Class A Common Stock were issued and outstanding immediately prior to the Reverse Split, and approximately 22,504,669 shares of common stock ~~will be identical.~~were issued and outstanding immediately after the Reverse Split. No fractional shares were outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock automatically received an additional fraction of a share of common stock to round up to the next whole share. In addition, effective as of the same time as the Reverse Split, proportionate adjustments were made to all then-outstanding options and warrants with

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respect to the number of shares of Class A Common Stock subject to such options or warrants and the exercise prices thereof. The impact of this change in capital structure has been retrospectively applied to all periods presented herein.

Common Stock and Series B Preferred Stock

The Company had the following transactions in its common stock during the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2023:

~~Issued 260,000 shares of its Class A common stock for services. Total expense for the shares issued for services was $21,170;~~

~~Issued 214,309 shares of its Class A~~•In April 2023, a shareholder converted 162,500 shares of Class B common stock into 162,500 shares of Class A common stock.

•In May 2023, the Company issued 13,750 restricted shares of Class A Common Stock as additional consideration for the purchase of the convertible note and 196,250 restricted shares of Class A Common Stock, which shall be returned to the Company if timely repayments are made against the note.

•In June 2023, the Company issued 67,400 restricted shares of Class A Common Stock as additional consideration for the purchase of the convertible note and 1,200,000 restricted shares of Class A Common Stock, which shall be returned to the Company if timely repayments are made against the note.

Series B Preferred Stock

During April 2023, a shareholder converted 1 share of Series B preferred stock into 1 share of Class A common stock.

Stock Options

The following summarizes the stock option activity for the six months ended June 30, 2023:


	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2022	386,751	$	4.39	7.94	$	463,495
Granted	—	—
Forfeited	(16,844)	6.16
Exercised	—	—
Outstanding at June 30, 2023	369,907	$	4.31	7.38	$	193,492

Exercisable at June 30, 2023	159,001	$	1.85	5.46	$	193,492

The following table summarizes information about options outstanding and exercisable as of June 30, 2023:


		Options Outstanding				Options Exercisable
Exercise Price		Number of Shares	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
$	0.40	111,438	5.01	$	0.40	111,438	$	0.40
0.80		10,625	4.78	0.80		10,625	0.80
6.16		234,340	8.84	6.16		23,434	6.16
7.20		13,504	3.77	7.20		13,504	7.20
		369,907				159,001

During the six months ended June 30, 2023 and 2022, stock option expense amounted to $0.3 million and $0.5 million, respectively. Unrecognized stock option expense as of June 30, 2023, amounted to $0.8 million, which will be recognized over a period extending through April 2025.

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Warrants

The following summarizes the warrants activity for the six months ended June 30, 2023:


	Warrants	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2022	2,321,411	$	11.78	4.31	$	—
Granted	203,579	3.51		5.00
Forfeited	—	—
Exercised	—	—
Outstanding at June 30, 2023	2,524,990	$	11.12	3.87	$	—

Exercisable at June 30, 2023	2,524,990	$	11.12	3.87	$	—

The following table summarizes information about warrants outstanding and exercisable as of June 30, 2023:


		Warrants Outstanding				Warrants Exercisable
Exercise Price		Number of Shares	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
$	52.80	52,084	1.64	$	52.80	52,084	$	52.80
20.16		49,604	1.45	20.16		49,604	20.16
24.80		535,716	3.41	24.80		535,716	24.80
24.64		53,572	3.40	24.64		53,572	24.64
5.52		1,630,435	4.04	5.52		1,630,435	5.52
3.50		200,000	5.00	3.50		200,000	3.50
4.20		3,579	5.00	4.20		3,579	4.20
		2,524,990				2,524,990

During the six months ended June 30, 2023, the Company issued 200,000 and 3,579 warrants to two holders in connection with ~~the conversion of convertible notes payable and accrued interest with a value of $57,320;~~

~~Issued 2,001 shares of the Company's restricted Class A common stock in private placement transactions to investors, in exchange for capital raised of $15,000.~~

~~There were no equity transactions related to the Predecessor Company during any Predecessor period presented.~~

~~Redeemable Common Stock~~

The Company issued 379,403 shares of its Class A common stock in connection with the purchase of HWT. 260,000 shares are redeemable at $4.25 per share at three different redemption periods: 130,000 shares at 12 months, 65,000 shares at 18 months and 65,000 shares at 24 months from the closing date of the purchase of HWT. 119,403 shares are redeemable at $3.35 per share at 12 months from the closing date of the purchase of HWT. Shares are valued at the redemption value of $1,439,725.

~~Due to the nature of~~ the issuance of ~~stock for the HWT acquisition, it is recorded outside~~a convertible note payable. The warrants have an exercise price of ~~permanent equity in the balance sheet.~~

~~Stock Options~~

~~During the nine months ended September 30, 2017, the following stock options~~$3.50 and $4.20, respectively, were ~~issued to purchase one share each~~exercisable as of June 29, 2023 and expire on June 29, 2028. The fair value of the ~~Company's Class A common stock. The options were~~200,000 and 3,579 warrants issued ~~pursuant to the Company's 2016 Stock Option~~is $378,000 and ~~Stock Award Plan (the "Plan"). The Company uses~~$6,764, respectively, and was determined using the Black-Scholes option pricing ~~model to estimate the~~model. The fair value of ~~stock-based awards on~~ the ~~date of grant and on each modification date~~warrants was determined using the following ~~assumptions.~~assumptions:

~~Expected dividend yield~~	0	%
~~Weighted average expected volatility~~Stock price				~~200~~	%$1.89
~~Weighted average risk-free~~Risk-free interest rate				~~2.38~~	%4.50%
Expected life of ~~options~~the warrants			~~6.25 years~~

On April 7, 2017, the Company issued 741,500 options to employees and consultants of the Company. The options granted vest over the next four years, and the exercise price of the options granted is $0.90, which was the last closing bid price of the Company's common stock as traded on the OTC QB Market. The stock options are valued at $586,972 which will be expensed quarterly over the vesting period.

On May 3, 2017, the Company issued 114,000 options to an employee. The options granted vest over the next four years and the exercise price of the options granted is $0.26, which was the last closing bid price of the Company's common stock as traded on the OTC QB Market. The stock options are valued at $29,298 which will be expensed quarterly over the vesting period.

On July 31, 2017, the Company issued 488,500 options to employees and consultants of the Company. The options granted vest over the next four years, and the exercise price of the options granted is $0.13, which was the last closing bid price of the Company's common stock as traded on the OTC QB Market. The stock options are valued at $62,773 which will be expensed quarterly over the vesting period.

~~Stock Options Outstanding~~		2.5
~~As of December 31, 2016~~Expected volatility			-	1242%
~~Issued~~Expected dividend yield			~~1,344,000~~
~~Forfeited~~	~~(102,000~~	)
~~As of September 30, 2017~~	~~1,242,000~~	0%

~~During~~

Note 7 – Segment Reporting

The Company discloses segment information that is consistent with the ~~three months~~way in which management operates and views its business. Effective during the quarter ended September 30, ~~2017, approximately $37,000~~2022, the Company increased its reportable segments to eight

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segments. All segments and the subsidiaries within each segment are geographically located in North America. The financial results are logical to review in this manner for comparison, trend, deviations, etc. purposes.

Management excludes the following when reviewing the profit/loss by segment.

•Intercompany Sales/COGS

•Management fees to the parent Company

•Income tax benefit/expense

There has not been any change to the measurement method in how management reviews the profit/loss by segment.

The operating segments and their business activity are as follows:

•A4 Construction Services - MSM provides commercial construction services primarily as a sheet metal contractor.

•A4 Construction Services - Excel provides commercial construction services primarily as a sheet metal contractor.

•A4 Manufacturing - QCA is a contract manufacturer within the technology industry.

•A4 Manufacturing - Alt Labs is a contract manufacturer within the dietary & nutraceutical supplements industry.

•A4 Defense - TDI does contracting for the US Government particularly for the US Defense Department and US Department of State.

•A4 Technologies - RCA is a business-to-business ("B2B") commercial electronics manufacturer.

•A4 Technologies - Elecjet is a battery research and development company.

•A4 Aerospace - Vayu is a drone aircraft manufacturer.

•A4 All Other includes the QCA-C, IDT, GAC, and Corporate.


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue
A4 Construction Services - MSM	$	3,550,392	$	5,326,296	$	7,363,532	$	9,093,686
A4 Construction Services - Excel	110,494		342,963		443,358		631,777
A4 Manufacturing - QCA	5,319,687		4,241,382		9,511,330		8,560,242
A4 Manufacturing - Alt Labs	6,787,129		2,958,885		11,014,043		6,783,023
A4 Defense - TDI	2,413,363		2,472,207		5,383,450		5,160,188
A4 Technologies - RCA	8,538,620		8,910,276		15,992,043		18,147,535
A4 Technologies - Elecjet	121,845		345,382		224,340		902,111
A4 Aerospace - Vayu	4,171		—		4,171		25,000
All Other	1,176,325		673,735		2,447,472		1,559,718
	$	28,022,026	$	25,271,126	$	52,383,739	$	50,863,280
Gross profit (loss)
A4 Construction Services - MSM	$	549,807	$	191,788	$	781,695	$	655,594
A4 Construction Services - Excel	(373,950)		(26,468)		(523,958)		(125,442)
A4 Manufacturing - QCA	1,786,189		1,149,049		2,683,904		2,176,233
A4 Manufacturing - Alt Labs	1,778,676		857,997		2,727,428		1,759,476
A4 Defense - TDI	944,550		1,285,732		1,561,132		2,128,921
A4 Technologies - RCA	2,752,026		2,159,923		5,126,204		4,344,251
A4 Technologies - Elecjet	(53,000)		249,297		(126,809)		187,268
A4 Aerospace - Vayu	4,116		—		1,706		25,000
All Other	398,676		293,225		772,244		646,699
	$	7,787,090	$	6,160,543	$	13,003,546	$	11,798,000
Income (loss) from operations
A4 Construction Services - MSM	$	(150,608)	$	(152,882)	$	(555,021)	$	(468,580)
A4 Construction Services - Excel	(578,989)		(238,956)		(1,011,070)		(558,946)
A4 Manufacturing - QCA	446,516		270,804		465,613		685,252

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A4 Manufacturing - Alt Labs	181,351		5,190,788		(377,774)		4,203,305
A4 Defense - TDI	829,235		783,704		1,010,769		1,206,844
A4 Technologies - RCA	944,686		193,377		1,420,550		759,667
A4 Technologies - Elecjet	(222,275)		(268,554)		(467,696)		(572,900)
A4 Aerospace - Vayu	(1,380,016)		(819,431)		(2,200,983)		(1,626,328)
All Other	(3,788,794)		(2,587,090)		(7,143,755)		(5,012,709)
	$	(3,718,894)	$	2,371,760	$	(8,859,367)	$	(1,384,395)
Depreciation and amortization
A4 Construction Services - MSM	$	178,665	$	171,342	$	352,963	$	337,746
A4 Construction Services - Excel	67,524		132,917		135,049		132,917
A4 Manufacturing - QCA	113,673		108,304		230,552		208,783
A4 Manufacturing - Alt Labs	225,654		253,948		434,208		560,983
A4 Defense - TDI	72,433		72,090		144,866		144,180
A4 Technologies - RCA	244,805		170,053		489,609		340,099
A4 Technologies - Elecjet	105,668		103,633		211,334		205,133
A4 Aerospace - Vayu	259,679		259,225		518,590		533,894
All Other	317,255		277,280		595,968		554,721
	$	1,585,356	$	1,548,792	$	3,113,139	$	3,018,456
Interest expense
A4 Construction Services - MSM	$	98,163	$	124,220	$	211,873	$	227,245
A4 Construction Services - Excel	60,196		61,643		120,766		123,628
A4 Manufacturing - QCA	171,005		87,601		334,650		123,890
A4 Manufacturing - Alt Labs	84,979		94,561		149,659		151,677
A4 Defense - TDI	16,598		—		33,945		—
A4 Technologies - RCA	71,896		60,431		157,852		115,248
A4 Technologies - Elecjet	—		—		—		—
A4 Aerospace - Vayu	5,414		—		11,372		—
All Other	600,494		534,018		1,087,498		829,747
	$	1,108,745	$	962,474	$	2,107,615	$	1,571,435
Net income (loss)
A4 Construction Services - MSM	$	(248,771)	$	(276,934)	$	(729,371)	$	(639,301)
A4 Construction Services - Excel	(639,185)		(300,599)		(1,131,836)		(682,574)
A4 Manufacturing - QCA	275,944		161,763		131,757		535,630
A4 Manufacturing - Alt Labs	178,697		5,298,191		(480,059)		4,186,729
A4 Defense - TDI	837,719		783,704		1,001,906		1,206,844
A4 Technologies - RCA	872,790		132,946		1,262,698		644,419
A4 Technologies - Elecjet	(222,275)		(272,099)		(467,696)		(576,445)
A4 Aerospace - Vayu	(1,414,806)		(819,431)		(2,241,731)		(1,626,328)
All Other	(4,191,979)		(3,167,735)		(7,666,677)		(5,508,728)
	$	(4,551,866)	$	1,539,806	$	(10,321,009)	$	(2,459,754)

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The Company’s reportable segments as of June 30, 2023, and December 31, 2022, were as follows:


	As of June 30, 2023		As of December 31, 2022
Total assets
A4 Construction Services - MSM	$	10,675,363	$	11,309,049
A4 Construction Services - Excel	3,334,543		3,359,818
A4 Manufacturing - QCA	20,550,261		20,988,492
A4 Manufacturing - Alt Labs	28,335,277		26,636,905
A4 Defense - TDI	13,663,378		13,497,381
A4 Technologies - RCA	24,753,925		27,191,977
A4 Technologies - Elecjet	12,787,943		12,897,440
A4 Aerospace - Vayu	12,890,586		14,632,530
All Other	15,619,649		15,118,622
	$	142,610,925	$	145,632,214
Goodwill
A4 Construction Services - MSM	$	113,592	$	113,592
A4 Construction Services - Excel	—		—
A4 Manufacturing - QCA	1,963,761		1,963,761
A4 Manufacturing - Alt Labs	4,410,564		4,410,564
A4 Defense - TDI	6,426,786		6,426,786
A4 Technologies - RCA	1,355,728		1,355,728
A4 Technologies - Elecjet	6,496,343		6,496,343
A4 Aerospace - Vayu	—		—
All Other	1,913,310		1,913,310
	$	22,680,084	$	22,680,084
Accounts receivable, net
A4 Construction Services - MSM	$	4,373,429	$	5,188,521
A4 Construction Services - Excel	386,429		288,243
A4 Manufacturing - QCA	2,768,483		3,867,141
A4 Manufacturing - Alt Labs	2,458,636		1,833,502
A4 Defense - TDI	2,207,665		1,905,314
A4 Technologies - RCA	3,669,480		3,232,559
A4 Technologies - Elecjet	6,302		12,888
A4 Aerospace - Vayu	—		—
All Other	758,324		811,776
	$	16,628,748	$	17,139,944

Note 8 – Commitments and Contingencies

Licensing Agreement

DTI has entered into licensing agreements with RCA Trademark Management for the licensing rights to the respective trademarks in the United States of America and Canada. The RCA licensing agreement was ~~recorded~~amended with Technicolor, S.A., as licensor, and expires December 31, 2027 except for ~~stock options expense. During~~ the ~~nine months~~agreement relating to Computer Monitors and Outdoor Televisions which expires on December 31, 2025. DTI agreed to pay a royalty fee of 2.50% - 3.50% on net sales based on product type with a total minimum annual payment of $550,000 for the year ended ~~September 30, 2017, approximately $69,000~~2023, $600,000 for the year ended 2024, $620,000 for the year ended 2025, $660,000 for the year ended 2026, and $700,000 for the year ended 2027.

Table of ~~expense was recorded~~Contents

Warranty Service Agreement

DTI entered into a warranty service agreement to provide certain warranty services for ~~stock options expense.~~a lighting supplier through December 31, 2024, except for one class of customer, for whom services will be provided through 2030. In exchange for these services, DTI expects to receive $66,626 and $59,964 during the years ended December 31, 2023 and 2024, respectively.

~~Reverse Stock Split~~

Royalty Agreement

On July 29, 2016, the Company adopted a resolution approved by the shareholders to effectuate a reverse stock split at a ratio of one (1) new share for each ten (10) old shares of the Company's commons stock (the "Reverse Split"). By its terms, the Reverse Split would only reduce the number of outstanding shares of Class A and Class B common stock, and would not correspondingly reduce the number of Class A and Class B common shares authorized for issuance, which remained at 500,000,000 and 100,000,000, respectively.

~~The financial statements have been retrospectively restated to reflect the reverse split.~~

~~Other Items Relating to Equity~~

~~On July 19, 2017,~~November 28, 2021, the Company entered into a ~~variable convertible~~Royalty Agreement with the sellers of Elecjet. Upon closing the Company desires to build its initial factory (“Factory”) to manufacture graphene batteries in the territory of the United States. The Company agrees to pay the sellers 1.5% of net sales for batteries produced by the Factory. Royalty payments shall continue to be paid for a period of ten years from the starting date, or until the total of the royalty payments equals $50 million, whichever occurs first.

Legal Proceedings

From time to time, the Company may become involved in lawsuits and other legal proceedings that arise in the course of business. Litigation is subject to inherent uncertainties, and it is not possible to predict the outcome of litigation with total confidence. As of the date of this Report, the Company was not aware of any legal proceedings or potential claims against it whose outcome would be likely, individually or in the aggregate, to have a material adverse effect on the Company’s business, financial condition, operating results, or cash flows.

Alan Martin Lawsuit

In August 2020, in a matter relating to our former subsidiary Horizon Well Testing, LLC (“Horizon”), the Company filed a lawsuit in the United States District Court, District of Arizona (Case No.2:20-cv-01679-DJH), against Alan Martin, the seller of Horizon dba Venture West Energy Services, LLC (“VWES”). The Company brought suit seeking to avoid the claimed liability due from the Company to Alan Martin, for the Company’s 2017 purchase of Mr. Martin’s business, Horizon. On summary judgment, the court found that the Company’s claim was barred by a time-limiting clause for indemnification claims. The Company disagreed with the court’s ruling and planned to appeal. Mr. Martin filed a counterclaim in which he claimed that he remains unpaid on the promissory note, ~~with unrelated 3~~^rd ~~party for $115,000 with net proceeds of $107,000.~~as modified, under which the Company purchased Horizon. The note isbalance alleged to have a principal sum due ~~January 21, 2018 and bears~~of $3.3 million, plus interest at ~~10%~~8% accruing from 2019 to present, plus late fees accruing at $575 per ~~annum. The note is immediately convertible to~~day. After confidential mediation before Hon. Eileen Willett, United States Magistrate Judge for the ~~Company's Class A common stock at a discount~~United States District Court for the District of ~~35% to~~Arizona, the ~~average of the three lowest trading closing prices of the stock for ten days prior to conversion.~~parties settled their dispute on acceptable terms. The Company ~~can prepay~~and Mr. Martin agreed to a settlement agreement whereby Mr. Martin will receive the ~~convertible~~following: $100,000 payable on or before August 3, 2023; 250,000 shares issued immediately; $2,000,000 payable on or before October 31, 2023 and a $1,800,000 note uppayable with monthly payments of $75,000 beginning on December 1, 2023 with a final payment of $900,000 payable on or before December 1, 2024. The $100,000 payment and the 250,000 shares have been paid and issued by the Company.

Robert Porter Lawsuit

In August 2021, in a matter relating to ~~180 days from July 19, 2017.~~Horizon, Robert Porter filed a lawsuit in the District Court of Oklahoma County, State of Oklahoma (CJ-2021-3421), alleging unjust enrichment and breach of contract with respect to shares of Company that Mr. Porter claims were owed to him pursuant to his employment contract with the Company as President of Horizon. In October 2021, the Company filed its answer denying such claims. In October 2021, the Company also filed counterclaims against Mr. Porter for conversion and breach of fiduciary duties. The Company ~~issued 500,000~~believes this is a frivolous lawsuit and as such, no accrual has been recorded as of June 30, 2023, and December 31, 2022.

VWES Lawsuit

In October 2021, in a matter relating to Horizon, the Company received three complaints in the District Court of Oklahoma Country State of Oklahoma from former VWES employees Bruce Morse (CJ-2021-4316), Brian Hobbs (CJ-2021-4315), Thomas Karraker (CJ-2021-4314) for unjust enrichment, and breach of contract with respect to their employment contracts with Horizon. On January 19, 2022, the Company filed answers to all three lawsuits that denied these claims. The Company believes these are frivolous lawsuits. In July 2022, the Company and Mr. Morse settled his claims against the Company. The settlement included the cash payment of $24,375 for Mr. Morse's claimed 4,688 shares of Class A common stock, ~~to the note holder which are returnable if no event of default~~and subsequently Mr. Morse’s case has ~~occurred~~been dismissed. Subsequently, Mr. Hobbs and ~~the note is paid~~Mr. Karraker have also expressed interest in ~~full within 180 days~~settling claims on similar terms, and negotiations were ongoing as of the ~~note date. Management~~date of this report. As no formal settlement offer has determined that it is probable that the Company will meet the conditions under the note and therefore it more likely than not that the Company will not be in default as defined in the note and the note will be paid in full within 180 days of the note date. As a result, managementbeen extended, no accrual has ~~concluded that it is probable that the shares would be returned and therefore the cost of issuance has not~~ been recorded as of ~~September~~June 30, ~~2017. The~~2023, and December 31, 2022.

Gatehouse Lawsuit

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In June 2022, in a matter relating to the Company’s subsidiaries, DTI Services Limited Liability Company ~~will reassess the likelihood of such at each period end.~~

~~Note 9 – Business Combinations~~

~~Quality Circuit Assembly~~

~~Effective April 1, 2016~~and Direct Tech Sales, LLC (doing business as RCA, the Company ~~Purchased 100%~~received a complaint filed in the Superior Court of Marion County State of Indiana (CAUSE NO. 49D01-2203-PL-006662) by Gatehouse, LLC (“Gatehouse”), a supplier of PPP gloves for resale by RCA, seeking payment of $213,000 for supplied goods that RCA has good reason to believe are counterfeit, and thus unsalable. RCA has answered the complaint and asserted counterclaims of fraud and breach of contract. After a long delay in prosecution of the ~~stock~~case by Gatehouse, motion practice has begun in this matter. However no scheduling, hearings, or trial date had been set as of ~~Quality Circuit Assembly, Inc.~~the date of this report.

Mark Bell Lawsuit

In November 2022, the Company, and its subsidiaries Excel and A4 Construction, received a complaint filed by Mark Bell in the district court of Idaho (CV42-22-4066) with regard to the Company’s February 2020 purchase of Excel Fabrication LLC (“Excel”) from Mr. Bell. The matter relates to the lack of payment on a $2.3 million seller note comprising part of the purchase consideration. In December 2022 the Company counter-sued Mr. Bell for breach of contract, fraud, and misrepresentation in the February 2020 sale of Excel to the Company. The case is set for trial in June of 2024.

Starr Corporation Arbitration

In December 2022, the Company’s subsidiary Excel received a demand for binding arbitration (AAA Case No. 01-22-0004-9935) by Starr Corporation of Idaho (“Starr Corporation”), a ~~California corporation ("QCA").~~contractor for whom Excel was performing as sub-contractor. Excel stopped its work for Starr Corporation' pursuant to its claimed contract right of termination based on Starr Corporation’s failure to make payment within the contracted period for work satisfactorily performed. Starr Corporation claims that Excel’s termination was wrongful, and seeks approximately $0.5 million, reflecting its costs in having to complete work that was called for under the contract. Excel is seeking a determination that its termination was rightful under the terms of the contract, and in addition seeks payment on its unpaid billing submittals and additional costs. Arbitration hearings are scheduled to commence in April 2024. As no formal settlement offer has been extended, no accrual has been recorded as of June 30, 2023, and December 31, 2022.

State University of New York at Stonybrook Lawsuit

In February 2023, the Company was apprised that a complaint was brought in the State of New York against Vayu in 2019 (prior to the Company’s ownership of Vayu) seeking a refund for two returned airframes. The case had originally been dismissed for lack of jurisdiction but was revived by virtue of New York’s highest court ruling (State of New York v Vayu, APL-2021-00148) that the State’s long arm statute applied to the 2016 transaction between Vayu and the State University of New York at Stonybrook. Total damages sought by the State of New York are less than $100,000, including interest and costs. In light of the decision by the Court of Appeals to return the case to the trial courts for adjudication, and as of the date of this report the Company and the State of New York have begun informal settlement discussions including the possibility of the State providing information useful to the Company should it wish to subsequently seek redress from the previous owners of Vayu.

Kevin Thomas Lawsuit

In May 2023, Kevin Thomas, who sold Alternative Laboratories, LLC to the Company in May of 2021, sued the Company, and its subsidiaries Alt Labs and A4 Manufacturing, in the State circuit court for Collier County Florida (Case Number 23-CA-1981), alleging that the Company failed to deliver shares of the Company as promised by the terms of the purchase ~~price paid~~agreement. Additionally Mr. Thomas claimed that an amount of $610,000 in Employee Retention Credits was received by the Company ~~for~~and that portion representing the ~~QCA Shares consisted~~credit attributed to the first and secondquarters of ~~cash~~2021 (prior to the May 4th, 2021 date of sale), should be remitted to him rather than retained by the Company. The Company believes that Mr. Thomas’ complaint is wholly without merit, and ~~a convertible promissory note. The "Cash Consideration" paid~~as of the date of this report, the Company was ~~the aggregate amount of $3,000,000. The "Promissory Note Consideration" consists of a secured promissory note (the "Quality Circuit Assembly Note")~~ in the ~~amount~~process of ~~$2,000,000 ($165,330 current, $1,694,627 noncurrent), secured by a subordinated security interest in~~answering the assets of QCA. Additionally, the Sellers have the opportunity to convert the Quality Circuit Assembly Note into shares of the Company's Class A common stock at a conversion price of $10 per share after 12 months. The Quality Circuit Assembly Note will bear interest at 5% with first payment due July 1, 2016,complaint and ~~will be payable in full in 36-months (namely, July 1, 2019).~~

considering possible motions and counterclaims.

~~A summary of the final purchase price allocation at fair value is below.~~

Purchase
Allocation

Cash $ 200,000
Accounts Receivable 1,158,995
Inventory 950,424
Property, Plant & Equipment 1,256,885
Prepaid 6,035
Intangibles 631,187
Goodwill 1,963,761
Accounts Payable (672,410 )
Accrued Expenses (128,444 )
Income Tax Payable (20,123 )
Deferred Tax Liability (346,310 )
$ 5,000,000

~~Horizon Well Testing~~

~~Effective January 1, 2017, the Company Purchased 100% of the stock of Horizon Well Testing, LLC, an Oklahoma limited liability company ("HWT").~~

Alpine 4 purchased 100% of the outstanding interests of HWT for $2,200,000 cash, two notes payables ($1,500,000 and $300,000), 379,403 shares of Alpine 4's Class A common stock, valued at $1,439,725, and 75,000 warrants, to purchase one share of Alpine 4 Class A common stock, valued at $40,941. The $300,000 note bears interest at 1% and was payable in full by July 31, 2017. The $1,500,000 note is a convertible note with an option to convert at $8.50 into Alpine 4's Class A common stock. The note bears interest at 5% per annum and has a balloon payment due on the 18-month anniversary of the closing of the purchase. There were also post-closing adjustments of $25,232.

HWT secured an equipment note for $1,872,392 from Crestmark Equipment Finance with a five-year term at a fixed interest rate of 10.14%. HWT also secured a line of credit from Crestmark Bank with an initial funding amount of $165,012. The line of credit is secured by HWT's accounts receivable and has a variable interest rate.

~~A summary of the preliminary purchase price allocation at fair value is below.~~

Purchase
Allocation

Cash $ 262,384
Accounts Receivable, net 245,833
Property, Plant & Equipment 4,804,458
Intangibles -
Goodwill 167,845
Accrued Expenses (25,086 )
Total consideration $ 5,455,434

During the three months ended September 30, 2017 an adjustment was made to the purchase price allocation based on additional information. Intangibles decreased by $123,240, Property, Plant & Equipment increased by $273,459 and Goodwill decreased by $150,219.

Unaudited pro forma results of operations for the nine months ended September 30, 2016 (Predecessor), as if the Companies (Alpine, QCA & HWT) had been combined as of January 1, 2016, follow. The pro forma results include estimates and assumptions which management believes are reasonable. However, pro forma results do not include any anticipated cost savings or other effects of the planned integration of these entities, and are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the dates indicated or which may result in the future. For period ending September 30, 2017 (Successor), pro forma information is not provided because the results after December 31, 2016, are post-acquisition.

Pro Forma
Combined
Financials

Nine Months
Ended
September 30,
2016

Revenue $ 9,017,550

Net (Loss) Income $ (2,827,653 )

Net (Loss) Income per Common Share - Basic and Diluted $ (0.12 )

~~Note 10 – Industry Segments~~

This summary presents the Company's current segments, QCA and HWT, for the three and nine months ended September 30, 2017 (Successor). Prior periods are not presented as QCA made up the majority of the financials.

Successor
Three Months Ended September 30, 2017
QCA HWT Unallocated & Eliminations Total Consolidated

Revenue, external customers $ 2,084,565 $ 74,301 $ 62,667 $ 2,221,533
Revenue, company segments 564 - (564 ) -
Segment Gross Profit 645,360 51,706 4,243 701,309
Segment Depreciation and Amortization 72,538 111,674 20,835 205,047
Segment Interest expense 179,491 71,404 173,091 423,986
Segment income tax expense 8,253 - 50 8,303
Segment net gain/(loss)
38,192
(489,950 ) (365,949 ) (817,707 )
Purchase and acquisition long-lived assets 6,480 73,042 16,344 95,866

Successor
Nine Months Ended September 30, 2017
QCA HWT Unallocated & Eliminations Total Consolidated

Revenue, external customers $ 5,648,285 $ 1,200,381 $ 196,140 $ 7,044,806
Revenue, company segments 27,401 - (27,401 ) -
Segment Gross Profit 1,742,209 565,887 75,547 2,383,643
Segment Depreciation and Amortization 217,136 313,155 37,501 567,792
Segment Interest expense 528,144 209,395 342,937 1,080,476
Segment income tax expense 8,620 - 50 8,670
Segment net gain/(loss) (99,724 ) (1,279,928 ) (878,765 ) (2,258,417 )
Purchase and acquisition long-lived assets 75,480 4,803,164 28,344 4,906,988

Successor
As of September 30, 2017
QCA HWT Unallocated Total Consolidated

Accounts receivable, net $ 1,716,616 $ 36,312 $ 1,909 $ 1,754,837
Goodwill 1,963,761 167,845 - 2,131,606
Total assets 10,772,456 4,860,059 314,975 15,947,490

~~Note 11 – Derivative Liabilities and Fair Value Measurements~~

~~Derivative liabilities~~

~~During the nine months ended September 30, 2017, the Company issued a convertible note dated July 19, 2017 (see "Note 7 – Convertible Notes Payable").~~

This note was evaluated under FASB ASC 815-40, Derivatives and Hedging and was determined to have characteristics of derivative liability under the above guidance. Each reporting period, this derivative liability is marked-to-market with the non-cash gain or loss recorded in the period as a gain or loss on derivatives. On September 30, 2017 and December 31, 2016, the aggregate fair value of the derivative liabilities was $175,332 and $0, respectively.

During the nine months ended September 30, 2017, certain notes issued, conversion options relating to convertible debt with a fixed conversion price that had been previously issued, and the outstanding Class A common stock warrants became tainted and were required to be accounted for as derivative liabilities under ASC 815.

~~For the nine months ended September 30, 2017 and twelve months ended December 31, 2016, the aggregate change in the fair value of derivative liabilities was a gain of $72,361 and $0, respectively.~~

~~The valuation of our embedded derivatives is determined by using the Black-Scholes Option Pricing Model. As such, our derivative liabilities have been classified as Level 3.~~

~~The Company estimated the fair value of the derivative liabilities using the Black-Scholes Option Pricing Model and the following key assumptions during the nine months ended September 30, 2017.~~

~~Expected dividend yield~~		0	%
~~Weighted average expected volatility~~		~~200~~	%
~~Weighted average risk-free interest rate~~		~~2.38~~	%
~~Expected terms (years)~~	~~.50 to 2.67~~

~~Fair value measurements~~

FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820 describes three levels of inputs that may be used to measure fair value:

~~Level 1~~ ~~– Quoted prices in active markets for identical assets or liabilities.~~

~~Level 2~~ – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

~~Level 3~~ – Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level of input that is significant to the fair value measurement of the instrument.

~~The following table provides a summary of the fair value of our derivative liabilities as of September 30, 2017 and December 31, 2016.~~

Fair value measurement on a recurring basis
Level 1 Level 2 Level 3
As of September 30, 2017
Liabilities
Derivatives $ - $ - $ 175,332

As of December 31, 2016
Liabilities
Derivatives $ - $ - $ -

~~The below table presents the change in the fair value of the derivative liabilities during the nine months ended September 30, 2017:~~

Fair value as of December 31, 2016 $ -
Additions recognized as debt discounts 115,000
Additions reclassified from equity 132,693
Gain on change in fair value of derivatives (72,361 )
Fair value as of September 30, 2017 $ 175,332

Note 129 – Subsequent Events

~~Convertible Notes~~In July 2023, Vayu received its first purchase order from All American Contracting for ten G1 MKIII Fixed Wing unmanned aerial vehicles ("UAVs") for $5.25 million with delivery expected to occur in Q4 2023 or Q1 2024. The purchase order requires a 10% down payment, with final payment to be sent prior to taking delivery.

In July 2023, Morris entered into an Amended Forbearance agreement extending the forbearance period until August 31, 2023.

On ~~October 5, 2017,~~July 31, 2023, the Company ~~entered into~~and Mr. Martin agreed to a ~~convertible~~settlement agreement whereby Mr. Martin will receive the following: $100,000 payable on or before August 3, 2023; 250,000 shares issued immediately; $2,000,000 payable on or before October 31, 2023 and a $1,800,000 note payable with ~~an unrelated lender for $60,000~~monthly payments of $75,000 beginning on December 1,

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2023 with ~~net proceeds~~a final payment of ~~$55,000.~~$900,000 payable on or before December 1, 2024. The ~~note is due July~~$100,000 payment and the 250,000 shares have been paid and issued by the Company.

On August 4, ~~2018~~2023, the Company filed a Registration Statement on Form S-1 with the Securities and ~~bears interest at 12% per annum. After 180 days, the note is convertible~~Exchange Commission ("SEC") relating to ~~the Company's~~a proposed offering of our Class A common stock. The number of shares of Class A common stock to be offered and the price for the proposed offering will be determined at the time of pricing and may be at a discount ~~of 35%~~ to the ~~average of~~then current market price. The offering is subject to market conditions, and the three lowest trading closing prices of the stock for ten days prior to conversion. The Company can prepay the convertible note up to 180 days from October 5, 2017. The prepayment penalty is equal to 20% to 25% of the outstanding note amount depending on when prepaid.

~~On October 11, 2017, the Company entered into a convertible note with an unrelated lender for $58,500 with net~~ proceeds of $55,500. The note is due July 20, 2018 and bears interest at 12% per annum. The note is immediately convertible to the Company's Class A common stock at a discount of 38% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. The Company can prepay the convertible note up to 180 days from October 11, 2017. The prepayment penalty is equal to 10% to 27% of the outstanding note amount depending on when prepaid.

~~On November 2, 2017, the Company entered into a variable convertible note with unrelated 3~~^rd party for $115,000 with net proceeds of $107,000. The note is due May 2, 2018 and bears interest at 10% per annum. After 180 days, the note is convertible to the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. The Company can prepay the convertible note up to 180 days from November 2, 2017 with a prepayment penalty of $750.

On November 1, 2017, in contemplation of entering into the November 2, 2017 note, the Company released 150,000 shares of the 500,000 returnable shares (see Note 8 – Other items Related to Equity). The shares were consideration for the second note dated November 2, 2017, and as such will be ~~accounted~~utilized for ~~as a discount associated with that note.~~general corporate purposes, working capital, research and development, and repayment of certain outstanding debt.

~~Other Equity transaction~~

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On November 1, 2017, the Company entered into an agreement with the investor relations firm RedChip Companies Inc. ("RedChip"). The agreement is for six months with a review after 90 days. The Company will pay RedChip $2,500 per month for months 1-3 and $5,000 per month for months 4-6. For the first 90 days of service the Company issued 275,000 shares of the Company's Class A common shares which are restricted pursuant to the provisions of Rule 144. For the second 90 days of service the Company will issue 125,000 shares fo the Company's Class A common shares which are restricted pursuant to the provisions of Rule 144.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

~~There are~~Management’s Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of the financial statements with a narrative report on our financial condition, results of operations, and liquidity. This discussion and analysis should be read in conjunction with the unaudited Financial Statements and notes thereto for the six months ended June 30, 2023, included under Item 1 – Financial Statements in this Quarterly Report, that are not historical facts. These "forward-looking statements" can be identified by use of terminology such as "believe," "hope," "may," "anticipate," "should," "intend," "plan," "will," "expect," "estimate," "project," "positioned," "strategy" and ~~similar expressions. You should be aware that these~~our audited Financial Statements and notes thereto for the year ended December 31, 2022, contained in our Annual Report on Form 10-K. The following discussion contains forward-looking statements ~~are subject to~~that involve risks and uncertainties, ~~that are beyond~~such as statements of our control. For a discussion of these risks, you should read this entire Report carefully, especially the risks discussed under "Risk Factors." Although management believes that the assumptions underlying the forward-looking statements included in this Report are reasonable, they do not guarantee our future performance,plans, objectives, expectations, and intentions. Our actual results could differ materially from those ~~contemplated by these forward looking statements. The assumptions used for purposes of~~discussed in the forward-looking ~~statements specified in~~statements. Please also see the ~~following information represent estimates~~cautionary language at the beginning of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this Quarterly Report will in fact transpire. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We expressly disclaim any obligation to update or revise anyregarding forward-looking statements.

Overview and Highlights

Company Background

Alpine 4 ~~Technologies Ltd. (the "Company"~~Holdings, Inc. (“we,” “our,” or the “Company”), was incorporated under the laws of the State of Delaware onin April ~~22,~~ 2014. The Company was formed to serve as a vehicle to affect an asset acquisition, merger, exchange of capital stock, or other business combination with a domestic or foreign business. As of the date of this Report, the Company is a technology holding company owning three companies (ALTIA, LLC; Quality Circuit Assembly, Inc.; and Horizon Well Testing, LLC).

~~Business Strategy~~

~~Who~~ We ~~Are~~

~~Alpine 4 is~~are a publicly ~~held enterprise with four principles at the core~~traded conglomerate that is acquiring businesses that fit into its disruptive DSF business model of ~~its business: Synergy, Innovation, Drive,~~Drivers, Stabilizers, and Excellence (S.I.D.E.). At Alpine 4, we believe synergistic innovation drives excellence. By anchoring these words to our combined experience and capabilities, we are able to aggressively pursue opportunities within and across vertical markets. We deliver solutions that not only drive industry standards, but also increase value for our shareholders.

Facilitators. At Alpine 4, we understand the nature of how technology and innovation can accentuate a business. Our focus is on how the adaptation of new technologies even in brick-and-mortar businesses can drive innovation. We ~~strive to develop strategic synergies between~~also believe that our holdings should benefit synergistically from each other and that the ability to have collaboration across varying industries can spawn new ideas and create ~~value~~fertile ground for competitive advantages.

As of the date of this Report, the Company was a holding company that wholly owned, directly or indirectly, twelve companies:

–A4 Corporate Services, LLC;

–Quality Circuit Assembly, Inc. ("QCA");

–Morris Sheet Metal, Corporation ("MSM");

–JTD Spiral, Inc.;

–Excel Construction Services, LLC ("Excel");

–Vayu Aerospace Corporation;

–Thermal Dynamics International, Inc. ("TDI");

–Alternative Laboratories, LLC. ("Alt Labs");

–Identified Technologies, Corporation ("IDT");

–Elecjet Corporation;

–DTI Services LLC (doing business as RCA Commercial Electronics ("RCA")); and ~~operational excellence within a unique long-term perspective.~~

–Global Autonomous Corporation ("GAC").

~~Our~~

Business Strategy

~~Alpine 4's strategy is~~What We Do:

Alexander Hamilton in his “Federalist paper #11”, said that our adventurous spirit distinguishes the commercial character of America. Hamilton knew that our freedom to ~~provide Fortune 500-level execution strategies in its subsidiary companies and market segments to~~be creative gave American businesses ~~and companies~~a competitive advantage over the rest of the world. We believe that ~~have the most to benefit from this access.~~

Alpine 4 ~~feels~~also exemplifies this ~~opportunity exists~~spirit in ~~smaller middle market operating companies~~our subsidiaries and that our greatest competitive advantage is our highly diverse business structure combined with revenues between $5 to $150 million. In this target rich environment, businesses generally sell at more reasonable multiples, presenting greater opportunities for operational and strategic improvements and have greater potential for growth. Implementationa culture of ~~our strategy within our holdings is accomplished by the offering of strategic and tactical MBA-level training and development, delivered via the following modules:~~collaboration.

~~Alpine 4 Mini MBA program; and~~

An Alpine 4 developed ERP (Enterprise Resource Planning) and collaboration system called SPECTRUMebos. SPECTRUMebos is what we are defining as an Enterprise Business Operating System (ebos). This system will combine the key technology software components of Accounting and Financial Reporting, an Enterprise Resource Planning System (ERP), a Document Management System (DMS), a Business Intelligence (BI) platform and a Customer Resource Management (CRM) hub which will be tethered to management reporting and collaboration toolsets. Management believes that these tools will help drive real-time information in two directions: first, to the front lines by empowering customer-facing stakeholders; and second, back to management for planning, problem solving, and integration. Management believes that SPECTRUMebos will be the technology "secret sauce" in managing our portfolio of companies and, in time, will be an offering to external customers.

All great strategies must have trade-offs. Therefore, Alpine 4 avoids companies that have unionized employees, businesses that have more than $150 million in revenue, and companies that operate in highly regulated business industries.

~~Diversification~~

It is our ~~goal~~mandate to ~~help drive~~grow Alpine 4 into a leading, multi-faceted holding company with diverse subsidiary holdings with products and services that not only benefit from one another as a whole, but also have the benefit of independence. This type of corporate structure is about having our subsidiaries prosper through strong onsite leadership while working synergistically with other Alpine 4 holdings. The essence of our business model is based around acquiring B2B companies in a broad spectrum of industries via our acquisition strategy of DSF (Drivers, Stabilizer, Facilitator). Our DSF business model (which is discussed more below) offers our shareholders an opportunity to own small-cap businesses that hold defensible positions in their individual market space. Further, Alpine 4’s greatest opportunity for growth exists in the smaller to middle-market operating companies with revenues between $5 to $150 million annually. In this target-rich environment, businesses generally sell at more reasonable multiples, presenting greater opportunities for operational and strategic improvements that have greater potential to enhance profit.

Driver, Stabilizer, Facilitator ("DSF")

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Driver: A Driver is a company that is in an emerging market or technology, that has enormous upside potential for revenue and profits, with a significant market opportunity to access. These types of acquisitions are typically small, brand new companies that need a structure to support their growth.

Stabilizer: Stabilizers are companies that have sticky customers, consistent revenue and provide solid net profit returns to Alpine 4.

Facilitators: Facilitators are our “secret sauce.” Facilitators are companies that provide a product or service that an Alpine 4 ~~has been set up~~sister company can use as leverage to create a competitive advantage.

When you blend these categories into a longer-term view of the business landscape, you can then begin to see the value-driving force that makes this a truly purposeful and powerful business model. As stated earlier, our greatest competitive advantage is our highly diversified business structure combined with a ~~holding company model, with Presidents who will run each~~collaborative business culture, that helps drive out competition in our markets by bringing; resources, planning, technology and Managers with specific industry related experience who, along with Kent Wilson, the CEO of Alpine 4, will help guide our portfolio of companies as needed. Alpine 4 will work with our Presidents and Managers to ensurecapacity that our motto of S.I.D.E (Synergistic, Innovation, Drives, Excellence) is utilized. Further, we plan to work with our subsidiaries and capital partners to provide the proper capital allocation and, to work to make sure each business is executing at high levels.

In 2016, we saw the beginning of our plan for diversification take hold with the acquisition of Quality Circuit Assembly, Inc. ("QCA") when Alpine 4 acquired 100% of QCA's stock effective April 1, 2016. Additional information relating to our acquisition of QCA can be found in our Current Report on Form 8-K, filed with the SEC on March 15, 2016.

~~In October of 2016, Alpine 4 formed a new Limited Liability Company called ALTIA (Automotive Logic & Technology In Action) to create an independent subsidiary for Alpine 4's 6~~^th ~~Sense Auto product ("6SA") and its BrakeActive product.~~

Effective, January 1, 2017, Alpine 4 acquired 100% of Horizon Well Testing, LLC ("HWT"). Additional information about the acquisition of HWT can be found in our Current Reports on Form 8-K filed with the SEC on December 8, 2016, and January 13, 2017.

~~Finally, we have entered into two additional LOI's to acquire two different companies, and will provide additional disclosures relating to those transactions as they progress.~~

~~Segments~~

~~Segment revenue and net income are key metrics we use to evaluate segment operating performance and to determine resource allocation between segments.~~

~~Common Stock~~

~~Voting Rights~~

Holders of our Class A and Class B common stock have identical rights, except that holders of our Class A common stock are entitled to one vote per share and holders of our Class B common stock are entitled to ten votes per share. Holders of shares of Class A common stock and Class B common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise required by law. We have not provided for cumulative voting for the election of directors in our certificate of incorporation.

~~Dividends~~

Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of Class A common stock and Class B common stock shall be entitled to share equally in any dividends that our board of directors may determine to issue from time to time. In the event a dividend is paid in the form of shares of common stock or rights to acquire shares of common stock, the holders of Class A common stock shall receive Class A common stock, or rights to acquire Class A common stock, as the case may be, and the holders of Class B common stock shall receive Class B common stock, or rights to acquire Class B common stock, as the case may be.

~~Liquidation Rights~~

Upon our liquidation, dissolution or winding-up, the holders of Class A common stock and Class B common stock shall be entitled to share equally all assets remaining after the payment of any liabilities and the liquidation preferences on any outstanding preferred stock.

~~Conversion~~

~~Our Class A common stock is not convertible into any other shares of our capital stock.~~

Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock shall convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain transfers described in our certificate of incorporation.

Once transferred and converted into Class A common stock, the Class B common stock shall not be reissued. No class of common stock may be subdivided or combined unless the other class of common stock concurrently is subdivided or combined in the same proportion and in the same manner.

The foregoing description of the Second Amended and Restated Certificate of Incorporation is qualified in its entirety by reference to the text of the Amendment attached as Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on August 27, 2015, and incorporated therein by reference.

~~Going Concern~~

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses since inception. The Company requires capital for its contemplated operational and marketing activities. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raises substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Companycompetitors simply do not ~~include any adjustments~~have. DSF reshapes the environment each subsidiary operates in by sharing and exploiting the resources each company has, thus giving them a competitive advantage that ~~may result from the outcome of these aforementioned uncertainties.~~their peers do not have.

In order to mitigate the risk related with this uncertainty, the Company has a three-fold plan to resolve these risks. First, the acquisition of QCA and HWT has allowed for an increased level of cash flow to the Company. Second, the Company is in negotiations to acquire another company that management believes will increase income and cash flow to the Company as QCA has done. Third, the Company plans to issue additional shares of common stock for cash and services during the next 12 months and has engaged MCAP, LLC to provide advisory services in connection with that capital raise.

Results of Operations

~~Revenue~~

~~Our revenues were $7,044,806 for the nine~~Three months ended ~~September~~June 30, ~~2017 (Successor), with~~2023, compared to three months ended June 30, 2022

The following are the ~~majority being from QCA. This compares with $1,788,654~~results of our operations for the three months ended ~~March 31, 2016 (Predecessor),~~June 30, 2023, as compared to the three months ended June 30, 2022.


	Three Months Ended June 30,
	2023		2022		$ Change
Revenue	$	28,022,026	$	25,271,126	$	2,750,900
Cost of revenue	20,234,936		19,110,583		1,124,353
Gross profit	7,787,090		6,160,543		1,626,547

Operating expenses:
General and administrative expenses	9,893,454		9,216,398		677,056
Research and development	1,612,530		394,835		1,217,695
Gain on sale of property	—		(5,822,450)		5,822,450
Total operating expenses	11,505,984		3,788,783		7,717,201
Income (loss) from operations	(3,718,894)		2,371,760		(6,090,654)

Other income (expenses)
Interest expense	(1,108,745)		(962,474)		(146,271)
Other income	15,906		258,660		(242,754)
Total other expense	(1,092,839)		(703,814)		(389,025)

Income (loss) before income tax	(4,811,733)		1,667,946		(6,479,679)

Income tax expense (benefit)	(259,867)		128,140		(388,007)

Net income (loss)	$	(4,551,866)	$	1,539,806	$	(6,091,672)

Revenue

Revenues were $28,022,026 for the three months ended June 30, 2023, an increase of $2,750,900 compared to revenue of $25,271,126 for the three months ended June 30, 2022. The increase is due to a $3,828,244 increase for Alt Labs and ~~$4,294,535~~a $1,078,305 increase for QCA due to organic growth, offset by a $1,775,904 decrease for MSM as MSM focuses on better bid pricing to improve their gross margin.

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Cost of revenue

Cost of revenue was $20,234,936 for the three months ended June 30, 2023, an increase of $1,124,353 compared to cost of revenue of $19,110,583 for the three months ended June 30, 2022. The increase is driven by the increase in revenue offset by improvements in our gross profit margin (27.8% vs. 24.4%) as all subsidiaries focus on better order and project pricing along with planned economies of scale begin to take effect.

Operating expenses

Operating expenses were $11,505,984 for the three months ended June 30, 2023, an increase of $7,717,201 compared to operating expenses of $3,788,783 for the three months ended June 30, 2022. The increase is primarily driven by an increase of $936,598 in professional fees associated with our quarterly and annual filings, a $5,822,450 gain on sale of property in 2022 that did not reoccur in 2023, and an increase an R&D expense of $404,356 at Vayu related to its drone program.

Other expenses

Other expense was $1,092,839 for the three months ended June 30, 2023, an increase of $389,025 compared to other expense of $703,814 for the three months ended June 30, 2022. The increase is driven by higher interest expense on the new debt along with the continued higher interest rate environment for our variable rate debt.

Six months ended June 30, 2023, compared to six months ended June 30, 2022

The following are the results of our operations for the six months ended ~~September 30, 2016 (Successor). Predecessor revenue is from circuit board and wire harness sales. Successor revenues include these and the 6SA product for the period ending~~ June 30, ~~2016,~~2023, as ~~well as oil industry services for~~compared to the period ending September 30, 2017. The Company began selling the 6SA products and services during the second half of 2015, and expect our revenue to grow significantly over the next 12 months. Management's expectations of growth in revenues are based on management's contacts within the automobile dealership industry and the anticipated increase in interest in Alpine 4's products and services. Management also expects revenue from circuit board and wire harness sales to increase over the next 12 months as well as services in the oil field industry. These expectations are a result of increased focus on acquiring new customers and growing current customer's orders.

~~Cost of Revenue~~

~~Our cost of revenues was $4,661,163 for the nine~~six months ended ~~September~~June 30, ~~2017 (Successor). This compares to $1,383,031 for the three months ended March 31, 2016 (Predecessor) and $2,730,395~~2022.


	Six Months Ended June 30,
	2023		2022		$ Change
Revenue	$	52,383,739	$	50,863,280	$	1,520,459
Cost of revenue	39,380,193		39,065,280		314,913
Gross profit	13,003,546		11,798,000		1,205,546

Operating expenses:
General and administrative expenses	20,136,477		18,418,080		1,718,397
Research and development	1,726,436		586,765		1,139,671
Gain on sale of property	—		(5,822,450)		5,822,450
Total operating expenses	21,862,913		13,182,395		8,680,518
Loss from operations	(8,859,367)		(1,384,395)		(7,474,972)

Other income (expenses)
Interest expense	(2,107,615)		(1,571,435)		(536,180)
Other income	59,106		291,379		(232,273)
Total other expense	(2,048,509)		(1,280,056)		(768,453)

Loss before income tax	(10,907,876)		(2,664,451)		(8,243,425)

Income tax benefit	(586,867)		(204,697)		(382,170)

Net loss	$	(10,321,009)	$	(2,459,754)	$	(7,861,255)

Revenue

Revenues were $52,383,739 for the six months ended ~~September~~June 30, ~~2016 (Successor). We expect our cost~~2023, an increase of ~~revenue~~$1,520,459 compared to ~~increase over the next 12 months as our revenue increases.~~

~~General and administrative expenses~~

Our general and administrative expenses were $3,238,927 for the nine months ended September 30, 2017 (Successor). This compares to $533,894 for the three months ended March 31, 2016 (Predecessor) and $2,858,163revenues of $50,863,280 for the six months ended ~~September~~June 30, ~~2016 (Successor). As Alpine 4 increases its advertising~~2022. The is primarily driven by an increase of $4,231,020 for Alt Labs and ~~brand~~$951,088 for QCA due to organic growth, offset by decreases in revenue of $2,155,492 for RCA and ~~product/service awareness campaigns beginning in the second half~~$1,730,154 for MSM as both companies focus on improving their gross margin.

Table of ~~2017, and as Alpine 4 hires additional personnel as needed and as operations permit, management anticipates that such actions will result in increased expenses in these areas to the Company.~~ Contents

Cost of revenue

~~Interest expense~~

~~Our interest expense~~Cost of revenue was ~~$1,080,476 for the nine months ended September 30, 2017 (Successor). This compares to $456 for the three months ended March 31, 2016 (Predecessor) and $627,515~~$39,380,193 for the six months ended ~~September~~June 30, ~~2016 (Successor).~~2023, an increase of $314,913 compared to cost of revenue of $39,065,280 for the six months ended June 30, 2022. The increase ~~in interest expense~~ is ~~due to~~primarily driven by the increase in ~~debt, including convertible notes,~~revenue offset by improvements in our gross profit margin (24.8% vs 23.2%) as all subsidiaries focus on better order and project pricing along with planned economies of scale begin to take effect.

Operating expenses

Operating expenses were $21,862,913 for the six months ended June 30, 2023, an increase of $8,680,518 compared to operating expenses of $13,182,395 for the six months ended June 30, 2022. The increase is primarily driven by an increase of $1,560,564 in professional fees incurred as a result of services performed related to the 2021 restated financial statements and quarterly and annual filings, a $5,822,450 gain on sale of property in 2022 that did not reoccur in 2023, and an increase an R&D expense of $404,356 at Vayu related to its drone program.

Other income (expenses)

Other expenses were $2,048,509 for the six months ended June 30, 2023, an increase of $768,453 compared to other expenses of $1,280,056 for the six months ended June 30, 2022. The increase is primarily driven by higher interest ~~costs associated~~expense on the new debt along with the ~~purchase of QCA and HWT. Interest expense includes the~~continued higher interest ~~on the convertible debentures and the amortization of the debt discounts associated with the conversion features embedded in the convertible debentures.~~rate environment for our variable rate debt.

Liquidity and Capital Resources

We have financed our operations since inception from existing revenue, the sale of common stock, capital contributions from stockholders and from the issuance of notes payable and convertible notes payable. We expect to continue to finance our operations from our current operating cash flow and by selling shares of our common stock ~~and by generating income from the sale~~and/or debt instruments.

As of our products. As noted above, management's expectations of growth in revenues is based on management's contacts within the automobile dealership industry, and the anticipated increase in interest in Alpine 4's products and services as Alpine 4 increases its advertising and brand and product/service awareness campaigns which began in the third quarter of 2017. Additionally, management anticipates that the new campaigns will result in the Company's adding new dealerships each month, which began in the second quarter and which should continue through the end of 2017.

Management expects to have sufficient working capital for continuing operations from either the sale of its products, its subsidiaries' product and services revenue, or through the raising of additional capital through private offerings of our securities. Additionally, as of the date of this Report,June 30, 2023, the Company ~~was in negotiations~~had bank lines of credit totaling $35.0 million. Additionally, the Company is monitoring additional businesses to acquire ~~two businesses,~~ which management ~~believes~~hopes will provide additional operating revenues to the Company. There can be no guarantee that the planned acquisitions will close or that they will produce the anticipated revenues on the schedule anticipated by ~~management, or at all.~~

management. The Company ~~used cash from operating activities~~also may elect to seek additional bank financing, engage in debt financing through a placement agent, or sell shares of $872,969 for the nine months ended September 30, 2017 (Successor). This compares with cash used of $72,935 for the three months ended March 31, 2016 (Predecessor) and cash generated of $30,831 for the six months ended September 30, 2016 (Successor). The increase is due to a larger loss and the increase of inventory.its common stock in public or private offering transactions.

The Company used cash from investing activities of $2,033,934 for the nine months ended September 30, 2017 (Successor). This compares with $0 cash used for the three months ended March 31, 2016 (Predecessor) and $2,969,500 cash used for the six months ended September 30, 2016 (Successor). The decrease is due to the purchase of QCA in 2016 cost more than the purchase of HWT in 2017.

The Company generated cash from financing activities of $2,760,781 for the nine months ended September 30, 2017 (Successor). This compares to cash used of $69,461 for the three months ended March 31, 2016 (Predecessor), and generated cash of $2,713,665 for the six months ended September 30, 2016.

Off-Balance Sheet Arrangements

The Company has not entered into any transactions with unconsolidated entities whereby the Company has financial guarantees, subordinated retained interests, derivative instruments, or other contingent arrangements that expose the Company to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to the Company.

Critical Accounting Policies and Estimates

~~The preparation of~~Our consolidated financial statements ~~and related disclosures~~are prepared in ~~conformity~~accordance with ~~U.S.~~ generally accepted accounting principles ("in the United States, or U.S. ~~GAAP") and the Company's discussion and analysis~~GAAP. Preparation of ~~its~~these financial ~~condition and operating results require the Company's management~~statements requires us to make ~~judgments,~~estimates and assumptions ~~and estimates~~ that affect the reported amounts ~~reported in its condensed consolidated financial statements~~of assets, liabilities, revenue, costs and ~~accompanying notes. Note 2, "Summary of Significant Accounting Policies," of this Form 10-Q describes the significant accounting policies~~expenses and ~~methods used in the preparation of the Company's condensed consolidated financial statements. Management bases its~~related disclosures. We base our estimates on historical experience and on various other assumptions ~~it believes~~that we believe to be ~~reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these~~reasonable. In many instances, we could have reasonably used different accounting estimates and ~~such differences may be material.~~

~~Management believes~~in other instances changes in the ~~Company's critical~~ accounting ~~policies and~~ estimates are ~~those related~~reasonably likely to ~~revenue recognition, inventory~~occur from period to period. This applies in particular to useful lives and valuation ~~and lease accounting. Management considers these policies critical because they are both important to the portrayal~~ of ~~the Company's financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.~~

~~Revenue Recognition~~

~~ALTIA~~

The Company accounts for ALTIA's revenue per the guidance in ASC 605-25-25 by allocating the total contract amount between the product and service elements. When a vehicle is sold to the driving consumer who purchases the 6^th Sense Auto service, the cost of the service is added to the price of the car and the amount collected by the dealership for this service is remitted to the Company. At the time the vehicle is purchased, the Company recognizes the service portion of the contract over the service period of generally 12 to 36 months.

~~Quality Circuit Assembly~~

The Company accounts for QCA's revenue per the guidance in ASC 605-25-25 by allocating the total contract amount between the product and service elements. Revenue is recognized when either the product has completely been built and shipped or the service has been completed. If a deposit for product or service is received prior to completion the payment is recorded to deferred revenue until such point the product or services meets our revenue recognition policy. Management assesses the materiality and likelihood of warranty work and returns, and records reserves as needed. For all periods presented, management determined that the warranty and returns would be immaterial.

~~Horizon Well Testing~~

~~Revenue is recognized when the contract has been performed in completion. Contracts range from one day to 30 days in length.~~

~~Principles of consolidation~~

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of September 30, 2017 (Successor), and December 31, 2016. Significant intercompany balances and transactions have been eliminated.

~~Basis of presentation~~

The accompanying financial statements present the balance sheets, statements of operations, stockholders' deficit and cash flows of the Company. The financial statements have been prepared in accordance with U.S. GAAP.

~~Use of estimates~~

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances.long-lived assets. Actual results could differ significantly from ~~those~~our estimates.

~~Advertising~~

~~Advertising costs~~ To the extent that there are ~~expensed when incurred. All advertising takes place at the time~~material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of ~~expense. We have no long-term contracts for advertising. Advertising expense for all periods presented were under $10,000.~~

~~Cash~~

~~Cash~~operations and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. The carrying value of those investments approximates fair value. As of September 30, 2017, and December 31, 2016, the Company had no cash equivalents.

~~Accounts Receivable~~

~~The Company maintains reserves for potential credit losses on accounts receivable.~~flows will be affected. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. As of September 30, 2017 (Successor), and March 31, 2016 (Predecessor), allowance for bad debt was $177,470 and $0, respectively.

~~Inventory~~

Inventory is valued at the lower of the inventory's cost (weighted average basis) or market. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower. Inventory is segregated into four areas, raw materials, WIP, finished goods, and In-Transit.

~~Property and Equipment~~

~~Automobiles & Trucks~~	~~10 to 20 years~~
~~Buildings~~	~~39 years~~
~~Leasehold Improvements~~	~~15 years or time remaining on lease (whichever is shorter)~~
~~Equipment~~	~~10 years~~

~~Maintenance and repair costs are charged against income as incurred. Significant improvements or betterments are capitalized and depreciated over the estimated life of the asset.~~

~~Purchased Intangibles and Other Long-Lived Assets~~

~~The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between five and fifteen years as follows:~~

~~Customer List~~	~~15 years~~
~~Non-compete agreements~~	~~5 years~~
~~Software development~~	~~5 years~~

~~Impairment of Intangibles~~

~~The Company evaluates intangible assets for impairment on a yearly basis or as needed. During the nine months ended September 30, 2017 (Successor),~~believes that there have been no ~~impairment losses.~~changes in our critical accounting policies during the six months ended June 30, 2023.

~~Impairment~~For a summary of ~~Long-Lived Assets~~

~~The Company accounts for long-lived assets~~our significant accounting policies, refer to Note 3 of our consolidated financial statements included under Item 8 – Financial Statements in ~~accordance~~our Annual Report on Form 10-K filed with the provisions of FASB Topic 360, "Accounting for the Impairment of Long-Lived Assets". This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when the estimated future cash flows from the use of the asset are less than the carrying amount of that asset. During the nine months ended September 30, 2017 (Successor), there have been no impairment losses.SEC on May 5, 2023.

~~Goodwill~~

In financial reporting, goodwill is not amortized, but is tested for impairment annually in the fourth quarter of the fiscal year or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Events that result in an impairment review include significant changes in the business climate, declines in our operating results, or an expectation that the carrying amount may not be recoverable. We assess potential impairment by considering present economic conditions as well as future expectations. All assessments of goodwill impairment are conducted at the individual reporting unit level. As of September 30, 2017, the only reporting units with goodwill were QCA and HWT.

The Company used qualitative factors according to ASC 350-20-35-3 to determine whether it is more likely than not that the fair value of goodwill is less than its carrying amount. Based on the qualitative criteria the company believes there not to be any triggers for potential impairment of goodwill and therefore the Company has recorded no impairment of goodwill in any period presented.

~~Fair Value Measurement~~

The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, convertible notes, notes and line of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

~~Leases~~

~~Leases are reviewed by management and examined to see if they are required to be categorized as an operating lease, a capital lease or a financing transaction.~~

~~Earnings (loss) per share~~

Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. The only potentially dilutive securities outstanding during the periods presented were the convertible debentures, but they are anti-dilutive due to the net loss incurred. All earnings (loss) per common share have been adjusted retroactively for periods presented to reflect changes in number of shares as a result of the reverse stock split amount.

~~Redeemable Common Stock~~

As discussed in Note 9 above 379,403 shares of Class A common stock that were issued as consideration for the HWT acquisition contain a redemption feature which allows for the redemption of Class A common stock at the option of the holder. In accordance with ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Accordingly, at September 30, 2017, 379,403 shares of the Class A common stock were classified outside of permanent equity at its redemption value.

~~Stock-based compensation~~

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10, Compensation – Stock Compensation, and the conclusions reached by FASB ASC 505-50, Equity – Equity-Based Payments to Non-Employees. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment is reached or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

~~Income taxes~~

The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carry forwards. Accounting standards regarding income taxes requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry forward periods, the Company's experience with operating loss and tax credit carry forwards not expiring unused, and tax planning alternatives.

The Company recorded valuation allowances on the net deferred tax assets. Management will reassess the realization of deferred tax assets based on the accounting standards for income taxes each reporting period. To the extent that the financial results of operations improve, and it becomes more likely than not that the deferred tax assets are realizable, the Company will be able to reduce the valuation allowance.

Significant judgment is required in evaluating the Company's tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely, based solely on the technical merits, of being sustained on examinations. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately anticipate actual outcomes.

~~Embedded Conversion Features~~

~~Related Party Disclosure~~

~~Recent Developments~~

~~Letter of Intent with Lattice Incorporated~~

On August 1, 2017, the Company announced that it had entered into a letter of intent to acquire all of the outstanding securities of Lattice Incorporated ("Lattice"), together with letters of intent with certain of Lattice's creditors to convert their debt in Lattice into equity. The transaction will be subject to the parties to the transaction (including the holders of debt) entering into definitive agreements and the approval of Lattice's stockholders.

~~The companies expect the transaction to close by the end of 2017.~~

~~About Lattice~~

Lattice Incorporated is a trusted global partner to correctional facilities. It provides a complete range of innovative inmate management and communications solutions that deliver greater efficiencies to facilities, reduce the administrative burden on their staff, provide them with revenue-generating opportunities, and connect their inmates with family and friends; serving approximately 350 correctional facilities and over 78,000 inmates in the United States, Canada, Japan, and Europe.

Lattice's headquarters are in southern New Jersey. They maintain Sales Offices and a Customer Service Call Center in the United States, and they have strong relationships with correctional facility partners both domestically and outside the United States.

~~Lattice's Corrections Operating Platform (COP) is a complete range of innovative, secure solutions that continues to evolve based on the latest technology advancements. It includes:~~

•	~~Inmate Telephone Solutions~~
•	~~Mobile Devices~~
•	~~Video Visitation~~
•	~~Video Arraignment~~
•	~~Deposit Solutions~~

~~Benefits of the Transaction~~

Sharing of resources: Management believes that the Alpine 4 acquisition of Lattice will leverage complementary strengths between the two companies, and Alpine 4 anticipates the benefits of that leverage to drop the fixed cost G&A expenses of Lattice in the first 12-18 months after closing.

Synergies: The Company's subsidiary, QCA, will assist in the engineering of new products and services for Lattice and will also take over a large amount of the contract manufacturing of the Lattice product offering that is currently outsourced. The Company's subsidiary, ALTIA, which has pioneered several GPS tracking hardware and software products, will be assisting Lattice in the development for pre and post prison tracking systems.

Increased Shareholder Value: Management believes that this transaction will result in a positive adjustment to the Company's Shareholder Equity and is anticipated to reduce Lattice's overall debt from $6m to $3m.

Profitable Earnings: Upon closing, management anticipates that this transaction will eliminate approximately 50% of Lattice's debt, which should allow Lattice to obtain net profit earnings on its current revenue base. It is also anticipated that the decreased debt burden will allow Lattice to direct more of its cash towards the growth of the company.

~~Convertible Notes~~

On October 4, 2017, the Company entered into a convertible note with an unrelated lender for $60,000 with net proceeds of $55,000. The note is due July 4, 2018 and bears interest at 12% per annum. After 180 days, the note is convertible to the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. The Company can prepay the convertible note up to 180 days from October 5, 2017. The prepayment penalty is equal to 20% to 25% of the outstanding note amount depending on when prepaid.

On October 11, 2017, the Company entered into a convertible note with an unrelated lender for $58,500 with net proceeds of $55,500. The note is due July 20, 2018 and bears interest at 12% per annum. After 180 days, the note is convertible to the Company's Class A common stock at a discount of 38% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. The Company can prepay the convertible note up to 180 days from October 11, 2017. The prepayment penalty is equal to 10% to 27% of the outstanding note amount depending on when prepaid.

~~On November 2, 2017, the Company entered into a variable convertible note with unrelated 3~~^rd party for $115,000 with net proceeds of $107,000. The note is due May 2, 2018 and bears interest at 10% per annum. The note is immediately convertible to the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. The Company can prepay the convertible note up to 180 days from November 2, 2017 with a $750 prepayment penalty.

On November 1, 2017, in contemplation of entering into the November 2, 2017 note, the Company released 150,000 shares of the 500,000 returnable shares (see Note 8 – Other items Related to Equity). The shares were consideration for the second note dated November 2, 2017, and as such will be accounted for as a discount associated with that note.

~~Other Equity transaction~~

~~Completion of Earnhardt Auto Center Pilot Program~~

~~On July 12, 2017, the Company announced that its subsidiary ALTIA had successfully concluded its 90 day pilot with Phoenix, AZ-based Earnhardt Auto Centers of its innovative 6~~^th Sense Auto product platform. The pilot program was installed at the Earnhardt Chevrolet dealership in Chandler, AZ, and performed well above expectations and will continue on in the store for the foreseeable future. ALTIA is also in negotiations with several other large automotive groups regarding its 6^th ~~Sense Auto and BrakeActive aftermarket products and anticipates larger orders in late Q3 and Q4 2017.~~

6^th Sense Auto is designed for the modern "connected car" and dedicated to helping large dealerships like Earnhardt improve their inventory management, engine diagnostics, service maintenance and personalized customer support through wireless, cloud-based software.

~~With approximately 40 million new and used cars sold in the United States annually, management believes that ALTIA's market opportunity is very large, and believes that the Company's 6~~^th ~~Sense Auto product is positioned to be a dominant player in this industry.~~

Item 3. Quantitative and Qualitative Disclosures ~~about~~About Market Risk.

~~None.~~As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item.

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Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report, June 30, ~~2017.~~2023. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company's reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based upon that evaluation, ~~including our Chief Executive Officer and Chief Financial Officer, we have~~as of the end of the period covered by this Report, the Company's management has concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report due to the following material weaknesses in our internal control over financial ~~reporting, which are indicative of many small companies with small staff:~~reporting: (i) inadequate segregation of duties and effective risk assessment; and (ii) inadequate control activities and monitoring processes; and (iii) failure in the process for identification and disclosure of related party transactions; and (iv) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both U.S. GAAP and SEC guidelines.

~~We plan to take steps to enhance and improve the design of our internal control~~processes over financial reporting. ~~During~~

However, as discussed in our Annual Report for the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ~~ending~~ended December 31, ~~2017: (i) appoint~~2022, additional ~~qualified personnel~~staff has been hired to address ~~inadequate~~the issue of segregation of duties and ~~ineffective risk management;~~the controls and ~~(ii) adopt sufficient written policies and procedures for accounting and~~monitoring processes. The Company is also in the process of switching ERP systems to provide greater IT controls over financial reporting. ~~The remediation efforts set out~~Management anticipates making significant progress to remediate these areas of material weakness in ~~(i)~~2023 and ~~(ii) are largely dependent upon our securing additional financing~~has engaged a third-party specialty management consultant firm to ~~cover~~help facilitate the ~~costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.~~process.

Changes in Internal Control over Financial Reporting

~~There~~As discussed in more detail below, there are material weaknesses in disclosure controls and procedures as well as a material weakness in internal control over financial reporting. Except as discussed above, there were no changes in our internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2017,~~2023, that would have ~~materially affected~~remediated these material weaknesses. However, the Company has made significant efforts to remedy this in 2023 through additional hiring of Corporate staff.

Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is defined as a deficiency, or ~~are reasonably likely to materially affect, our~~a combination of deficiencies, in internal control over financial ~~reporting.~~reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As described in the Annual Report on From 10-K for the year ended December 31, 2022, as of the date of this report, there remained a material weakness around inadequate segregation of duties from a lack of accounting personnel and inherent system limitations of the current ERP system. Further, Management identified seven material weakness in the areas of business combinations, income taxes, preferred stock, equity, acquired intangible assets, impairment of goodwill and intangibles, and financial reporting. Other deficiencies aggregated to two material weakness in accounting for non-routine transactions and accounting for routine transactions. All the material weaknesses above related to not having appropriate accounting expertise to evaluate and account for transactions in the above areas. These material weaknesses had not been remediated as of June 30, 2023. The Company is committed to remediating its material weakness as promptly as possible.

Remediation

The Company is committed to remediating these material weaknesses as promptly as possible. In addition to the additional staff hired to aid in the material weakness over segregation of duties, as of the date of this Report, the Company was also in the process of switching ERP systems to provide greater IT controls over financial reporting. Management anticipates making significant progress to remediate these areas of material weakness in 2023 and has engaged a third-party specialty management consultant firm to help facilitate the process. Further, the Company has engaged a tax specialist CPA firm to assist with the preparation of the tax provision and other tax-related items. These material weaknesses will not be deemed remediated until the remediation efforts described herein have been in place and tested and deemed to be designed, implemented and operating effectively. We plan for this to occur later in 2023.

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PART II - OTHER INFORMATION

Item 1. Legal ~~Proceedings.~~Proceedings

~~There are not presently any~~See Note 8 of Notes to Consolidated Financial Statements in Part I, Item 1 of this report.

Item 1A. Risk Factors

Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, as updated by our disclosures in the "Risk Factors" section of the Registration Statement on Form S-1, filed on August 4, 2023, includes a detailed discussion of the material ~~pending legal proceedings to which~~risks facing the Company ~~is a party or as to which any of~~and its ~~property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.~~operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~During the quarter ended September 30, 2017,~~Issuances in 2023

•In January 2023, certain shareholders converted 1,428 shares of Class C common stock into 1,428 shares of Class A common stock.

•In April 2023, a shareholder converted 162,500 shares of Class B common stock and 1 share of Series B preferred stock into 1,300,001 shares of Class A common stock.

•In May 2023, the Company issued ~~106,000~~13,750 restricted shares of ~~its restricted~~ Class A ~~common stock in connection with services, 177,342~~Common Stock as additional consideration for the purchase of the convertible note and 196,250 restricted shares of Class A Common Stock, which shall be returned to the Company if timely repayments are made against the note.

•In June 2023, the Company issued 67,400 restricted shares of Class A Common Stock as additional consideration for the purchase of the convertible note ~~conversions~~ and ~~500,000~~1,200,000 restricted shares of Class A Common Stock, which shall be returned to the Company if timely repayments are ~~fully returnable upon~~made against the ~~payment of a convertible~~ note. ~~Of the 500,000 shares 150 000 have been released for return in exchange for another note with no issuance of shares on the second note.~~

The shares of Class A common stock referenced above were issued without registration under the 1933 Act in reliance on Section 4(a)(2) of the 1933 Act and the rules and regulations promulgated thereunder.

~~Item 4. Mine safety disclosures.~~Purchases of equity securities by the issuer and affiliated purchasers

~~None~~No purchases of the Company's equity securities were made by the Company or any affiliated purchasers during the six months ended June 30, 2023.

~~Item 5. Other Information.~~

~~None~~

Item 6. Exhibits.

~~3.1~~
Exhibit Number			Description
2.1			Impossible Aerospace Merger Agreement dated November 13, 2020 (incorporated by reference to Exhibit 3.4 to Alpine 4’s Current Report on Form 8-K filed November 17, 2020).

2.2			Vayu (US) Merger Agreement dated December 29, 2020 (incorporated by reference to Exhibit 3.4 to Alpine 4’s Current Report on Form 8-K filed January 4, 2021).

2.3			Elecjet Merger Agreement, dated November 29, 2021 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on December 3, 2021)

3.1			Certificate of Incorporation ~~(previously filed with the Commission as an exhibit~~of Alpine 4 Automotive Technologies Ltd. (incorporated by reference to ~~the Company's~~Exhibit 3.1 to Alpine 4’s Registration Statement on Form 10, ~~and incorporated herein by reference)~~filed May 8, 2014).

3.2		~~Bylaws (previously filed with the Commission as an exhibit to the Company's Form 10 and incorporated herein by reference)~~

~~3.3~~	Certificate of Amendment to Certificate of Incorporation, ~~(previously filed with the Commission as an exhibit~~dated June 27, 2014 (incorporated by reference to ~~the Company's~~Exhibit 3.3 to Alpine 4’s Current Report on Form 8-K onfiled July 18, ~~2014, and incorporated herein by reference)~~2014).

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~~3.4~~3.3						Certificate of Amendment to Certificate of Incorporation, ~~(previously filed with the Commission as an exhibit~~dated June 30, 2014 (incorporated by reference to ~~the Company's~~Exhibit 3.4 to Alpine 4’s Current Report on Form 8-K onfiled July 18, ~~2014, and incorporated herein by reference)~~2014).

~~10.5~~3.4						~~QCA~~Second Amended and Restated Certificate of Incorporation, dated August 24, 2015 (incorporated by reference to Exhibit 3.1 to Alpine 4’s Current Report on Form 8-K filed August 27, 2015)

3.5						Certificate of Amendment of Amended and Restated Certificate of Incorporation, dated December 15, 2017

3.6						By-Laws of Alpine 4 (incorporated by reference to Exhibit 3.2 to Alpine 4’s Registration Statement on Form 10, filed May 8, 2014).

3.7						Series C Preferred Stock Certificate of Designation (incorporated by reference to Exhibit 3.4 to Alpine 4’s Current Report on Form 8-K filed November 17, 2020).

3.8						Series D Preferred Stock Certificate of Designation (incorporated by reference to Exhibit 3.4 to Alpine 4’s Current Report on Form 8-K filed January 4, 2021).

3.9						Certificate of Amendment to Certificate of Incorporation (Name Change) filed February 5, 2021 (incorporated by reference to Exhibit 3.4 to Alpine 4’s Current Report on Form 8-K filed February 8, 2021).

3.10						Certificate of Amendment to Certificate of Incorporation filed May 12, 2023 (incorporated by reference to Exhibit 3.1 to Alpine 4’s Current Report on Form 8-K filed May 12, 2023).

4.1						Form of Placement Agent Warrant (incorporated by reference to Exhibit 3.4 to Alpine 4’s Current Report on Form 8-K filed February 12, 2021).

4.2						Form of Investor Warrant (incorporated by reference to Exhibit 4.1 to Alpine 4’s Current Report on Form 8-K filed November 24, 2021).

4.3						Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 to Alpine 4’s Current Report on Form 8-K filed November 24, 2021).

4.4						Mast Hill Fund, L.P. Warrant (incorporated by reference to Exhibit 4.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

4.5						JH Darbie Finder Warrant (incorporated by reference to Exhibit 4.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

4.6						Armistice Capital Master Fund, Ltd. Warrant - July 2022 (incorporated by reference to Exhibit 4.1 to Alpine 4’s Current Report on Form 8-K filed on July 13, 2022).

4.7						Armistice Capital Master Fund, Ltd. Warrant - November 2021 (incorporated by reference to Exhibit 4.2 to Alpine 4’s Current Report on Form 8-K filed on November 24, 2021).

10.1						Purchase Agreement, dated ~~as of March 15, 2016~~effective January 16, 2020, by and between Alpine 4 Technologies Ltd. and Lincoln Park Capital Fund, LLC (incorporated by reference to the ~~Company's~~Company’s Current Report filed with the SEC on January 23, 2020)

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10.2						Registration Rights Agreement, dated effective January 16, 2020, by and between Alpine 4 Technologies Ltd. and Lincoln Park Capital Fund, LLC (incorporated by reference to the Company’s Current Report filed with the SEC on January 23, 2020)

10.3						FPCD Note - $350,000 (incorporated by reference to the Company’s Current Report filed with the SEC on November 25, 2019)

10.4						FPCD Note - $600,000 (incorporated by reference to the Company’s Current Report filed with the SEC on November 25, 2019)

10.5						Note Amendment – #1 (incorporated by reference to the Company’s Current Report filed with the SEC on November 25, 2019)

10.6						Note Amendment - # 2 (incorporated by reference to the Company’s Current Report filed with the SEC on November 25, 2019)

10.7						FPCD Note - $137,870.48 (incorporated by reference to the Company’s Current Report filed with the SEC on November 25, 2019)

10.8						Note Amendment - $180,000 (incorporated by reference to the Company’s Current Report filed with the SEC on November 25, 2019)

10.9						APF Securities Agreement (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on ~~March 15, 2016)~~April 9, 2018)

~~10.6~~10.10						~~Reverse stock slip of 1 to 10 as of July 29, 2016~~Secured Promissory Notes (incorporated by reference to the ~~Company's~~Company’s Current Report on Form 8-K filed with the Commission on ~~August 3, 2016)~~April 9, 2018)

~~10.7~~10.11						~~Horizon Securities Purchase Agreement~~Secured Convertible Notes (incorporated by reference to ~~Exhibit 99.1 to Alpine 4's~~the Company’s Current Report on Form 8-K filed with the Commission on ~~December 8, 2016)~~April 9, 2018)

~~10.8~~10.12						~~Horizon Secured Promissory Note~~Security Agreement (incorporated by reference to ~~Exhibit 99.1 to Alpine 4's~~the Company’s Current Report on Form 8-K filed with the Commission on ~~December 8, 2016)~~April 9, 2018)

~~10.9~~10.13						~~Horizon Security~~Consulting Services Agreement (incorporated by reference to ~~Exhibit 99.1 to Alpine 4's~~the Company’s Current Report on Form 8-K filed with the Commission on ~~December 8, 2016)~~April 9, 2018)

~~10.10~~10.14						~~Horizon Warrant~~Purchase Agreement (incorporated by reference to ~~Exhibit 99.1 to Alpine 4's~~the Company’s Current Report on Form 8-K filed with the Commission on ~~December 8, 2016)~~February 24, 2020)

~~10.11~~10.15						~~Horizon Master Services Commission Agreement~~Secured Promissory Note - $2,300,000 (incorporated by reference to ~~Exhibit 99.1 to Alpine 4's~~the Company’s Current Report on Form 8-K filed with the Commission on ~~December 8, 2016)~~February 24, 2020)

~~10.12~~10.16						~~Consulting Services~~Security Agreement (incorporated by reference to ~~Exhibit 99.1 to Alpine 4's~~the Company’s Current Report on Form 8-K filed with the Commission on ~~December 8, 2016)~~February 24, 2020)

3110.17						Amendment to Purchase Agreement (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on February 24, 2020)

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10.18						Impossible Aerospace Consultant Agreement dated November 13, 2020 (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed November 17, 2020).

10.19						RSU Agreement dated November 13, 2020 (incorporated by reference to Exhibit 10.2 to Alpine 4’s Current Report on Form 8-K filed November 17, 2020).

10.20						Vayu (US) Employment Agreement dated December 29, 2020 (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed January 4, 2021).

10.21						RSU Agreement dated December 29, 2020 (incorporated by reference to Exhibit 10.2 to Alpine 4’s Current Report on Form 8-K filed January 4, 2021).

10.22						Form of Securities Purchase Agreement (AGP Transaction) (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed February 12, 2021).

10.23						Form of Placement Agent Agreement (incorporated by reference to Exhibit 10.2 to Alpine 4’s Current Report on Form 8-K filed February 12, 2021).

10.24						Class A Common Stock Sales Agreement, dated March 8, 2022, between the Company and A.G.P. (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed March 9, 2022

10.25						Membership Interest Purchase Agreement for DTI Transaction, dated December 9, 2021 (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed December 15, 2021)

10.26						Placement Agent Agreement between the Company and A.G.P., dated November 22, 2021 (incorporated by reference to Exhibit 10.2 to Alpine 4’s Current Report on Form 8-K filed November 24, 2021)

10.27						Securities Purchase Agreement between the Company and the Purchasers named therein, dated as of November 22, 2021 (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed November 24, 2021)

10.28						Membership Interest Purchase Agreement for Alt Labs Transaction, dated May 4, 2021 (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed May 10, 2021)

10.29						Membership Interest Purchase Agreement for RCA Transaction (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed December 15, 2021)

10.30						Class A Common Stock Sales Agreement (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed March 9, 2022)

10.31						Unmanned Aerial Vehicles Supply Agreement (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed October 28, 2022)

10.32						Mast Hill Securities Purchase Agreement (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.33						Mast Hill Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

Table of Contents


10.34						Mast Hill Senior Promissory Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.35						Mast Hill Finder Agreement (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.36						Kent Wilson Employment Agreement (February 2021) (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.37						Kent Wilson Employment Agreement Amendment (November 2021) (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.38						Jeffrey Hail Employment Agreement (February 2021) (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.39						Alan Martin Settlement Agreement (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.40						Ian Kantrowitz Original Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.41						Ian Kantrowitz Extension Renewal Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.42						Christoph Jeunot Original Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.43						Christoph Jeunot Extension Renewal Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.44						Shannon Rigney Original Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.45						Shannon Rigney Extension Renewal Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.46						Jeffrey Hail Original Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.47						Jeffrey Hail Extension Renewal Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.48						Edmond Lew Original Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.49						Edmond Lew Extension Renewal Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

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10.50		Gabriel Garcia Original Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.51		Gabriel Garcia Extension Renewal Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.52		Jeffrey Hail Original Note 2 (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.53		Jeffrey Hail Extension Renewal Note 2 (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.54		Kent Wilson Original Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

10.55		Kent Wilson Extension Renewal Note (incorporated by reference to Exhibit 10.2 to Alpine 4’s Registration Statement on Form S-1 filed August 4, 2023).

31.1		Certification of Chief Executive Officer ~~and~~pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

3232.1		Certification of ~~the~~ Chief Executive Officer ~~and~~pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*101 INS		XBRL Instance ~~Document~~Document*

101.SCH*101 SCH		XBRL ~~Taxonomy Extension~~ Schema ~~Document~~Document*

101.CAL*101 CAL		XBRL ~~Taxonomy Extension~~ Calculation Linkbase ~~Document~~Document*

101.LAB*101 DEF		XBRL ~~Taxonomy Extension Label~~Definition Linkbase ~~Document~~Document*

101.PRE*101 LAB		XBRL ~~Taxonomy Extension~~Labels Linkbase Document*

101 PRE		XBRL Presentation Linkbase ~~Document~~

101.DEF*	~~XBRL Taxonomy Extension Definition Linkbase Definition~~Document*

*The XBRL related information in Exhibit 101 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

Table of Contents

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Alpine 4 ~~Technologies Ltd.~~Holdings, Inc.

Dated: ~~November 14, 2017~~ August 11, 2023

	By: ~~/s/~~	/s/ Kent B. Wilson
		Kent B. Wilson
		Chief Executive Officer ~~President, and Secretary (Principal~~
		(Principal Executive Officer)

~~Dated: November 14, 2017~~

	By: ~~/s/ David G. Schmitt~~	/s/ Christopher Meinerz
	~~David G. Schmitt~~	Christopher Meinerz
		Chief Financial Officer ~~(Principal~~
		(Principal Financial Officer)

~~Delaware~~	~~46-5482689~~
Delaware		46-5482689
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
2525 E Arizona Biltmore Circle, Suite 237
~~4742 N. 24~~^th ~~Street Suite 300~~ Phoenix, AZ		85016
~~Phoenix, AZ~~		~~85016~~
(Address of Principal Executive Offices)	(Zip Code)


Large accelerated filer	☐o	Accelerated filer	☐o
Non-accelerated filer	☐x	Smaller reporting company	☒x
Emerging growth company	☒x

~~PART I~~		~~Page~~
PART I				Page
~~Item 1.~~			~~Financial Statements~~	3
Item 1.			Financial Statements	4

Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	27 25

Item 3.			Quantitative and Qualitative Disclosures About Market Risk	38 28

Item 4.			Controls and Procedures	38 29

PART II

Item 1.			Legal Proceedings	39 30

Item 1A			Risk Factors	30

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	39 30

Item 3.6.			~~Defaults Upon Senior Securities~~ Exhibits	39 30

~~Item 4.~~			~~Mine Safety Disclosures~~ Signatures	39

~~Item 5.~~	~~Other Information~~	39

~~Item 6.~~	~~Exhibits~~	40

	~~Signatures~~	41 36


	June 30, 2023		December 31, 2022
	(Unaudited)
ASSETS

CURRENT ASSETS:
Cash	$	3,828,963	$	2,673,541
Accounts receivable, net	16,628,748		17,139,944
Inventory	24,019,013		25,258,369
Contract assets	1,392,007		1,402,788
Prepaid expenses and other current assets	2,134,045		2,428,223
Total current assets	48,002,776		48,902,865

Property and equipment, net	19,861,909		19,503,485
Intangible assets, net	34,668,042		36,282,609
Right of use assets, net	15,704,511		16,407,566
Goodwill	22,680,084		22,680,084
Other non-current assets	1,693,603		1,855,605
TOTAL ASSETS	$	142,610,925	$	145,632,214

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	15,807,557	$	8,608,554
Accrued expenses	6,570,507		6,749,890
Contract liabilities	5,854,696		5,284,285
Lines of credit	8,699,609		7,426,814
Notes payable, current portion	6,170,472		3,201,136
Notes payable, related party	555,000		—
Convertible note payable, current portion	471,311		—
Financing lease obligation, current portion	764,267		725,302
Operating lease obligation, current portion	1,518,842		1,318,885
Total current liabilities	46,412,261		33,314,866

Notes payable, net of current portion	2,144,048		4,266,350
Lines of credit, net of current portion	4,058,411		7,215,520
Financing lease obligations, net of current portion	14,195,602		14,592,813
Operating lease obligations, net of current portion	14,447,193		15,262,494
Deferred tax liability	333,708		988,150
TOTAL LIABILITIES	81,591,223		75,640,193

Commitments & Contingencies (Note 8)
STOCKHOLDERS' EQUITY(1):
Preferred stock, $0.0001 par value, 5,000,000 shares authorized	—		—
Series B preferred stock; $1.00 stated value; 100 shares authorized, 3 and 5 shares issued and outstanding at June 30, 2023, and December 31, 2022	3		5
Class A Common stock, $0.0001 par value, 200,000,000 shares authorized, 23,974,657 and 22,303,333 shares issued and outstanding at June 30, 2023, and December 31, 2022	2,397		2,230
Class B Common stock, $0.0001 par value, 10,000,000 shares authorized, 906,012 and 1,068,512 shares issued and outstanding at June 30, 2023, and December 31, 2022	91		107
Class C Common stock, $0.0001 par value, 15,000,000 shares authorized, 1,528,533 and 1,529,888 shares issued and outstanding at June 30, 2023, and December 31, 2022	153		153
Additional paid-in capital	143,072,462		141,723,921
Accumulated deficit	(82,055,404)		(71,734,395)
Total stockholders' equity	61,019,702		69,992,021
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	142,610,925	$	145,632,214

~~Financial Statements~~	~~PAGE~~

~~Consolidated Balance Sheets (Unaudited)~~	4

~~Consolidated Statements of Operations (Unaudited)~~	5

~~Consolidated Statements of Cash Flows (Unaudited)~~	7

~~Notes to Consolidated Financial Statements (Unaudited)~~	8

	Successor			Successor
	September 30, 2017			December 31, 2016

ASSETS

CURRENT ASSETS:
Cash	$	63,372		$	209,494
Accounts receivable, net		1,754,837			1,346,585
Inventory		1,199,571			930,114
Prepaid expenses and other current assets		184,942			39,734
Total current assets		3,202,722			2,525,927

Property and equipment, net		9,545,965			5,202,133
Intangible asset, net		752,892			757,528
Goodwill		2,131,606			1,963,761
Other non-current assets		314,305			688,204
Total non-current assets		12,744,768			8,611,626

TOTAL ASSETS	$	15,947,490		$	11,137,553

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	2,055,385		$	1,434,170
Accrued expenses		833,602			299,043
Deferred Revenue		130,227			12,536
Derivative liabilities		175,332			-
Deposits		12,509			12,509
Notes payable		3,561,978			1,332,031
Notes payable, related parties		487,000			205,000
Convertible notes payable, net of discount of $76,097 and $7,421		2,042,732			247,359
Financing Lease Obligation		24,133			13,814
Income Tax Payable		19,819			20,123
Total current liabilities		9,342,717			3,576,585

NON-CURRENT LIABILITIES:
Long-term debt		-			147,079
Convertible notes payable		1,694,627			1,760,198
Financing Lease Obligation		6,546,645			6,572,579
Deferred Revenue		53			-
Deferred tax liability		287,153			287,153
Total non-current liabilities		8,528,478			8,767,009

TOTAL LIABILITIES		17,871,195			12,343,594


REDEEMABLE COMMON STOCK
Class A Common stock, $0.0001 par value, 379,403 and 0 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		1,439,725			-

STOCKHOLDERS' DEFICIT:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding		-			-
Class A Common stock, $0.0001 par value, 500,000,000 shares authorized, 21,950,791 and 21,474,481 shares issued and outstanding		2,195			2,148
Class B Common stock, $0.0001 par value, 100,000,000 shares authorized, 1,600,000 and 1,600,000 shares issued and outstanding		160			160
Additional paid-in capital		16,329,087			16,228,106
Accumulated deficit		(19,694,872	)		(17,436,455	)
Total stockholders' deficit		(3,363,430	)		(1,206,041	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	15,947,490		$	11,137,553

	Three month period
	Successor			Successor
	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016

Revenue	$	2,221,533		$	2,258,099
Cost of revenue (exclusive of depreciation)		1,520,224			1,410,772
Gross Profit		701,309			847,327

Operating expenses:
General and administrative expenses		1,001,921			937,449
Depreciation		173,693			104,455
Amortization		31,354			10,901
Total operating expenses		1,206,968			1,052,805
Loss from operations		(505,659	)		(205,478	)

Other expenses
Interest expense		423,986			366,825
Gain on derivative liabilities		(72,361	)		-
Other (income)		(47,880	)		(49,173	)
Total other expenses		303,745			317,652

Loss before income tax		(809,404	)		(523,130	)

Income tax expense (benefit)		8,303			(964	)

Net loss	$	(817,707	)	$	(522,166	)

Weighted average shares outstanding :
Basic		23,829,713			22,842,265
Diluted		23,829,713			22,842,265

Loss per share
Basic	$	(0.03	)	$	(0.02	)
Diluted	$	(0.03	)	$	(0.02	)

	Nine month period
	Successor			Successor			Predecessor
	Nine Months Ended January, 1, 2017 to September 30, 2017			Six Months Ended April, 1, 2016 to September 30, 2016			Three Months Ended January, 1, 2016 to March 31, 2016

Revenue	$	7,044,806		$	4,294,535		$	1,788,654
Cost of revenue (exclusive of depreciation)		4,661,163			2,730,395			1,383,031
Gross Profit		2,383,643			1,564,140			405,623

Operating expenses:
General and administrative expenses		3,238,927			2,858,163			533,894
Depreciation		498,732			175,625			33,492
Amortization		69,060			21,734			-
Total operating expenses		3,806,719			3,055,522			567,386
Loss from operations		(1,423,076	)		(1,491,382	)		(161,763	)

Other expenses
Interest expense		1,080,476			627,515			456
Gain on derivative liabilities		(72,361	)		-			-
Other (income)		(181,444	)		(101,121	)		-
Total other expenses		826,671			526,394			456

Loss before income tax		(2,249,747	)		(2,017,776	)		(162,219	)

Income tax expense (benefit)		8,670			7,411			(31,770	)

Net loss	$	(2,258,417	)	$	(2,025,187	)	$	(130,449	)

Weighted average shares outstanding :
Basic		23,589,017			22,760,422			-
Diluted		23,589,017			22,760,422			-

Loss per share
Basic	$	(0.10	)	$	(0.09	)	$
Diluted	$	(0.10	)	$	(0.09	)	$

Inventory
	Sep 30, 2017		Dec 31, 2016
Raw materials	$	607,818	$	527,599
WIP		389,586		193,525
Finished goods		189,167		195,990
In Transit		13,000		13,000
	$	1,199,571	$	930,114

Property and Equipment
	Sep 30, 2017			Dec 31, 2016
Automobiles & Trucks	$	1,354,435		$	-
Machinery & Equipment		4,492,235			1,263,941
Office furniture & fixtures		7,057			-
Building		3,945,952			3,895,000
Land		126,347			-
Leasehold Improvements		294,524			219,045
Less: Accumulated Depreciation		(674,585	)		(175,853	)
	$	9,545,965		$	5,202,133

Intangibles
	Sep 30, 2017			Dec 31, 2016
Software	$	255,724		$	191,300
Noncompete		100,000			100,000
Customer Lists		531,187			531,187
Less: Accumulated Amortization		(134,019	)		(64,959	)
	$	752,892		$	757,528

Other Long-Lived Assets
	Sep 30, 2017		Dec 31, 2016
Restricted Cash	$	255,709	$	630,270
Deposits		58,596		57,934
	$	314,305	$	688,204

Fiscal Year
2017	$	143,500
2018		584,763
2019		599,382
2020		614,366
2021		629,725
Thereafter		7,961,289
Total		10,533,025
Less: Current capital leases and financing transaction		(24,133	)
Less: imputed interest		(3,962,247	)
Noncurrent capital leases and financing transaction	$	6,546,645

Fiscal Year	San Jose, CA		Phoenix, AZ		Oklahoma City, OK
2017	$	64,596	$	5,600	$	15,000
2018		266,134		-		60,000
2019		274,118		-		35,000
2020		282,342		-		-
2021		290,812		-		-
Thereafter		-		-		-
Total		1,178,002		5,600		110,000

September 30, 2017 (Successor)	Alpine 4		QCA		HWT
LOC current	$	-	$	1,717,937	$	4,648
Equipment current		-		154,635		1,674,758
Term notes		10,000		-		-
Total Current	$	10,000	$	1,872,572	$	1,679,406
Equipment noncurrent		-		-		-
Total Notes	$	10,000	$	1,872,572	$	1,679,406

	Dec 31, 2016		Borrowings		Payments			Sep 30, 2017
Note payable; non-interest bearing; due upon demand; unsecured	$	15,000	$	-	$	(15,000	)	$	-
Note payable; non-interest bearing; due upon demand; unsecured		15,000		-		(15,000	)		-
Note payable; interest bearing; due May 31, 2017; unsecured		5,000		-		(5,000	)		-
Notes payable; non-interest bearing; due upon demand; unsecured		-		6,000		(1,500	)		4,500
Note payable; interest bearing; due January 10, 2017; unsecured		60,000		-		(60,000	)		-
Note payable; interest bearing; due March 2, 2017; unsecured		-		10,000		(10,000	)		-
Note payable; interest bearing; due March 14, 2017; unsecured		-		12,000		(12,000	)		-
Note payable; interest bearing; due April 11, 2017; unsecured		-		2,500		(2,500	)		-
Note payable; interest bearing; due May 26, 2017; unsecured		-		43,500		-			43,500
Note payable; interest bearing; due June 30, 2017; unsecured		10,000		-		(2,500	)		7,500
Note payable; interest bearing; due May 31, 2017; secured		100,000		-		-			100,000
Note payable; interest bearing; due July 31, 2017; secured		-		300,000		-			300,000
Note payable; interest bearing; due March 3, 2018; unsecured		-		11,500		-			11,500
Note payable; interest bearing; due April 27, 2018; unsecured		-		20,000		-			20,000
	$	205,000	$	405,500	$	(123,500	)	$	487,000

	Sep 30, 2017			Dec 31, 2016
Convertible Note - current	$	2,118,830		$	254,780
Debt discount		(76,098	)		(7,421	)
Net current	$	2,042,732		$	247,359

Convertible Note - noncurrent		1,694,627			1,760,198

Total Convertible Note	$	3,737,359		$	2,007,557

	Payments due by Period
	Less than One Year		One to Three Years		Three to Five Years		More Than Five Years		Total
Notes payable, related parties	$	487,00	$	-	$	-	$	-	$	487,000
Notes payable, non-related parties		3,561,978		-		-		-		3,561,978
Convertible notes payable		2,118,830		1,694,627						3,813,457
Total	$	6,167,808	$	1,694,627	$	-	$	-	$	7,862,435

	Purchase Allocation
Cash	$	200,000
Accounts Receivable		1,158,995
Inventory		950,424
Property, Plant & Equipment		1,256,885
Prepaid		6,035
Intangibles		631,187
Goodwill		1,963,761
Accounts Payable		(672,410	)
Accrued Expenses		(128,444	)
Income Tax Payable		(20,123	)
Deferred Tax Liability		(346,310	)
	$	5,000,000

	Purchase Allocation
Cash	$	262,384
Accounts Receivable, net		245,833
Property, Plant & Equipment		4,804,458
Intangibles		-
Goodwill		167,845
Accrued Expenses		(25,086	)
Total consideration	$	5,455,434

	Pro Forma Combined Financials
	Nine Months Ended September 30, 2016

Revenue	$	9,017,550

Net (Loss) Income	$	(2,827,653	)

Net (Loss) Income per Common Share - Basic and Diluted	$	(0.12	)

	Successor
	Three Months Ended September 30, 2017
	QCA		HWT			Unallocated & Eliminations			Total Consolidated

Revenue, external customers	$	2,084,565	$	74,301		$	62,667		$	2,221,533
Revenue, company segments		564		-			(564	)		-
Segment Gross Profit		645,360		51,706			4,243			701,309
Segment Depreciation and Amortization		72,538		111,674			20,835			205,047
Segment Interest expense		179,491		71,404			173,091			423,986
Segment income tax expense		8,253		-			50			8,303
Segment net gain/(loss)		38,192		(489,950	)		(365,949	)		(817,707	)
Purchase and acquisition long-lived assets		6,480		73,042			16,344			95,866

	Successor
	Nine Months Ended September 30, 2017
	QCA			HWT			Unallocated & Eliminations			Total Consolidated

Revenue, external customers	$	5,648,285		$	1,200,381		$	196,140		$	7,044,806
Revenue, company segments		27,401			-			(27,401	)		-
Segment Gross Profit		1,742,209			565,887			75,547			2,383,643
Segment Depreciation and Amortization		217,136			313,155			37,501			567,792
Segment Interest expense		528,144			209,395			342,937			1,080,476
Segment income tax expense		8,620			-			50			8,670
Segment net gain/(loss)		(99,724	)		(1,279,928	)		(878,765	)		(2,258,417	)
Purchase and acquisition long-lived assets		75,480			4,803,164			28,344			4,906,988

	Successor
	As of September 30, 2017
	QCA		HWT		Unallocated		Total Consolidated

Accounts receivable, net	$	1,716,616	$	36,312	$	1,909	$	1,754,837
Goodwill		1,963,761		167,845		-		2,131,606
Total assets		10,772,456		4,860,059		314,975		15,947,490

	Fair value measurement on a recurring basis
	Level 1		Level 2		Level 3
As of September 30, 2017
Liabilities
Derivatives	$	-	$	-	$	175,332

As of December 31, 2016
Liabilities
Derivatives	$	-	$	-	$	-

Fair value as of December 31, 2016	$	-
Additions recognized as debt discounts		115,000
Additions reclassified from equity		132,693
Gain on change in fair value of derivatives		(72,361	)
Fair value as of September 30, 2017	$	175,332