U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2019~~

March 31, 2020

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-55205

Alpine 4 Technologies Ltd.

(Exact name of registrant as specified in its charter)

Delaware	46-5482689
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

2525 E Arizona Biltmore Circle, Suite 237
Phoenix, AZ	85016
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code: 480-702-2431

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(1) of the Exchange Act. ☒

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of ~~November 18, 2019,~~July 6th 2020, the issuer had ~~99,770,161~~110,677,860 shares of its Class A common stock issued and ~~outstanding; 5,000,000~~outstanding, 9,023,088 shares of its Class B common stock issued and outstanding and ~~9,910,200~~11,572,267 shares of its Class C common stock issued and outstanding.

TABLE OF CONTENTS

PART I		Page

Item 1.	Financial Statements	3

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26 30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33 35

Item 4.	Controls and Procedures	33 35

PART II

Item 1.	Legal Proceedings	34 35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34 36

Item 3.	Defaults Upon Senior Securities	34 36

Item 5.	Other Information	34 36

Item 6.	Exhibits	34 37

	Signatures	35 38

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Alpine 4 Technologies Ltd.

Consolidated Balance Sheets

				March 31,	December 31,
				2020	2019
				(unaudited)
ASSETS

CURRENT ASSETS:
	Cash		$	257,900	$ 302,486
	Accounts receivable			8,724,234	8,731,565
	Contract assets			1,033,694	667,724
	Inventory, net			2,334,727	2,401,242
	Prepaid expenses and other current assets			121,216	269,289

		Total current assets		12,471,771	12,372,306

Property and equipment, net				19,778,126	17,157,845
Intangible asset, net				3,606,447	2,774,618
Right of use assets, net				596,816	660,032
Goodwill				2,617,082	2,517,453
Other non-current assets				326,744	319,344

	TOTAL ASSETS		$	39,396,986	$ 35,801,598

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
	Accounts payable		$	5,728,045	$ 5,148,805
	Accrued expenses			2,233,680	2,676,651
	Contract liabilities			194,279	170,040
	Derivative liabilities			-	2,298,609
	Deposits			-	12,509
	Notes payable, current portion			9,225,062	8,724,171
	Notes payable, related parties, current portion			350,998	341,820
	Convertible notes payable, current portion, net of discount of $601,059 and $846,833			280,084	1,110,118
	Financing lease obligation, current portion			453,233	377,330
	Operating lease obligation, current portion			279,233	266,623
	Contingent consideration			`-`	500,000
		Total current liabilities		18,744,614	21,626,676

Notes payable, net of current portion				11,304,939	9,850,184
Convertible notes payable, net of current portion				2,145,043	1,673,688
Financing lease obligations, net of current portion				15,534,744	13,696,011
Operating lease obligations, net of current portion				328,566	403,931
Contingent consideration				592,000	-
Deferred tax liability				521,250	521,250

	TOTAL LIABILITIES			49,171,156	47,771,740

STOCKHOLDERS' DEFICIT:
	Preferred stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding at March 31, 2020 and December 31, 2019			-	-
	Series B preferred stock; $1.00 stated value; 100 shares authorized, 5 and 0 shares issued and outstanding at March 31, 2020 and December 31,2019			5	-
	Class A Common stock, $0.0001 par value, 125,000,000 shares authorized, 110,577,860 and 100,070,161 shares issued and outstanding at March 31, 2020 and December 31, 2019			11,057	10,007
	Class B Common stock, $0.0001 par value, 10,000,000 shares authorized, 9,023,088 and 5,000,000 shares issued and outstanding at March 31, 2020 and December 31, 2019			902	500
	Class C Common stock, $0.0001 par value, 15,000,000 shares authorized, 11,572,267 and 9,955,200 shares issued and outstanding at March 31, 2020 and December 31, 2019			1,158	996
	Additional paid-in capital			21,707,848	19,763,883
	Accumulated deficit			(31,495,140)	(31,745,528)
		Total stockholders' deficit		(9,774,170)	(11,970,142)
	TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	39,396,986	$ 35,801,598

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

Alpine 4 Technologies Ltd.

Consolidated Statements of Operations

(Unaudited)

			Three Months Ended March 31,
			2020	2019

Revenue		$	`8,835,596`	`$7,125,989`
Cost of revenue			`7,075,852`	`5,008,456`
Gross Profit			`1,759,744`	`2,117,533`

Operating expenses:
	General and administrative expenses		`2,863,389`	`2,466,502`

	Total operating expenses		`2,863,389`	`2,466,502`
Loss from operations			`(1,103,645)`	`(348,969)`

Other income (expenses)
	Interest expense		`(1,649,227)`	`(1,031,630)`
	Change in value of derivative liability		`2,298,609`	`(107,871)`
	Gain on extinguishment of debt		`154,592`	`-`
	Change in fair value of contingent consideration		`500,000`	`-`
	Other income (expense)		`50,059`	`58,132`
	Total other income (expenses)		`1,354,033`	`(1,081,369)`

Income (loss) before income tax			`250,388`	`(1,430,338)`

Income tax (benefit)			`-`	`-`

Income (loss) from continuing operations			`250,388`	`(1,430,338)`

Discontinued operations:
	Loss from operations of discontinued operations		`-`	`(95,179)`
	Gain on disposition of discontinued operations		`-`	`2,515,028`
	Total discontinued operations		`-`	`2,419,849`

Net income		$	`250,388`	`$ 989,511`

Weighted average shares outstanding :
	Basic		`127,207,693`	`30,782,076`
	Diluted		`138,036,023`	`30,782,076`

Basic Income (loss) per share
	Continuing operations	$	`0.00`	`$(0.05)`
	Discontinued operations		`-`	`0.08`
		$	`0.00`	`$0.03`

Diluted income (loss) per share
	Continuing operations	$	`(0.01)`	`$(0.05)`
	Discontinued operations		`-`	`0.08`
		$	`(0.01)`	`$0.03`

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

ALPINE 4 TECHNOLOGIES, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

September 30, December 31,
2019 2018
(unaudited)
ASSETS

CURRENT ASSETS:
Cash $ 251,019 $ 207,205
Accounts receivable 4,631,642 2,610,354
Inventory 3,107,885 2,175,795
Capitalized contract costs 64,234 64,234
Prepaid expenses and other current assets 1,117,719 222,200
Assets of discontinued operations - 121,296
Total current assets 9,172,499 5,401,084

Property and equipment, net 11,693,599 7,990,556
Intangible asset, net 1,331,723 677,210
Right of use assets, net 721,004 -
Goodwill 3,007,453 3,193,861
Other non-current assets 346,655 290,238
Assets of discontinued operations - 387,727

TOTAL ASSETS $ 26,272,933 $ 17,940,676

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable $ 3,777,733 $ 3,102,970
Accrued expenses 2,846,355 1,254,853
Deferred revenue - 25,287
Derivative liabilities 1,850,947 1,892,321
Deposits 12,509 12,509
Notes payable, current portion 6,629,858 3,585,603
Notes payable, related parties, current portion 401,820 192,000
Convertible notes payable, current portion, net of discount of $113,741 and $942,852 1,787,943 2,644,735
Financing lease obligation, current portion 234,682 105,458
Operating lease obligation, current portion 254,535 -
Acquisition contingency 500,000 -
Net liabilities of discontinued operations - 2,752,447
Total current liabilities 18,296,382 15,568,183

Notes payable, net of current portion 5,521,502 4,517,441
Convertible notes payable, net of current portion 1,122,688
450,000
Financing lease obligations, net of current portion 11,455,105 8,295,176
Operating lease obligations, net of current portion 474,473 -
Deferred tax liability 608,304 608,304

TOTAL LIABILITIES 37,478,454 29,439,104

STOCKHOLDERS' DEFICIT:
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding at September 30, 2019 and December 31, 2018 - -
Class A Common stock, $0.0001 par value, 100,000,000 shares authorized, 95,370,161 and 26,567,410 shares issued and outstanding at September 30, 2019 and December 31, 2018 9,537 2,657
Class B Common stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 and 5,000,000 shares issued and outstanding at September 30, 2019 and December 31, 2018 500 500
Class C Common stock, $0.0001 par value, 10,000,000 shares authorized, 9,870,200 shares issued and outstanding at September 30, 2019 987 -
Additional paid-in capital 18,557,801 17,018,509
Accumulated deficit (29,774,346 ) (28,520,094 )
Total stockholders' deficit (11,205,521 ) (11,498,428 )
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 26,272,933 $ 17,940,676

Alpine 4 Technologies Ltd.

Consolidated Statements of Stockholders’ Deficit

(Unaudited)

														Additional					Total
	Series B Preferred Stock			Class A Common Stock			Class B Common Stock			Class C Common Stock					Paid-in		Accumulated		Stockholders'
	Shares		Amount	Shares		Amount	Shares		Amount	Shares		Amount		Capital			Deficit		Deficit
Balance, December 31, 2019	-	$	-	100,070,161	$	10,007	5,000,000	$	500	9,955,200	$	996	$	19,763,883		$	(31,745,528)	$	(11,970,142)

Issuance of shares of common stock for cash	-		-	3,941,753		394	-		-	-				249,606			-		250,000
Issuance of shares of common stock for convertible note payable and accrued interest	-		-	4,648,879		464	-		-	-				696,868			-		697,332
Issuance of shares of common stock for debt settlement	-		-	1,617,067		162	-		-	1,617,067		162		330,204			-		330,528
Issuance of shares of common stock for penalty interest	-		-	300,000		30	-		-	-		-		44,670			-		44,700
Issuance of shares of common stock for settlement of unpaid salaries	-		-	-		-	4,023,088		402	-		-		603,061			-		603,463
Issuance of shares of series B preferred stock for services	5		5																5
Share-based compensation expense	-		-	-		-	-		-	-		-		19,556			-		19,556
Net income																	250,388		250,388

Balance, March 31, 2020	5	$	5	110,577,860	$	11,057	9,023,088	$	902	11,572,267	$	1,158	$	21,707,848		$	(31,495,140)	$	(9,774,170)


Balance, December 31, 2018	-	$	-	26,567,410	$	2,657	5,000,000	$	500	-	$	-	$	17,018,509		$	(28,520,094)	$	(11,498,428)

Issuance of shares of common stock for convertible note payable and accrued interest	-		-	1,670,000		167	-		-	-		-		26,421			-		26,588
Derivative liability resolution	-		-	-		-	-		-	-		-		10,993			-		10,993
Share-based compensation expense	-		-	-		-	-		-	-		-		19,341			-		19,341
Net income	-		-	-		-	-		-	-		-		-			989,511		989,511

Balance, March 31, 2019	-	$	-	28,237,410	$	2,824	5,000,000	$	500	-	$	-	$	17,075,264		$	(27,530,583)	$	(10,451,995)

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

ALPINE 4 TECHNOLOGIES, LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

Three Months ended
September 30,

Nine Months Ended
September 30,

2019

2018

2019

2018

Revenue

$
7,088,182

$
4,342,203

$
20,690,014

$
10,570,032

Cost of revenue

5,311,323

2,119,913

15,542,194

6,478,090

Gross Profit

1,776,859

2,222,290

5,147,820

4,091,942

Operating expenses:

General and administrative expenses

1,739,867

2,387,092

5,509,996

4,255,035

     Total operating expenses

1,739,867

2,387,092

5,509,996

4,255,035

Income (loss) from operations

36,992

(164,802
)

(362,176
)

(163,093
)

Other income (expenses)

Interest expense

(698,844
)

(701,114
)

(2,736,968
)

(1,642,562
)
Change in value of derivative liability

3,389,116

(1,012,743
)

(689,369
)

(766,718
)
Gain on extinguishment of debt

-

-

-

6,305

Other income

77,918

55,949

206,681

173,608

     Total other income (expenses)

2,768,190

(1,657,908
)

(3,219,656
)

(2,229,367
)

Loss before income tax

2,805,182

(1,822,710
)

(3,581,832
)

(2,392,460
)

Income tax (benefit)

-

-

-

-

Income (loss) from continuing operations

2,805,182

(1,822,710
)

(3,581,832
)

(2,392,460
)

Discontinued operations:

Loss from operations of discontinued operations

-

(1,051,916
)

(95,179
)

(1,720,538
)
Gain on disposition of discontinued operations

-

-

2,515,028

-

     Total discontinued operations

-

(1,051,916
)

2,419,849

(1,720,538
)

Net income (loss)

$
2,805,182

$
(2,874,626
)

$
(1,161,983
)

$
(4,112,998
)

Weighted average shares outstanding :

Basic

101,810,802

30,358,570

62,450,846

27,813,506

Diluted

237,269,687

30,358,570

62,450,846

27,813,506

Basic Income (loss) per share

Continuing operations

$
0.03

$
(0.06
)

$
(0.06
)

$
(0.09
)
Discontinued operations

-

$
(0.03
)

0.04

$
(0.06
)

$
0.03

(0.09
)

$
(0.02
)

(0.15
)

Diluted income (loss) per share

Continuing operations

$
(0.00
)

$
(0.06
)

$
(0.06
)

$
(0.09
)
Discontinued operations

-

$
(0.03
)

0.04

$
(0.06
)

$
(0.00
)

(0.09
)

$
(0.02
)

(0.15
)

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

ALPINE 4 TECHNOLOGIES, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(unaudited)

Class A
Common Stock

Class B
Common Stock

Class C
Common Stock

Additional
Paid-in
Accumulated
Total
Stockholders'

Shares Amount Shares Amount Shares Amount Capital Deficit Deficit
Balance, December 31, 2018 26,567,410 $ 2,657 5,000,000 $ 500 - $ - $ 17,018,509 $ (28,520,094 ) $ (11,498,428 )

Issuance of shares of common stock for convertible note payable and accrued interest 1,670,000 167 26,421 26,588
Derivative liability resolution 10,993 10,993
Share-based compensation expense 19,341 19,341
Net income for the three months 989,511 989,511

Balance, March 31, 2019 28,237,410 2,824 5,000,000 500 - - 17,075,264 (27,530,583 ) (10,451,995 )

Issuance of shares of common stock for convertible note payable and accrued interest 33,975,924 3,398 232,551 235,949
Derivative liability resolution 332,703 332,703
Share-based compensation expense 19,556 19,556
Net loss for the three months (4,956,676 ) (4,956,676 )

Balance, June 30, 2019 62,213,334 6,222 5,000,000 500 - - 17,660,074 (32,487,259 ) (14,820,463 )

Issuance of shares of common stock for convertible note payable and accrued interest 32,956,827 3,295 258,004 261,299
Issuance of shares of common stock for dividend 7,097,594 710 91,559 (92,269 ) -
Conversion of Class B to Class A 200,000 20 (200,000 ) (20 ) -
Issuance of shares of common stock for services 200,000 20 2,772,606 277 38,347 38,644
Derivative liability resolution 490,047 490,047
Share-based compensation expense 19,770 19,770
Net loss for the three months 2,805,182 2,805,182

Balance, September 30, 2019 95,370,161 $ 9,537 5,000,000 $ 500 9,870,200 $ 987 $ 18,557,801 $ (29,774,346 ) $ (11,205,521 )

Balance, December 31, 2017 23,222,087 $ 2,322 1,600,000 $ 160 - $ - $ 16,573,632 $ (20,433,875 ) $ (3,857,761 )

Adoption of ASC 606 (178,202 ) (178,202 )
Issuance of shares of common stock for convertible note payable and accrued interest 120,000 12 15,588 15,600
Issuance of common stock for modification of debt 100,000 10 14,990 15,000
Issuance of shares for debt discount 333,333 33 56,633 56,666
Reclassification of shares from mezzanine 379,403 38 (38 ) -
Derivative liability resolution 125,759 125,759
Stock-based compensation expense 15,840 15,840
Change in fair value of warrant modification 4,310 4,310
Net loss for the three months (661,078 ) (661,078 )

Balance, March 31, 2018 24,154,823 2,415 1,600,000 160 - - 16,806,714 (21,273,155 ) (4,463,866 )

Issuance of shares of common stock for convertible note payable and accrued interest 713,033 72 16,762 16,834
Derivative liability resolution (182,425 ) (182,425 )
Stock-based compensation expense 17,555 17,555
Shares issued for employee compensation 3,400,000 340 176,460 176,800
Net loss for the three months (577,294 ) (577,294 )

Balance, June 30, 2018 24,867,856 $ 2,487 5,000,000 $ 500 - $ - $ 16,835,066 $ (21,850,449 ) $ (5,012,396 )

Issuance of shares of common stock for convertible note payable and accrued interest 669,251 66 33,604 33,670
Derivative liability resolution 58,018 58,018
Stock-based compensation expense 18,914 18,914
Net loss for the three months (2,874,626 ) (2,874,626 )

Balance, September 30, 2018 25,537,107 $ 2,553 5,000,000 $ 500 - $ - $ 16,945,602 $ (24,725,075 ) $ (7,776,420 )

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

ALPINE 4 TECHNOLOGIES, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Nine Months Ended
September 30,

2019 2018

OPERATING ACTIVITIES:
Net income (loss) $ (1,161,983 ) $ (4,112,998 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation 710,133 690,743
Amortization 135,487 48,225
Gain on extinguishment of debt - (136,300 )
Loss on disposal of fixed assets - 414,204
Change in value of derivative liabilities 689,369 766,718
Stock issued for services 38,644 176,800
Employee stock compensation 58,667 52,309
Amortization of debt discounts 932,111 701,850
Gain on disposal of discontinued operations (2,515,028 ) -
Issuance of convertible debentures for penalty interest 128,777 -
Operating lease expense 170,409 -
Change in current assets and liabilities:
Accounts receivable (508,081 ) (727,643 )
Inventory (478,249 ) (506,277 )
Capitalized contracts costs - 37,300
Prepaid expenses and other assets (56,449 ) 171,006
Accounts payable 346,378 583,299
Accrued expenses 1,596,304 606,234
Operating lease liability (162,405 ) -
Deferred revenue (25,287 ) (276,703 )
Net cash used in operating activities (101,203 ) (1,511,233 )

INVESTING ACTIVITIES:
Capital expenditures (48,878 ) (71,268 )
Proceeds from insurance claim on automobiles and trucks - 260,467
Cash paid for acquisitions, net of cash acquired (1,967,606 ) (1,976,750 )
Net cash used in investing activities (2,016,484 ) (1,787,551 )

FINANCING ACTIVITIES:
Proceeds from issuances of notes payable, related party 282,320 125,000
Proceeds from issuances of notes payable, non-related party 500,000 924,750
Proceeds from issuances of convertible notes payable 103,000 1,399,250
Proceeds from financing lease 3,267,000 1,900,000
Repayments of notes payable, related party (72,500 ) (31,500 )
Repayments of notes payable, non-related party (1,579,013 ) (777,727 )
Repayments of convertible notes payable (787,700 ) (937,959 )
Proceeds from line of credit, net 582,046 1,072,327
Cash paid on financing lease obligations (133,652 ) (166,627 )
-
Net cash provided by financing activities 2,161,501 3,507,514

NET INCREASE IN CASH AND RESTRICTED CASH 43,814 208,730

CASH AND RESTRICTED CASH, BEGINNING BALANCE 414,516 335,823

CASH AND RESTRICTED CASH, ENDING BALANCE $ 458,330 $ 544,553

CASH PAID FOR:
Interest $ 1,768,533 $ 955,741
Income taxes $ - $ -

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Common stock issued for convertible note payable and accrued interest $ 523,836 $ 63,773
Issuance of convertible payable for acquisition $ - $ 450,000
Issuance of note payable for acquisition $ 3,450,000 $ 1,950,000
Debt discount due to derivative liabilities $ 103,000 $ 1,262,970
Notes payable and redeemable common stock restructuring $ - $ 3,197,538
Release of derivative liability $ 833,743 $ 58,018
Capital leases $ - $ 247,000
ROU asset and operating lease obligation recognized upon adoption of Topic 842 $ 891,413 $ -
Goodwill adjustment to intangible asset for APF acquisition $ 790,000 $ -
Class C common stock issued for dividend $ 92,269 $ -

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

Alpine 4 Technologies Ltd.

Consolidated Statements of Cash Flows

(Unaudited)

					Three Months Ended March 31,
					2020	2019

OPERATING ACTIVITIES:
	Net income			$	`250,388`	`$989,511`
	Adjustments to reconcile net income to
	net cash provided by (used in) operating activities:
		Depreciation			`78,171`	`234,444`
		Amortization			`406,091`	`18,853`
		Gain on extinguishment of debt			`(154,592)`	`-`
		Change in fair value of contingent consideration			`(500,000)`
		Change in value of derivative liabilities			`(2,298,609)`	`107,871`
		Stock issued for penalty interest			`44,700`	`-`
		Employee stock compensation			`19,561`	`19,341`
		Amortization of debt discounts			`245,774`	`397,550`
		Gain on disposal of discontinued operations			`-`	`(2,515,028)`
		Noncash lease expense			`63,216`	`43,686`
		Change in operating assets and liabilities:
			Accounts receivable		`1,950,811`	`(815,437)`
			Inventory		`75,590`	`(520,361)`
			Contract assets		`(365,970)`	`-`
			Prepaid expenses and other assets		`140,673`	`160,834`
			Accounts payable		`239,089`	`56,824`
			Accrued expenses		`64,767`	`860,066`
			Contract liabilities		`24,239`	`-`
			Operating lease liability		`(62,755)`	`(43,686)`
			Deposits		`(12,509)`	`-`
			Deferred revenue		`-`	`(20,367)`
	Net cash provided by (used in) operating activities				`208,635`	`(1,025,899)`

INVESTING ACTIVITIES:
		Capital expenditures			`(68,182)`	`(20,417)`
		Cash paid for acquisitions, net of cash acquired			`(2,033,355)`	`(1,967,606)`
	Net cash used in investing activities				`(2,101,537)`	`(1,988,023)`


FINANCING ACTIVITIES:
		Proceeds from the sale of common stock			`250,000`	`-`
		Proceeds from issuances of notes payable, related party			`19,000`	`-`
		Proceeds from issuances of notes payable, non-related party			`748,710`	`537,500`
		Proceeds from issuances of convertible notes payable			`-`	`103,000`
		Proceeds from financing lease			`2,000,000`	`3,267,000`
		Repayments of notes payable, related party			`(9,822)`	`-`
		Repayments of notes payable, non-related party			`(545,646)`	`(1,214,257)`
		Repayments of convertible notes payable			`(73,902)`	`(441,699)`
		Proceeds from (repayment of) line of credit, net			`(454,660)`	`931,224`
		Cash paid on financing lease obligations			`(85,364)`	`(186,323)`
	Net cash provided by financing activities				`1,848,316`	`2,996,445`


NET DECREASE IN CASH AND RESTRICTED CASH					`(44,586)`	`(17,477)`

CASH AND RESTRICTED CASH, BEGINNING BALANCE					`302,486`	`414,516`

CASH AND RESTRICTED CASH, ENDING BALANCE				$	`257,900`	`$397,039`

CASH PAID FOR:
	Interest			$	`1,114,034`	`1,277,225`
	Income taxes			$	`-`	`-`

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
	Common stock issued for convertible notes and accrued interest			$	`697,332`	`$26,588`
	Common stock issued for debt settlement			$	`330,528`	`$-`
	Common stock issued to settle unpaid salaries			$	`603,463`	`$-`
	Issuance of note payable for acquisition			$	`2,300,000`	`$3,450,000`
	Penalty interest added to debt			$	`15,000`	`$-`
	Debt discount due to derivative liabilities			$	`-`	`$103,000`
	Release of derivative liability			$	`-`	`$10,993`
	ROU asset and operating lease obligation recognized upon adoption of Topic 842			$	`-`	`$676,944`

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 ~~Nine months ended September 30, 2019~~

Three Months Ended March 31, 2020

(Unaudited)

Note 1 – Organization and Basis of Presentation

The unaudited financial statements were prepared by Alpine 4 Technologies Ltd. ~~(the~~(‘we”, “our”, the "Company"), pursuant to the rules and regulations of the Securities 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 financial statements and footnotes included in the Company's Annual Report on Form 10-K filed with the SEC on ~~April 22, 2019.~~June 1, 2020. The results for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, are not necessarily indicative of the results to be expected for the year ending December 31, ~~2019.~~

2020.

Description of Business

The Company was incorporated under the laws of the State of Delaware on 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. The Company is a technology holding company owning five companies (ALTIA, LLC; Quality Circuit Assembly, Inc. ("QCA"); Venture West Energy Services (“VWES”) (formerly Horizon Well Testing, LLC, currently filed for Chapter 7 bankruptcy); American Precision Fabricators, Inc., an Arkansas corporation (“APF”) and Morris. Effective January 1, 2019, the Company purchased Morris Sheet Metal Corp., an Indiana corporation, JTD Spiral, Inc. a wholly owned subsidiary of MSM, an Indiana corporation, Morris Enterprises LLC, an Indiana limited liability company and Morris Transportation LLC, an Indiana limited liability company (collectively “Morris”) (see Note 9).

Effective November 6, 2019, the Company purchased Deluxe Sheet Metal, Inc., an Indiana corporation, DSM Holding, LLC, an Indiana limited liability company, and Lonewolf Enterprises, LLC, an Indiana limited liability company (collectively “Deluxe”) (see Note 9). Effective February 21, 2020, the Company purchased Excel Fabrication, LLC., an Idaho Limited Liability Company (“Excel”) (See Note 9). The Company is a technology holding company owning seven companies (ALTIA, LLC; Quality Circuit Assembly, Inc. ("QCA"); American Precision Fabricators, Inc., an Arkansas corporation (“APF”), Morris, Deluxe and Excel.

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 30, 2019,~~March 31, 2020, and December 31, ~~2018.~~2019. 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. Actual results could differ from those estimates.

The ultimate impact from COVID-19 on the Company’s operations and financial results during 2020 will depend on, among other things, the ultimate severity and scope of the pandemic, the pace at which governmental and private travel restrictions and public concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with which the economy recovers. We are not able to fully quantify the impact that these

factors will have on our financial results during 2020 and beyond, but expect developments related to COVID-19 to materially affect the Company’s financial performance in 2020.

Reclassification~~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 not significant.

Cash

Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. As of ~~September 30, 2019,~~March 31, 2020, and December 31, ~~2018,~~2019, the Company had no cash equivalents.

The following table provides a reconciliation of cash and restricted cash reported within the accompanying consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.

September 30, December 31,
2019 2018
Cash $ 251,019 $ 207,205
Restricted cash included in other non-current assets 207,311 207,311
Total cash and restricted cash shown in statement of cash flows $ 458,330 $ 414,516

		March 31,		March 31,
		2020		2019
Cash	$	257,900	$	189,728
Restricted cash included in other non-current assets		-		207,311
Total cash and restricted cash shown in statement of cash flows	$	257,900	$	397,039

Major Customers

~~The Company had three customers that made up 21%, 16% and 13%, respectively, of accounts receivable as of September 30, 2019.~~

The Company had two customers that made up ~~29 %~~15% and ~~27%~~11%, respectively, of accounts receivable as of March 31, 2020. The Company had one customer that made up 7%, respectively, of accounts receivable as of December 31, ~~2018.~~

2019.

For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the Company had two customers that made up 14% and 11%, respectively, of total revenues. For the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, the Company had ~~one customer~~two customers that made up ~~23%~~24% and 10%, respectively, of total revenues.

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, 2019,~~March 31, 2020, and December 31, ~~2018,~~2019, allowance for bad debt was $0 and $0, respectively.

Inventory

Inventory for all subsidiaries, except Deluxe, is valued at ~~the lower of the inventory's cost (weighted~~weighted average ~~basis) or net realizable value.~~and first-in; first-out basis for Deluxe. Management compares the cost of inventory with its net realizable value and an allowance is made to write down

inventory to net realizable value, if lower. Inventory is segregated into three areas, raw materials, ~~work in progress (WIP)~~work-in-process and finished goods. ~~Below is a breakdown of how much inventory was in each area as of September 30, 2019~~Inventory, net at March 31, 2020 and December 31, ~~2018:~~

September 30, December 31,
2019 2018
Raw materials $ 1,460,091 $ 676,621
WIP 7,558 -

Finished goods 1,640,236 1,499,174
$ 3,107,885 $ 2,175,795

2019 consists of:

		March 31,		December 31,
		2020		2019
Raw materials	$	1,707,405	$	1,791,733
WIP		232,616		576,196
Finished goods		394,706		59,972
		2,334,727		2,427,901
Reserve		-		(26,659)
Inventory, net	$	2,334,727	$	2,401,242

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~~five years to 39 years as follows:

Automobiles & Trucks	10 5 to 207 years
Buildings and improvements	15 to 39 years
Leasehold Improvements	15 years or time remaining on lease (whichever is shorter)
~~Equipment~~ Machinery and equipment	10 5 to 7 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.

Property and equipment consisted of the following as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~

September 30, December 31,
2019 2018
Automobiles and trucks $ 155,179 $ 155,179
Machinery and equipment 3,654,717 2,548,855
Office furniture and fixtures 114,867 109,619
Building 9,062,000 5,795,000
Leasehold improvements 307,341 261,608
Less: Accumulated depreciation (1,600,505 ) (879,705 )
$ 11,693,599 $ 7,990,556

2019:

		March 31,		December 31,
		2020		2019
Automobiles and trucks	$	911,114	$	563,614
Machinery and equipment		4,484,652		3,792,964
Office furniture and fixtures		119,526		119,526
Buildings and improvements		16,167,000		14,167,000
Leasehold improvements		-		12,816
Total Property and equipment		21,682,292		18,655,920
Less: Accumulated depreciation		(1,904,166)		(1,498,075)
Property and equipment, net	$	19,778,126	$	17,157,845

During the year ended December 31, 2019, the Company terminated its lease agreement for the building it leased in San Diego, California which removed $3,895,000 and $294,525 from building and leasehold improvements, respectively. The lease of the San Diego building was accounted for as a capital lease. In addition, as part of the termination, the Company issued the landlord a note payable in the amount of $2,740,000. (See Note 5)

Purchased Intangibles and Other Long-Lived Assets

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

Customer lists	3 to 15 years
Non-compete agreements	15 years
Software development	5 years

Intangible assets consisted of the following as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~

September 30, December 31,
2019 2018
Software $ 278,474 $ 278,474
Noncompete 100,000 100,000
Customer lists 1,321,187 531,187
Less: Accumulated amortization (367,938 ) (232,451 )
$ 1,331,723 $ 677,210

2019:

		March 31,		December 31,
		2020		2019
Software	$	278,474	$	278,474
Noncompete		100,000		100,000
Customer lists		3,771,187		2,861,187
Total Intangible assets		4,149,661		3,239,661
Less: Accumulated amortization		(543,214)		(465,043)
Intangibles, net	$	3,606,447	$	2,774,618

Expected amortization expense of intangible assets over the next 5 years and thereafter is as follows:

Twelve Months Ending September 30,

2020 $ 132,627
2021 132,627
2022 132,627
2023 99,028
2024 99,028
Thereafter 735,786
Total $ 1,331,723

Twelve Months Ending March 31,
2021	$	589,960
2022		589,960
2023		548,473
2024		253,028
2025		253,028
Thereafter		1,371,998
Total	$	3,606,447

Other long-term assets consisted of the following as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~

September 30, December 31,
2019 2018
Restricted Cash $ 207,311 $ 207,311
Deposits 105,927 50,927
Other 33,417 32,000
$ 346,655 $ 290,238

2019:

	��	March 31,		December 31,
		2020		2019
Deposits	$	293,327	$	285,927
Other		33,417		33,417
	$	326,744	$	319,344

~~Restricted cash consists of deposit account collateralizing letters of credit in favor of the counterparty in our lease financing obligation.~~

Impairment of Long-Lived Assets

The Company accounts for long-lived assets in accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 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 all periods presented, there have been no impairment losses.

Goodwill

In financial reporting, goodwill is not amortized, but is tested for impairment annually 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, 2019,~~March 31, 2020, and December 31, ~~2018,~~2019, the reporting units with goodwill were QCA, APF, Morris and ~~Morris.~~

Excel.

T~~The~~he 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~~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. For additional information, please see Note 11 – Derivative Liabilities and Fair Value Measurements.

Revenue Recognition

On January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC Topic ~~606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under ASC Topic 605.~~

The Company recorded a net increase to its opening accumulated deficit of $178,202 as of January 1, 2018 due to the cumulative impact of adopting ASC Topic 606, with the impact related to recognition of revenue and costs relating to the sales of the 6th Sense Auto service. Under the new revenue standard, sales of the Company’s 6th Sense Auto service, which includes a hardware and a monthly subscription component, are required to be treated as a single performance obligation and recognized over time. As a result, the deferred revenue increased by $279,736 and capitalized contract costs increased by $101,534. The impact to the consolidated statement of operations for the year ended December 31, 2018 was a net increase of $279,736 to revenue and a net increase of $101,534 to cost of revenue as a result of applying ASC Topic 606.

Revenues under ASC Topic 606 are recognized when the promised goods or services are transferred to customers, in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods or services.

The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.

Revenue is recognized under Topic 606 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 contracts 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 the transaction price to each performance obligation; and

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

The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.

ALTIA

Revenues recorded by ALTIA relate primarily to the Company’s 6th Sense Auto service. The Company accounts for its revenue by deferring the total contract amount and recognizing the amounts over the monthly subscription period, ranging from 12 to 36 months.

~~QCA~~

QCA ~~is a~~and Excel Fabrication

QCA and Excel Fabrication are contract ~~manufacturer~~manufacturers and ~~recognizes~~recognize revenue when the products have been built and control has been transferred to the customer. 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.

APF~~APF~~

APF is a contract manufacturer and recognizes revenue when the products have been built and control has been transferred to the customer. 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.

~~Morris~~

Morris Sheet Metal and Deluxe Sheet Metal

For our construction contracts, revenue is generally recognized over time as our performance creates or enhances an asset that the customer controls as it is created or enhanced. Our fixed price construction projects generally use a ~~mechanical contractor~~cost-to-cost input method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. For certain of our revenue streams, that are performed under time and ~~recognizes~~materials contracts, our progress towards complete satisfaction of such performance obligations is measured using an output method as the customer receives and consumes the benefits of our performance completed to date. Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. When the current estimate of total costs for a performance obligation indicate a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident.

Contract Assets and Contract Liabilities

The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets include unbilled amounts from our construction projects when revenues recognized under the ~~services~~cost-to-cost measure of progress exceed the amounts invoiced to our customers, as the amounts cannot be billed under the terms of our contracts. Such amounts are recoverable from our customers based upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of a contract. In addition, many of our time and materials arrangements, are billed pursuant to contract terms that are standard within the industry, resulting in contract assets being recorded, as revenue is recognized in advance of billings. Our contract assets do not include capitalized costs to obtain and fulfill a contract. Contract assets are generally classified as current within the consolidated balance sheets.

Contract liabilities from our construction contracts arise when amounts invoiced to our customers exceed revenues recognized under the cost-to-cost measure of progress. Contract liabilities additionally include advanced payments from our customers on certain contracts. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation.

Contract Retentions

As of March 31, 2020, and December 31, 2019, accounts receivable included retainage billed under terms of our contracts. These retainage amounts represent amounts which have been ~~performed~~contractually invoiced to customers where payments have been partially withheld pending the ~~customer. If a deposit for product~~achievement of certain milestones, satisfaction of other contractual conditions or ~~service is received prior to~~ completion of 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.project.

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 for the three~~debt and ~~nine months ended September 30, 2018 and the nine months ended September 30, 2019 due to the net loss incurred.~~options. The following table illustrates the computation of basic and diluted EPS for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~

For the Three Months
ended
September 30, 2019

For the Three Months
ended
September 30, 2018

Net Income (Loss) Shares Per Share Amount Net Income (Loss) Shares Per Share Amount
Basic EPS
Income (loss) available to stockholders $ 2,805,182 101,810,802 $ 0.03 $ (2,874,626 ) 30,358,570 $ (0.09 )
Effect of Dilutive Securities
Convertible debt (3,468,509 ) 135,458,885 - - -
Dilute EPS
Income (loss) available to stockholders plus assumed conversions $ (663,327 ) 237,269,687 $ (0.00 ) $ (2,874,626 ) 30,962,398 $ (0.09 )

For the Nine Months
ended
September 30, 2019

For the Nine Months
ended
September 30, 2018

Net Income (Loss) Shares Per Share Amount Net Income (Loss) Shares Per Share Amount
Basic EPS
Income (loss) available to stockholders $ (1,161,983 ) 62,450,846 $ (0.02 ) $ (4,112,998 ) 27,813,506 $ (0.15 )
Effect of Dilutive Securities
Convertible debt - -
Dilute EPS
Income (loss) available to stockholders plus assumed conversions $ (1,161,983 ) 62,450,846 $ (0.02 ) $ (4,112,998 ) 27,813,506 $ (0.15 )

2019:

		For the Three Months Ended March 31, 2020				For the Three Months Ended March 31, 2019
		Net Income (Loss)	Shares		Per Share Amount		Net Income (Loss)	Shares		Per Share Amount
Basic EPS
Income (loss) available to stockholders	$	250,388	127,207,693	$	0.00	$	989,511	30,782,076	$	0.03
Effect of Dilutive Securities
Convertible debt and options		(1,974,908)	10,828,330		-		-	-		-
Dilute EPS
Income (loss) available to stockholders plus
assumed conversions	$	(1,724,520)	138,036,023	$	(0.01)	$	989,511	30,782,076	$	0.03

Stock-based compensation

The Company accounts for equity instruments issued in exchange for the receipt of goods or services in accordance with ASC 718-10, Compensation – Stock Compensation. 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.

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

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

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 of the Company and any immediate family members of a principal owner, director or executive officer.

Recent Accounting Pronouncements

In ~~June 2018,~~January 2017, the FASB issued ASU ~~2018-07,~~ ~~Stock Compensation~~2017-04, Intangibles—Goodwill and Other (Topic ~~718): Improvements to Nonemployee Share-Based Payment Accounting~~~~, which~~350)—Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the accounting for ~~share-based payments granted~~goodwill impairments by eliminating the requirement to ~~nonemployees for goods and services and aligns most~~compare the implied fair value of goodwill with its carrying amount as part of step two of the ~~guidance on such payments~~goodwill impairment test referenced in ASC 350, Intangibles - Goodwill and Other. As a result, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the impairment loss recognized should not exceed the total amount of goodwill allocated to ~~nonemployees with the requirements for share-based payments granted to employees.~~that reporting unit. ASU ~~2018-07~~2017-04 is effective for annual reporting periods beginning after December 15, 2019, including any interim impairment tests within those annual periods, with early application permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, ~~2019.~~2017. The Company does not expect the adoption of this ASU ~~did not~~to have ~~any~~a material impact on the Company’s consolidated financial statements and related disclosures.

In ~~February 2016,~~December 2019, the FASB issued ASU ~~2016-02,~~ ~~Leases (Topic 842)~~2019-12, Simplifying the Accounting for Income Taxes which amends ASC 740 Income Taxes (ASC 740). ~~ASU 2016-02 requires lessees~~This update is intended to ~~recognize lease assets~~simplify accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and ~~lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02~~amending existing guidance to improve consistent application of ASC 740. This update is effective for fiscal years beginning after December 15, ~~2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 and additional ASUs are now codified as ASC 842,~~ ~~Leases. ASC 842 supersedes the lease accounting~~2021. The guidance in ~~ASC 840~~ ~~Leases~~,this update has various elements, some of which are applied on a prospective basis and ~~requires lessees to recognize~~others on a ~~lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements.~~retrospective basis with earlier application permitted. The Company ~~adopted ASC 842 on January 1, 2019 and used~~is currently evaluating the ~~modified retrospective transition approach and did not restate its comparative periods. The Company elected to utilize the “package”~~effect of three expedients, as defined in ASC 842, which retain the lease classification and initial direct costs for any leases that existed prior to adoption of the standard. As of the date of implementation on January 1, 2019, the impact of the adoption of ASC 842 resulted in the recognition of a right of use asset and lease payable obligationthis ASU on the Company’s consolidated ~~balance sheets of $891,413. As the right of use asset~~financial statements and ~~the lease payable obligation were the same upon adoption of ASC 842, there was no cumulative effect impact on the Company’s accumulated deficit.~~

related disclosures.

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 ~~Company has recurring losses and a~~ working capital ~~deficit. These factors raise substantial~~of the Company is currently negative and causes doubt as to the ~~Company’s~~ ability of the Company to ~~continue as a going concern.~~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 ultimate transition 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 the going concern uncertainty, the Company has a three-fold plan to resolve these risks. First, the acquisitions of QCA, APF, Morris, Deluxe and ~~Morris~~Excel have allowed for an increased level of cash flow to the Company. Second, the Company is considering other potential acquisition targets that, like QCA, Morris, Deluxe and ~~Morris,~~Excel should increase income and cash flow to the Company. Third, the Company plans to ~~seek new non-convertible debt agreements~~issue additional shares of common stock for cash and services during the next 12 months and has engaged professional service firms to ~~fund any deficits~~provide advisory services in ~~cash requirements.~~

connection with that capital raise.

Note 4 – Leases

The Company 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 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 must discount lease payments based on an estimate of its incremental borrowing rate.

As of ~~September 30, 2019,~~March 31, 2020, the future minimum financing and operating lease payments, net of amortization of debt issuance costs, were as follows:

Finance Operating
Twelve Months Ended September 30,
Leases Leases
2020 $ 1,206,080 $ 346,998
2021 1,228,708 356,757
2022 1,248,696 142,116
2023 1,269,248 40,950
2024 1,251,104 -
Thereafter 11,843,097 -
Total 18,046,933 886,821
Less: current lease obligation (234,682 ) (254,535 )
Less: imputed interest (6,357,146 ) (157,813 )
Non-current capital leases obligations $ 11,455,105 $ 474,473

		Finance		Operating
Twelve Months Ending March 31,		Leases		Leases
2021	$	1,737,720	$	351,847
2022		1,763,064		286,847
2023		1,795,633		70,087
2024		1,797,556		5,850
2025		1,808,083		-
Thereafter		18,884,602		-
Total payments		27,786,658		714,631
Less: imputed interest		(11,798,681)		(106,832)
Total obligation		15,987,977		607,799
Less: current portion		(453,233)		(279,233)
Non-current capital leases obligations	$	15,534,744	$	328,566

Finance Leases

In 2016, the Company sold a building and used the money to purchase QCA. Because this is a financing transaction, the sale is recorded under "financing lease obligation" on the accompanying consolidated 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.

On April 5, 2018, the Company acquired APF. In order to fund a portion of the acquisition price, the Company simultaneously entered into a sale leaseback transaction with a third-party lender whereby the building acquired from APF was sold for $1,900,000, and leased back to the company for a period of 15 years at a monthly rate of $15,833, subject to an annual increase of 2% throughout the term of the lease. The Company had no gain or loss resulting from the sale of the property, and the resulting lease qualifies as a capital lease. As a result, the Company has capitalized the cost of the building and the resulting capital lease obligation liability of $1,900,000. The payments related to this lease are reflected in the table above.

On January 1, 2019, the Company acquired Morris. In order to fund a portion of the acquisition price, the Company simultaneously entered into a sale leaseback transaction with a third-party lender whereby the building acquired from Morris was sold for $3,267,000, and leased back to the company for a period of 15 years at a monthly rate of $27,500, subject to an annual increase of 2% throughout the term of the lease. The transaction did not qualify as a sale and leaseback transaction under Topic 842 and as such was accounted for as a financing lease. The payments related to this lease are reflected in the table above.

~~A letter~~

On November 6, 2019, the Company acquired Deluxe. In order to fund a portion of ~~credit of $1,000,000 is to be provided~~the acquisition price, the Company simultaneously entered into a sale leaseback transaction with a third-party lender whereby the building acquired from Deluxe was sold for $9,000,000, and leased back to the ~~landlord~~company for a period of 15 years at a monthly rate of $75,000, subject to an annual increase of 2.5% throughout the term of the lease. The transaction did not qualify as a sale and

leaseback transaction under Topic 842 and as such was accounted for as a financing lease. The payments related to this lease are reflected in the ~~above QCA~~table above.

On February 21, 2020, the Company acquired Excel. In order to fund a portion of the acquisition price, the Company simultaneously entered into a sale leaseback transaction with a third-party lender whereby the building acquired from Excel was sold for $2,000,000, and leased back to the Company for a period of 15 years at a monthly rate of $18,700 for the first five years, subject to annual increases throughout the term of the lease. The transaction did not qualify as a sale and leaseback transaction under Topic 842 and as such was accounted for as a financing lease. The payments related to this lease ~~obligation, of which $207,311 had been satisfied as of September 30, 2019.~~

are reflected in the table above.

Operating Leases

The table below presents the lease related assets and liabilities recorded on the Company’s consolidated balance ~~sheet~~sheets as of ~~September 30,~~March 31, 2020 and December 31, 2019:

Classification on Balance Sheet

September 30,
2019

Assets
  Operating lease assets Operating lease right of use assets $ 721,004
Total lease assets $ 721,004

Liabilities
Current liabilities
  Operating lease liability Current operating lease liability $ 254,535
Noncurrent liabilities
  Operating lease liability Long-term operating lease liability 474,473
Total lease liability $ 729,008

			March 31		December 31,
	Classification on Balance Sheet		2020		2019
Assets
Operating lease assets	Operating lease right of use assets	$	596,816	$	660,032
Total lease assets		$	596,816	$	660,032

Liabilities
Current liabilities
Operating lease liability	Current operating lease liability	$	279,233	$	266,623
Noncurrent liabilities
Operating lease liability	Long-term operating lease liability		328,566		403,931
Total lease liability		$	607,799	$	670,554

The lease expense for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was ~~$170,409.~~$87,584. The cash paid under operating leases during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was ~~$162,405.~~$87,123. At ~~September 30, 2019,~~March 31, 2020, the weighted average remaining lease terms were ~~2.62~~2.15 years and the weighted average discount rate was 15%

Note 5 – Notes Payable

In May 2018, APF ~~also~~ secured a line of credit with Crestmark, providing for borrowings up to $1,000,000 at a variable interest rate, collateralized by APF’s outstanding accounts receivable.��

In February 2019 the Company moved the Crestmark line of credit to FSW with a variable interest and collateralized by APF’s accounts receivable. In January 2020 the Company received a default notice from Crestmark regarding noncompliance with certain loan covenants, including but not limited to, QCA’s failure to maintain a tangible net worth as contained in the loan agreement. QCA’s credit line with Crestmark totaled $2,800,000 and was restructured from an ABL line of credit to a ledger line of credit. In addition, a minimum interest of 7.75% interest was imposed; an exit fee of 1% through January 31, 2021 and the financial covenant replaced with a requirement for QCA to maintain a free cash flow of at least $1.00 beginning with QCA’s financial statements as of January 31, 2020. The CEO has also validity guaranteed the $2.8 million line of credit with Crestmark. In addition with the acquisitions of Morris, Deluxe and Excel, the Company secured four lines of credit with Advanced Energy Capital for borrowings up to $6,250,000 at variable interest rates, collateralized by their respective accounts receivable.

On February 22, 2018, the Company issued a $3,000,000 note payable under the Amended and Restated Secured Promissory Note with the seller of VWES. The note is secured by the assets of VWES and bears interest at 7% per annum and is due in semi-annual payments of $150,000 commencing on June 1, 2018, through June 1, 2020. The remaining principal and accrued interest is due on the 3 year anniversary. The Company is not current on its payments on the note. The balance as of March 31, 2020 is $2,910,000.

On April 5, 2018, the Company issued two secured promissory notes in the aggregate principal amount of $1,950,000 (“Secured APF Notes”) as part of the consideration for the purchase of ~~APF (see Note 9).~~APF. The Secured APF Notes are secured by the equipment, customer accounts and intellectual property of the Company, and all of the products and proceeds from any of the assets of APF. The Secured APF Notes bear interest at 4.25% per annum and have aggregate monthly payments of $19,975 for the first 23 months, with a balloon payment due in April 2020 for the remaining principal and interest outstanding.

The note with an outstanding balance as of March 31, 2020 of approximately $1.09 million was amended subsequent to March 31, 2020. (SeeNote 13). The Company is currently negotiating the extension of the other note with an outstanding balance of approximately $562,000 with the lender.

On May 3, 2018, the Company entered into an equipment note with a lender for total borrowings of $630,750, which is secured by the equipment of APF. The note bears interest at ~~11.75%~~10.25% per annum and is payable in weekly payments of $3,795 commencing on the loan date through May 4, 2022.

In connection with the Morris acquisition in January 2019, the Company issued three subordinated secured promissory notes for an aggregate of $3,100,000. The notes bear interest at 4.25% per annum, require monthly payment for the first 35 months of $31,755 with any remaining principal and accrued interest due on the 3 year-anniversary. The Company also issued three supplemental notes payable for an aggregate of $350,000. The notes bear interest at 4.25% per annum and are due on the 1-year anniversary.

The supplemental notes were amended in May 2020. (See Note 13).

In connection with the Deluxe acquisition in November 2019, the Company issued two subordinated secured promissory notes to the seller. The first note for $1,900,000 bears interest at 4.25% per annum, require monthly payment for the first 35 months of $19,463 with any remaining principal and accrued interest due on the 3 year-anniversary. The second note for $496,343 bears interest at 8.75% and is due in January 2020. In January 2020, the Company entered into a debt conversion agreement with the seller which fully settled the second note. (See Note 8)

In connection with the Excel acquisition in February 2020, the Company issued a subordinated secured promissory note to the seller. The note for $2,300,000 bears interest at 4.25% per annum, requires monthly interest only payments for 48 months and is due February 2024. There was unpaid cash consideration of $392,362 as of March 31, 2020, which is included in notes payable as of March 31, 2020.

In November 2019, in connection with the termination of the lease for the San Diego building, the Company issued the landlord a note payable. The note is for $2,740,000, bears interest at 7% with monthly payments starting at $15,984 and is due in November 2034.

In October and November 2019 the Company entered into two merchant agreements which are secured by rights to customer receipts until the loans have been repaid in full and subject to interest rates ranging from 13% to 20%. Under the terms of these agreements, the Company will receive the disclosed purchase price of $600,000 and $300,000, respectively and agreed to repay the disclosed purchased amount of $839,400 and $420,000, respectively. The merchant lenders collect the purchase amounts at the disclosed weekly payment rates of $29,978 and $11,667 over a period of 28 weeks and 36 weeks, respectively. These loans were personally guaranteed by the CEO and COO.

In January 2020, the Company entered into a $200,000 term note with Celtic Capital, Inc. The note is subject to annual interest which is the greater of 13% or 11% plus the 3 month LIBOR rate and requires monthly payments of $3,333 over a period of 60 months. The note is secured by certain equipment of Deluxe.

In connection with the Excel acquisition, the Company entered into a $425,000 term note with Celtic Capital, Inc. The note is subject to annual interest which is the greater of 13% or 11% plus the 3 month LIBOR rate and requires monthly payments of $7,083 over a period of 60 months. The note is secured by certain equipment of Excel.

The Company issued a $48,000 note in January 2020 to a private investor with an interest rate of 15% with a due date of 1 year.

In October 2019 Morris entered into an equipment finance note for $107,997 with an interest rate of 9.4% for 48 monthly payments with Bryn Mawr Equipment Finance Inc.

The outstanding balances for the loans were as follows:

September 30, December 31,
2019 2018
Lines of credit, current portion $ 3,086,487 $ 2,504,440
Equipment loans, current portion 234,659 260,301
Term notes, current portion 3,308,712 820,862
Total current 6,629,858 3,585,603
Long-term portion 5,521,502 4,517,441
Total notes payable $ 12,151,360 $ 8,103,044

		March 31,		December 31,
		2020		2019
Lines of credit, current portion	$	3,361,446	$	3,816,103
Equipment loans, current portion		310,921		368,011
Term notes, current portion		5,122,695		3,849,273
Merchant loans		430,000		690,784
Total current		9,225,062		8,724,171
Long-term portion		11,304,939		9,850,184
Total notes payable	$	20,530,001	$	18,574,355

$755,000 worth of term loans are past due and are currently being negotiated with the lenders.

Future scheduled maturities of outstanding notes payable ~~from related parties~~ are as follows:

Twelve Months Ending September 30,

2020 $ 6,629,858
2021 2,752,639
2022 2,648,863
2023 80,000
2024 40,000
Total $ 12,151,360

Twelve Months Ending March 31,
2021	$	9,225,062
2022		1,276,038
2023		4,896,304
2024		2,537,129
2025		196,832
Thereafter		2,398,636
Total	$	20,530,001

Note 6 – Notes Payable, Related Parties

At ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, notes payable due to related parties consisted of the following:

September 30, December 31,
2019 2018
Notes payable; non-interest bearing; due upon demand; unsecured $ 4,500 $ 4,500
Note payable; bearing interest at 8% per annum; due June 30, 2017; unsecured 7,500 7,500
Series of notes payable, bearing interest at rates from 10% to 20% per annum, with maturity dates from April 2018 to July 2020, unsecured 389,820 180,000
Total notes payable - related parties $ 401,820 $ 192,000

		March 31,		December 31,
		2020		2019
Notes payable; non-interest bearing; due upon demand; unsecured	$	4,500	$	4,500
Note payable; bearing interest at 8% per annum; due June 30, 2017; unsecured		7,500		7,500
Series of notes payable, bearing interest at rates from 10% to 20% per annum, with maturity dates from April 2018 to July 2020, unsecured		338,998		329,820
Total notes payable - related parties	$	350,998	$	341,820

The above notes which are in default as of ~~September 30, 2019,~~March 31, 2020, except for one note due in July 2020 with an outstanding balance of approximately $105,000, were due on demand by the lenders as of the date of this Report.

Note 7 – Convertible Notes Payable

At ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, convertible notes payable consisted of the following:

		March 31,		December 31,
		2020		2019
Series of convertible notes payable issued prior to December 31, 2016, bearing interest at rates of 8% - 20% per annum, with due dates ranging from April 2016 through October 2017. The outstanding principal and interest balances are convertible into shares of Class A common stock at the option of the debt holder at exercise prices ranging from $0.10 to $1 per share.	$	25,000	$	25,000

Secured convertible notes payable issued to the sellers of QCA on April 1, 2016 for an aggregate of $2,000,000, bearing interest at 5% per annum, due in monthly payments starting on July 1, 2016 and due in full on July 1, 2019. On August 6 and 11, 2019, the Company extended the due date of the two notes to December 31, 2020 and December 31, 2022, respectively. The outstanding principal and interest balances are convertible after 12 months into Class A common stock at the option of the debt holder at a conversion price of $1 per share.		1,271,186		1,324,588

Convertible note payable issued in January 2017, bearing interest at rates of 10% per annum, and due in January 2018. The outstanding principal and interest balances are convertible into shares of Class A common stock at the option of the debt holder at an exercise price of $1 per share.		10,000		10,000

On April 5, 2018, the Company entered into convertible promissory notes for an aggregate principal amount of $450,000 as part of the consideration for the acquisition of APF. The convertible notes are due in full in 36 months and bear interest at 4.25% per annum, and are convertible into shares of Class A common stock after 6 months from the issuance date at a rate of $1 per share.		450,000		450,000

On April 9, 2018, the Company entered into a variable convertible note for $124,199 with net proceeds of $115,000. The note is due January 9, 2019 and bears interest at 12% per annum. After 180 days, the note is convertible into shares of 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. In connection with this variable convertible note, the Company issued 76,670 shares of its Class A common stock, along with warrants to purchase 153,340 shares of Class A common stock at an exercise price of $1 per share which are immediately vested and have a 3 years contractual life. The value of the common stock and warrants have been recorded as a discount.		-		500

On August 30, 2018, the Company entered into a variable convertible note for $337,500 with net proceeds of $303,750. The note is due February 28, 2019 and bears interest at 10% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 42% to the average of the two lowest trading closing prices of the stock for ten days prior to conversion. This note was amended in November 2019 to affect a floor in the conversion price of $0.15 per share. The note was fully converted as of March 31, 2020.		-		187,681

On October 23, 2018, the Company entered into a variable convertible note for $220,000 with net proceeds of $198,000. The note is due December 14, 2018 and bears interest at 10% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 42% to the average of the two lowest trading closing prices of the stock for ten days prior to conversion. This note was amended in November 2019 to affect a floor in the conversion price of $0.15 per share. The note was fully converted as of March 31, 2020.		-		115,000

On December 7, 2018, the Company entered into a variable convertible note for $130,000 with net proceeds of $122,200. The note is due September 7, 2019 and bears interest at 12% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 40% to the lowest trading closing prices of the stock for 20 days prior to conversion. This note was amended in November 2019 to increase the principal amount by $180,000 due to penalty interest; increased the interest to 15% and affect a floor in the conversion price of $0.15 per share.		105,000		195,000

On November 6, 2019, the Company issued a convertible note for $600,000 with net proceeds of $570,000. The note is due November 6, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share.		580,000		600,000

On November 6, 2019, the Company issued a convertible note for $350,000. The note is due November 6, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share.		350,000		350,000

On November 14, 2019, the Company issued a convertible note for $137,870. The note is due November 13, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share. The note was fully converted as of March 31, 2020.		-		137,870

On November 14, 2019, the Company issued convertible note for $35,000. The note is due November 13, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share.		35,000		35,000

On November 14, 2019, the Company issued convertible note for $200,000. The note is due November 13, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share.		200,000		200,000
Total convertible notes payable		3,026,186		3,630,639
Less: discount on convertible notes payable		(601,059)		(846,833)
Total convertible notes payable, net of discount		2,425,127		2,783,806
Less: current portion of convertible notes payable		(280,084)		(1,110,118)
Long-term portion of convertible notes payable	$	2,145,043	$	1,673,688

September 30, December 31,
2019 2018
Series of convertible notes payable issued prior to December 31, 2016, bearing interest at rates of 8% - 20% per annum, with due dates ranging from April 2016 through October 2017. The outstanding principal and interest balances are convertible into shares of Class A common stock at the option of the debt holder at exercise prices ranging from $0.10 to $1 per share. $ 25,000 $ 25,000

Secured convertible notes payable issued to the sellers of QCA on April 1, 2016 for an aggregate of $2,000,000, bearing interest at 5% per annum, due in monthly payments starting on July 1, 2016 and due in full on July 1, 2019. On August 11, 2019, the Company extended the due date of one of the notes to December 31, 2022. The outstanding principal and interest balances are convertible after 12 months into Class A common stock at the option of the debt holder at a conversion price of $1 per share.
1,429,587 1,654,588

Convertible note payable issued in January 2017, bearing interest at rates of 10% per annum, and due in January 2018. The outstanding principal and interest balances are convertible into shares of Class A common stock at the option of the debt holder at an exercise price of $1 per share. 10,000 10,000

On January 10, 2018, the Company entered into a variable convertible note for $150,000 with net proceeds of $135,000. The note is due October 1, 2018 and bears interest at 12% per annum. The note is immediately convertible into shares of Class A common stock at the lesser of $0.16 per share or 60% of the lowest trading price the previous 25 days prior to conversion. The Company can prepay the note within the first 90 days following January 10, 2018 with a prepayment penalty equal to 145% of the total outstanding balance. The Company issued 333,333 shares to the lender with this note, which has been recorded as a discount. - 95,000

On April 5, 2018, the Company entered into convertible promissory notes for an aggregate principal amount of $450,000 as part of the consideration for the acquisition of APF (see Note 9). The convertible notes are due in full in 36 months and bear interest at 4.25% per annum, and are convertible into shares of Class A common stock after 6 months from the issuance date at a rate of $1 per share. 450,000 450,000

On April 9, 2018, the Company entered into a variable convertible note for $124,199 with net proceeds of $115,000. The note is due January 9, 2019 and bears interest at 12% per annum. After 180 days, the note is convertible into shares of 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. In connection with this variable convertible note, the Company issued 76,670 shares of its Class A common stock, along with warrants to purchase 153,340 shares of Class A common stock at an exercise price of $1 per share which are immediately vested and have a 3 years contractual life. The value of the common stock and warrants have been recorded as a discount. 500 61,699

On April 9, 2018, the Company entered into a variable convertible note for $37,800 with net proceeds of $35,000. The note is due January 9, 2019 and bears interest at 12% per annum. After 180 days, the note is convertible into shares of 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. 68,757 37,800

On June 4, 2018, the Company entered into a variable convertible note for $165,000 with net proceeds of $151,500. The note is due December 4, 2019 and bears interest at 10% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 42% to the average of the two lowest trading closing prices of the stock for ten days prior to conversion. The Company issued 850,000 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. 116,480 165,000

On July 18, 2018, the Company entered into a variable convertible note for $88,000 with net proceeds of $88,000. The note is due April 30, 2019 and bears interest at 12% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 42% to the average of the two lowest trading closing prices of the stock for ten days prior to conversion. - 88,000

On August 30, 2018, the Company entered into a variable convertible note for $337,500 with net proceeds of $303,750. The note is due February 28, 2019 and bears interest at 10% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 42% to the average of the two lowest trading closing prices of the stock for ten days prior to conversion. 198,348 337,500

On September 27, 2018, the Company entered into a variable convertible note for $93,000 with net proceeds of $93,000. The note is due July 15, 2019 and bears interest at 12% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 42% to the average of the two lowest trading closing prices of the stock for ten days prior to conversion. - 93,000

On October 23, 2018, the Company entered into a variable convertible note for $220,000 with net proceeds of $198,000. The note is due December 14,2018 and bears interest at 10% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 42% to the average of the two lowest trading closing prices of the stock for ten days prior to conversion. 49,000 220,000

On November 12, 2018, the Company entered into a variable convertible note for $670,000 with net proceeds of $636,000. The note is due November 12, 2019 and bears interest at 10% per annum. The note is immediately convertible into shares of 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. 511,700 670,000

On December 7, 2018, the Company entered into a variable convertible note for $130,000 with net proceeds of $122,200. The note is due September 7, 2019 and bears interest at 12% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 40% to the lowest trading closing prices of the stock for 20 days prior to conversion. This convertible note is past due. 98,000 130,000

On February 5, 2019, the Company entered into a variable convertible note for $103,000 with net proceeds of $103,000. The note is due November 30, 2019 and bears interest at 12% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 42% to the average of the two lowest trading closing prices of the stock for ten days prior to conversion. This convertible note is past due. 67,000 -

Total convertible notes payable 3,024,372 4,037,587

Less: discount on convertible notes payable (113,741 ) (942,852 )

Total convertible notes payable, net of discount 2,910,631 3,094,735

Less: current portion of convertible notes payable (1,787,943 ) (2,644,735 )

Long-term portion of convertible notes payable $ 1,122,688 $ 450,000

The discounts on convertible notes payable arise from stock issued with notes payable, beneficial conversion features, as well as conversion features of certain convertible notes being treated as derivative liabilities (see Note 11). The discounts are being amortized over the terms of the convertible notes payable. Amortization of debt discounts during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ amounted to ~~$932,111~~$245,774 and ~~$701,850,~~$397,550, respectively, and is recorded as interest expense in the accompanying consolidated statements of operations. The unamortized discount balance for these notes was ~~$113,741~~$601,059 as of ~~September 30, 2019,~~March 31, 2020, which is expected to be amortized over the next 12 months.

A summary of the activity in the Company's convertible notes payable is provided below:

Balance outstanding, December 31, 2018 $ 3,094,735
Issuance of convertible notes payable for cash 103,000
Issuance of convertible notes payable for penalty interest 128,777
Repayment of notes (787,700 )
Conversion of notes payable to common stock (457,292 )
Discount from derivative liability (103,000 )
Amortization of debt discounts 932,111
Balance outstanding, September 30, 2019 $ 2,910,631

Balance outstanding, December 31, 2019	$	2,783,806
Repayment of notes		(73,902)
Conversion of notes payable to common stock		(545,551)
Penalty interest added to convertible note		15,000
Amortization of debt discounts		245,774
Balance outstanding, March 31, 2020	$	2,425,127

Note 8 – Stockholders' Equity

Preferred Stock

The Company is authorized to issue ~~10,000,000~~5,000,000 shares of $.0001 par value preferred stock.

Series B Preferred Stock

The Company is authorized to issue 100 shares of Series B preferred stock. The Series B Preferred Stock has a $1.00 stated value and does not accrue dividends. The Series B has the following voting rights:

·If at least one share of Series B Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series B Preferred Stock at any given time, regardless of their number, shall have that number of votes (identical in every other respect to the voting rights of the holders of all classes of Common Stock or series of preferred stock entitled to vote at any regular or special meeting of stockholders) equal to two hundred percent (200%) of the total voting power of all holders of the Company’s common and preferred stock then outstanding, but not including the Series B Preferred Stock.

·If more than one share of Series B Preferred Stock is issued and outstanding at any time, then each individual share of Series B Preferred Stock shall have the voting rights equal to: Two hundred percent (200%) of the total voting power of all holders of the Company’s common and preferred stock then outstanding, but not including the Series B Preferred Stock divided by the number of shares of Series B Preferred Stock issued and outstanding at the time of voting.

Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a "Liquidation"), the Holders of the Series B Preferred Stock are entitled to receive out of the assets of the Company for each share of Series B Preferred Stock then held by the Holder an amount equal to the Stated Value, and all other amounts in respect thereof then due and payable before any distribution or payment shall be made to the holders of any Junior Securities.

The Series B Preferred Stock shall be convertible into shares of the Company's Class A Common Stock only as follows:

·In the event that the Holder of Series B Preferred Stock ceases to be a director of the Company, upon such director's resignation or removal from the board by any means, the shares of Series B

Preferred Stock held by such resigning or removed director shall convert automatically into that same number of shares of Class A Common Stock (i.e. on a one-for-one share basis).

·Shares of Series B Preferred Stock converted into Class A Common Stock, canceled, or redeemed, shall be canceled and shall have the status of authorized but unissued shares of undesignated preferred stock.

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018, no~~2019, 5 and 0 shares of preferred stock were outstanding.

Common Stock

Pursuant to the Amended and Restated Certificate of Incorporation, the Company is authorized to issue three classes of common stock: Class A common stock, which has one vote per share, Class B common stock, which has ten votes per share and Class C common stock, which has five votes per share. Any holder of Class B common stock may convert his or her shares at any time into shares of Class A common stock on a share-for-share basis. Otherwise the voting rights of the two classes of common stock will be identical. Any holder of Class C common stock may convert 25% of his or her shares at any time after the 3^rd3rd to 6^th6th anniversary into shares of Class A common stock on a share-for-share basis. Otherwise the voting rights of the two classes of common stock will be identical.

The Company had the following transactions in its common stock during the ~~nine~~three months ended ~~September 30, 2019:~~

•	~~issued 68,602,751 shares of Class A common stock for the conversion of $457,292 of outstanding convertible notes payable and $66,544 of accrued interest;~~

•	~~issued 7,097,595 shares of Class C common stock as a dividend to the Class A common stockholders.~~

•	~~issued 200,000 shares of Class B common stock and 2,772,606 shares of Class C common stock to officer, directors and employees for services rendered valued at $38,644.~~

March 31, 2020:

·Issued 3,941,753 Class A common stock for cash for total proceeds of $250,000;

·Issued 4,648,879 Class A common stock for the conversion of convertible debt and accrued interest of $697,332;

·Issued 1,617,067 Class A common stock and 1,617,067 Class C common stock to the Seller of Deluxe for the settlement of debt of $485,120; the fair value of the stock was $330,528. The Company recognized a gain on the settlement of debt of $154,592;

·Issued 300,000 Class A common stock with a fair value of $44,700 to a noteholder as penalty interest; and

·Issued 4,023,088 Class B common stock to settle unpaid salaries of $603,463.

Stock Options

The Company has issued stock options to purchase shares of the Company’s Class A common stock issued pursuant to the Company's 2016 Stock Option and Stock Award Plan (the "Plan"). The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant and on each modification date.

The following summarizes the stock option activity for the ~~nine~~three months ended ~~September 30, 2019:~~

Weighted-
Weighted- Average
Average Remaining Aggregate
Exercise Contractual Intrinsic
Options Price Life (Years) Value

Outstanding at December 31, 2018 1,790,000 $ 0.19 9.10 $ -
Granted -
Forfeited -
Exercised -
Outstanding at September 30, 2019 1,790,000 $ 0.19 8.60 $ -

Vested and expected to vest at September 30, 2019
1,790,000 $ 0.19 8.35 $ -

Exercisable at September 30, 2019 727,594 $ 0.26 8.12 $ -

March 31, 2020:

				Weighted-
			Weighted-	Average
			Average	Remaining		Aggregate
			Exercise	Contractual		Intrinsic
	Options		Price	Life (Years)		Value
Outstanding at December 31, 2019	1,790,000	$	0.19	8.10	$	176,445
Granted	-
Forfeited	-
Exercised	-
Outstanding at March 31, 2020	1,790,000	$	0.19	7.85	$	-

Vested and expected to vest
at March 31, 2020	1,790,000	$	0.19	7.85	$	-

Exercisable at March 31, 2020	951,344	$	0.24	7.67	$	-

T~~The~~he following table summarizes information about options outstanding and exercisable as of ~~September 30, 2019:~~

Options Outstanding Options Exercisable
Weighted Weighted Weighted
Average Average Average
Exercise Number Remaining Exercise Number Exercise
Price of Shares Life (Years) Price of Shares Price

$ 0.05 979,000 9.13 $ 0.05 271,563 $ 0.05
0.10 85,000 9.04 0.10 21,250 0.10
0.13 388,500 8.34 0.13 194,250 0.13
0.26 114,000 8.10 0.26 64,125 0.26
0.90 223,500 8.02 0.90 125,719 0.90
1,790,000 676,907

March 31, 2020:


		Options Outstanding				Options Exercisable
			Weighted		Weighted			Weighted
			Average		Average			Average
	Exercise	Number	Remaining		Exercise	Number		Exercise
	Price	of Shares	Life (Years)		Price	of Shares		Price

$	0.05	979,000	8.13	$	0.05	393,938	$	0.05
	0.10	85,000	8.03		0.10	37,188		0.10
	0.13	388,500	7.34		0.13	267,094		0.13
	0.26	114,000	7.09		0.26	85,500		0.26
	0.90	223,500	7.02		0.90	167,624		0.90
		1,790,000				951,344

During the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ stock option expense amounted to ~~$58,667~~$19,556 and ~~$52,309,~~$19,341, respectively. Unrecognized stock option expense as of ~~September 30, 2019~~March 31, 2020 amounted to ~~$142,170,~~$101,819, which will be recognized over a period extending through December 2022.

Warrants

On April 9, 2018, the Company granted 153,340 warrants in connection with the issuance of a convertible note payable. The warrants have a 3 year contractual life, an exercise price of $1 per share and are vested immediately.

On January 1, 2017, the Company granted 75,000 warrants to the seller of VWES. The warrants have a 3 year contractual life, an exercise price of $4.25 per share and are vested immediately. The warrants were accounted for as part of the purchase price of the acquisition of VWES. On February 22, 2018, in connection with the Amended Agreement (see Note 9), the warrants were cancelled and replaced with 75,000 new warrants with an exercise price of $1 per share that were vested immediately and have a contractual life of 3 years.

During the year ended December 31, 2017, the Company granted an aggregate total of 2,001 warrants to individuals. These warrants all have a 3 year contractual life, an exercise price of $2.00 per share and are vested immediately.

As of ~~September 30, 2019,~~March 31, 2020, the Company had ~~277,001~~275,000 warrants outstanding with a weighted average exercise price of $1.01 and a weighted average remaining life of ~~1.48~~0.98 years.

N~~Note~~ote 9 – Business Combination

Morris

On January 9, 2019, (with an effective date of January 1, 2019) the Company entered into a Securities Purchase Agreement (the "SPA") with Morris Sheet Metal Corp., an Indiana corporation, JTD Spiral, Inc. a wholly owned subsidiary of MSM, an Indiana corporation, Morris Enterprises LLC, an Indiana limited liability company and Morris

Transportation LLC, an Indiana limited liability company.

This acquisition was considered an acquisition of a business under ASC 805.

A summary of the purchase price allocation at fair value is below. The business combination accounting is not yet complete and the amounts assigned to assets acquired and liabilities assumed are provisional. Therefore, this may result in future adjustments to the provisional amounts as new information is obtained about facts and circumstances that existed at the acquisition date.

Purchase Allocation
Cash $ 192,300
Accounts receivable 1,498,591
Inventory 453,841
Prepaid expenses and other current assets 858,456
Property and equipment 4,214,965
Goodwill 603,592
Accounts payable (234,236 )
Accrued expenses (443,908 )
Notes payable (1,033,695 )
$ 6,109,906

		Purchase Allocation
Cash	$	192,300
Accounts receivable		2,146,541
Inventory		453,841
Contract assets		210,506
Property and equipment		4,214,965
Customer list		490,000
Goodwill		113,592
Accounts payable		(234,236)
Accrued expenses		(351,865)
Contract liabilities		(92,043)
Notes payable		(1,033,695)
	$	6,109,906

The purchase price was paid as follows:

Cash 2,159,906
Seller notes 3,450,000
Acquisition contingency 500,000
$ 6,109,906

Cash	$	2,159,906
Seller notes		3,450,000
Acquisition contingency		500,000
	$	6,109,906

One year after the closing date, the sellers will calculate monthly the 85/25 requirement to meet the Construction Industry Exemption for the Withdraw Liability (WDL). If the calculations verify Morris Sheet Metal Corp. and/or JTD Spiral, Inc. met the Exemption requirement for six consecutive months the Company will pay the sellers a $500,000 success fee. ~~The~~In January 2020, the Company ~~anticipates~~determined that ~~this contingency will be met and it will be obligated~~the conditions were not met; therefore the Company is no longer required to pay the additional $500,000.

Simultaneous with the purchase of Morris, a building, owned by Morris prior to the acquisition, was sold in a sale-leaseback transaction agreement, whereby the building was leased from the buyer for 15 years. The proceeds from the sale-leaseback of $3,267,000 were used to fund the cash consideration to the sellers. The building and the lease is being treated as a financing lease (see Note 4).

~~American Precision Fabricators (“APF”)~~

Deluxe

On ~~April 5, 2018,~~November 6, 2019, the Company ~~announced that it had entered into~~purchased Deluxe Sheet Metal, Inc., an Indiana corporation, DSM Holding, LLC, an Indiana limited liability company, and Lonewolf Enterprises, LLC, an Indiana limited liability company (collectively “Deluxe”) This acquisition was considered an acquisition of a Securities Purchase Agreement (the "SPA") with APF, an Arkansas corporation, and Andy Galbach ("Galbach") and Clarence Carl Davis, Jr. ("Davis"), the owners of APF (the "Sellers"). Pursuant to the SPA, the Company acquired 100% of the outstanding shares in APF.

business under ASC 805.

The total purchase price of APF from the SPA amounted to $4,500,000, which consisted of aggregate cash consideration paid to the Sellers of $2,100,000, an aggregate of $1,950,000 of secured promissory notes due to the Sellers (see Note 5), and an aggregate of $450,000 of convertible promissory notes due to the Sellers. At the closing date, the Company and the Sellers agreed to a reduction of the purchase price of $123,250, resulting from a net working capital adjustment which was deducted from the cash consideration due to the Sellers. As a result, the total purchase price of APF was $4,376,750.

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

		Purchase Allocation
Cash	$	140,948
Accounts receivable		2,785,454
Inventory		736,312
Prepaid expenses and other current assets		61,320
Contract assets		350,138
Property and equipment		9,502,045
Customer list		1,050,000
Accounts payable		(1,122,317)
Accrued expenses and other current liabilities		(163,891)
Contract liabilities		(155,016)
Notes payable		(7,544,871)
Bargain purchase gain		(2,143,779)
	$	3,496,343

The Company recognized a bargain purchase gain of $2,143,779 on the ~~period ended June 30, 2019,~~acquisition of Deluxe as a result the seller being motivated to sell in order to focus his time and effort on another business venture.

The purchase price was paid as follows:

Cash	$	1,100,000
Seller notes		2,396,343
	$	3,496,343

Simultaneous with the purchase of Deluxe, a building, owned by Deluxe prior to the acquisition, was sold in a sale-leaseback transaction agreement, whereby the building was leased from the buyer for 15 years. The proceeds from the sale-leaseback of $9,000,000 were used to fund the cash consideration to the sellers. The building and the lease is being treated as a financing lease (see Note 4).

Excel

On February 21, 2020, the Company ~~finalized~~purchased Excel Fabrication, LLC., an Idaho Limited Liability Company (“Excel”). This acquisition was considered an acquisition of a business under ASC 805.

A summary of the purchase price ~~allocation.~~ allocation at fair value is below. The business combination accounting is not yet complete and the amounts assigned to assets acquired and liabilities assumed are provisional. Therefore, this may result in future adjustments to the provisional amounts as information is obtained about facts and circumstances that existed at the acquisition date.

		Purchase Allocation
Cash	$	174,283
Accounts receivable		1,943,481
Other current assets		9,074
Property and equipment		2,958,190
Customer list		910,000
Accounts payable		(340,151)
Accrued expenses and other current liabilities		(262,506)
Goodwill		99,629
	$	5,492,000

The purchase price was paid as follows:

Cash	$	2,600,000
Contingent consideration		592,000
Seller notes		2,300,000
	$	5,492,000

As ~~a result~~part of the purchase price, the Company ~~took~~is also liable to the seller for royalty payments over a ~~charge~~period of 5 years whenever revenues exceed certain thresholds as provided for in the purchase agreement at rates ranging from 2% to ~~earnings during~~7%.

Simultaneous with the ~~three months ended June 30, 2019 for $65,833 for amortization on~~purchase of Excel, a building, owned by Excel prior to the ~~customer list~~acquisition, was sold in a sale-leaseback transaction agreement, whereby the building was leased from the ~~purchase date~~buyer for 15 years. The proceeds from the sale-leaseback of $2,000,000 were used to ~~June 30, 2019.~~

Purchase Allocation
Accounts receivable $ 945,050
Inventory 675,074
Prepaid expenses and other current assets 250,040
Property and equipment 3,300,000
Customer list 790,000
Goodwill 440,100
Accounts payable (1,234,328 )
Accrued expenses (154,186 )
Line of credit (165,000 )
Deferred tax liability (470,000 )
$ 4,376,750

fund the cash consideration to the seller. The building and the lease is being treated as a financing lease (see Note 4).

The following are the unaudited pro forma results of operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ as if Morris, Deluxe and ~~APF~~Excel had been acquired on January 1, ~~2018.~~2019. The pro forma results include estimates and assumptions which management believes are reasonable. However, pro forma results do 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.

		Pro Forma Combined Financials (unaudited)
		Three Months Ended March 31,
		2020		2019
Sales	$	9,821,341	$	10,435,563
Cost of goods sold		7,672,154		8,972,333
Gross profit		2,149,187		1,463,230
Operating expenses		3,059,891		3,522,172
Loss from operations		(910,704)		(2,058,942)
Net income (loss) from continuing operations		443,329		(3,187,476)
Income (loss) per share		0.00		(0.10)

Nine Months Ended
September 30,

2019 2018
Sales $ 20,690,014 $ 19,812,607
Cost of goods sold 15,542,194 14,202,405
Gross profit 5,147,820 5,610,202
Operating expenses 5,509,996 5,675,248
Loss from operations (362,176 ) (65,046 )
Net loss from continuing operations (3,581,832 )
(2,121,185 )
Loss per share (0.06 ) (0.08 )

21N

N ote 10 – Industry Segments

This summary presents the Company's segments, QCA, APF, Morris, Deluxe and ~~Morris~~Excel for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~

2019:

			Three Months Ended March 31,
			2020		2019

Revenue
	QCA	$	2,030,126	$	2,477,542
	APF		529,041		1,708,992
	Morris		3,254,927		2,870,797
	Deluxe		2,394,164		-
	Excel		627,338		-
	Unallocated and eliminations		-		68,658
		$	8,835,596	$	7,125,989

Gross profit
	QCA	$	505,782	$	658,394
	APF		(29,642)		700,200
	Morris		629,623		721,166
	Deluxe		514,195		-
	Excel		139,786		-
	Unallocated and eliminations		-		37,773
		$	1,759,744	$	2,117,533

Depreciation and amortization
	QCA	$	53,981	$	84,397
	APF		71,961		68,708
	Morris		151,264		91,859
	Deluxe		176,250		-
	Excel		30,806		-
	Unallocated and eliminations		-		8,333
		$	484,262	$	253,297

Interest Expenses
	QCA	$	120,445	$	180,582
	APF		79,944		-
	Morris		374,400		45,831
	Deluxe		257,202		-
	Excel		47,855		-
	Unallocated and eliminations		769,381		805,217
		$	1,649,227	$	1,031,630

Net income (loss)
	QCA	$	(185,690)	$	(130,442)
	APF		(365,115)		411,402
	Morris		320,412		(17,413)
	Deluxe		(79,306)		-
	Excel		(268,815)		-
	Unallocated and eliminations		828,902		(1,693,885)
		$	250,388	$	(1,430,338)

			As of		As of
			March 31,		December 31,
			2020		2019
Total Assets
	QCA	$	6,439,268	$	6,359,711
	APF		4,880,556		5,344,175
	Morris		7,989,351		8,771,165
	Deluxe		13,837,271		14,810,307
	Excel		5,904,911		-
	Unallocated and eliminations		345,629		516,240
		$	39,396,986	$	35,801,598

Goodwill
	QCA	$	1,963,761	$	1,963,761
	APF		440,100		440,100
	Morris		113,592		113,592
	Deluxe		-		-
	Excel		99,629		-
	Unallocated and eliminations		-		-
		$	2,617,082	$	2,517,453

Accounts receivable, net
	QCA	$	1,311,406	$	1,234,898
	APF		458,597		831,477
	Morris		2,579,153		3,488,340
	Deluxe		2,510,114		3,156,492
	Excel		1,864,964		-
	Unallocated and eliminations		-		20,358
		$	8,724,234	$	8,731,565

Three Months Ended
September 30,

Nine Months Ended
September 30,

2019 2018 2019 2018

Revenue
  QCA $ 2,252,997 $ 2,910,462 $ 7,056,674 $ 7,856,208
  APF 966,735 1,200,529 3,925,190 2,162,126
Morris 3,820,472 - 9,561,843 -
Unallocated and eliminations 47,978 231,212 146,307 551,698
   $ 7,088,182 $ 4,342,203 $ 20,690,014 $ 10,570,032

Gross profit
  QCA $ 711,053 $ 1,233,038 $ 2,083,729 $ 2,915,421
  APF 294,722 713,047 1,180,619 816,688
Morris 702,675 - 1,747,619 -
Unallocated and eliminations 68,409 276,205 135,853 359,833
   $ 1,776,859 $ 2,222,290 $ 5,147,820 $ 4,091,942

Income (loss) from operations
  QCA $ 111,832 $ 452,793 $ 179,707 $ 1,184,664
  APF 110,454 (256,068 ) 561,990 (404,148 )
Morris 423,083 - 507,162 -
Unallocated and eliminations (608,377 ) (361,527 ) (1,611,035 ) (943,609 )
   $ 36,992 $ (164,802 ) $ (362,176 ) $ (163,093 )

Depreciation and amortization
  QCA $ 84,398 $ 75,755 $ 253,192 $ 220,976
  APF 82,514 95,817 286,119 191,634
Morris 95,342 - 281,310 -
Unallocated and eliminations 8,333 52,965 24,999 278,133
   $ 270,587 $ 224,537 $ 845,620 $ 690,743

Interest Expenses
  QCA $ 180,014 $ 170,785 $ 538,252 $ 469,368
  APF 94,562 39,443 263,071 68,149
Morris 150,138 - 302,724 -
Unallocated and eliminations 274,130 490,886 1,632,921 1,105,045
   $ 698,844 $ 701,114 $ 2,736,968 $ 1,642,562

Net income (loss)
  QCA $ 9,736 $ 337,956 $ (156,877 ) $ 888,904
  APF 15,892 (295,511 ) 298,919 (472,297 )
Morris 272,945 - 209,063 -
Unallocated and eliminations 2,506,609 (1,865,155 ) (3,932,937 ) (2,809,067 )
   $ 2,805,182 $ (1,822,710 ) $ (3,581,832 ) $ (2,392,460 )

As of As of
September 30, December 31,
2019 2018
Total Assets
  QCA $ 13,152,517 $ 10,767,883
  APF 11,254,397 6,159,098
Morris 15,929,389 -
Unallocated and eliminations (14,063,370 ) 1,013,695
$ 26,272,933 $ 17,940,676

Goodwill
  QCA $ 1,963,761 $ 1,963,761
  APF 440,100 1,230,100
Morris 603,592 -
Unallocated and eliminations - -
$ 3,007,453 $ 3,193,861

Accounts receivable, net
  QCA $ 1,531,514 $ 1,649,701
  APF 1,003,589 958,153
Morris 2,066,789 -
Unallocated and eliminations 29,750 2,500
$ 4,631,642 $ 2,610,354

Note 11 – Derivative Liabilities and Fair Value Measurements

Derivative liabilities

The Company has issued convertible notes payable that were evaluated under the guidance in ASC 815-40, Derivatives and Hedging, and were determined to have characteristics of derivative liabilities. As a result of the characteristics of these notes, the conversion options relating to previously issued convertible debt and outstanding Class A common stock warrants were also required to be accounted for as derivative liabilities under ASC 815. Under this guidance, this derivative liability is marked-to-market at each reporting period with the non-cash gain or loss recorded in the period as a gain or loss on derivatives.

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 at ~~September 30, 2019 and~~ December 31, ~~2018:~~

September 30, December 31,
2019 2018

Risk free rate 2.03% to 2.51% 1.89 %
Volatility 231% - 321 % 200 %
Expected terms (years) 0.5 to 1.51 1.3 to 2.53
Dividend rate 0 % 0 %

2019:

		December 31,
		2019

Risk free rate		1.60%
Volatility		287%-298%
Expected terms (years)		0.5 to 1.26
Dividend rate		0%

Fair value measurements

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. 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. 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.

IIff 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~~the derivative liabilities as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~

Description

Fair Value
As of
September 30,
2019

Fair Value Measurements at
September 30, 2019
Using Fair Value Hierarchy

Level 1 Level 2 Level 3
Conversion feature on convertible notes $ 1,850,947 $ - $ - $ 1,850,947

Description

Fair Value
As of
December 31,
2018

Fair Value Measurements at
December 31, 2018
Using Fair Value Hierarchy

Level 1 Level 2 Level 3
Conversion feature on convertible notes $ 1,892,321 $ - $ - $ 1,892,321

2019. There were no derivative liabilities at March 31, 2020 as the convertible notes with variable conversion prices were repaid during the three months ended March 31, 2020.

		Fair Value		Fair Value Measurements at
		As of		March 31, 2020
Description		March 31, 2020		Using Fair Value Hierarchy
				Level 1		Level 2		Level 3
Conversion feature on convertible notes	$	-	$	-	$	-	$	-

		Fair Value		Fair Value Measurements at
		As of		December 31, 2019
Description		December 31, 2019		Using Fair Value Hierarchy
				Level 1		Level 2		Level 3
Conversion feature on convertible notes	$	2,298,609	$	-	$	-	$	2,298,609

The below table presents the change in the fair value of the derivative liabilities during the ~~nine~~three months ended ~~September 30, 2019:~~

Derivative liability balance, December 31, 2018 $ 1,892,321
Issuance of derivative liability during the period 103,000
Derivative liability resolution (833,743 )
Change in derivative liability during the period 689,369
Derivative liability balance, September 30, 2019 $ 1,850,947

March 31, 2020:

Derivative liability balance, December 31, 2019	$	2,298,609
Change in derivative liability during the period		(2,298,609)
Derivative liability balance, March 31, 2020	$	-

Note 12 – Discontinued Operations

In December 2018, the Company decided to shut down the operations of its VWES subsidiary. In February 2019, VWES filed for Chapter 7 bankruptcy.

VWES has been presented as discontinued operations in the accompanying consolidated financial statements.

The operating results for VWES have been presented in the accompanying consolidated statement of operations for the nine months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ as discontinued operations and are summarized below:

Nine Months Ended
September 30,

2019 2018
Revenue $ - $ 2,938,441
Cost of revenue -
2,489,273
Gross Profit - 449,168
Operating expenses 95,179 2,267,843
Loss from operations (95,179 )
(1,818,675 )
Other income (expenses) -
98,137
Net loss $ (95,179 ) $ (1,720,538 )

		Three Months Ended March 31,
		2020		2019
Revenue	$	-	$	-
Cost of revenue		-		-
Gross Profit		-		-
Operating expenses		-		95,179
Loss from operations		-		(95,179)
Other income (expenses)		-		-
Net loss	$	-	$	(95,179)

~~The assets and liabilities of the discontinued operations at September 30, 2019 and December 31, 2018 are summarized below:~~

September 30, December 31,
2019 2018

Current assets $ - $ 121,296
Property and equipment - 387,727
Total assets $ - $ 509,023

Current liabilities $ - $ 2,493,049
Notes payable - related party - 43,500
Notes payable - 215,898
Total liabilities $ - $ 2,752,447

As of March 31, 2019, VWES’ bankruptcy was completed and the Company removed all the assets and liabilities of VWES resulting in a gain on the disposition of discontinued operations of $2,515,028.

Note 13 – Subsequent Events

~~Subsequent to September 30, 2019,~~

In April and May 2020 the Company ~~agreed~~received five loans under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act totaling $3,761,866. The loans have terms of 24 months and accrue interest at 1% per annum. The Company expects some or all of these loans to ~~settle with convertible note holders and issued 4,400,000 shares of Class A common stock upon~~be forgiven as provided by in the ~~conversion of convertible debts (see below).~~ CARES Act.

In ~~addition,~~May 2020, the Company ~~entered into agreement~~amended three notes of $116,667 with ~~convertible note holders as follows:~~

~~Convertible note with total balance owing, including all interest and penalties~~the sellers of ~~$167,990.~~Morris totaling $350,000. The ~~Company and the noteholder agreed that note would be settled over a 13-week period beginning on August 12, 2019, with 13 weekly payments of $4,000 per week and a final lump-sum payment of $115,990.~~

Convertible note with total balance owing, including all interest and penalties of, $651,292. The Company and the noteholder entered into a settlement agreement, pursuant to which the parties agreed that note would be settled with a cash payment by the Company of $300,000, paid on November 8, 2019; a $350,000 fixed-price, one-year convertible note with an interest rate of 15%, convertible at a price per share of $0.15, The holdernotes were due January 1, 2020. Each of the ~~note~~new notes as of the date of amendment had ~~previously submitted a conversion notice on August 5, 2019, for 4,500,000 shares. The noteholder and the Company agreed to amend the conversion notice to 2,000,000 shares, which will be issued~~accrued interest of $2,703. This was added to the ~~noteholder as a good faith issuance.~~

~~Convertible notes with the first~~ note having an original balance of $337,500 and was settled for 12 monthly payments of $18,000 starting on December 27, 2019. The second note having an original balance of $220,000 and has been settled for 12 monthly payments of $17,000 starting on December 27, 2019. The note holder also issued a new Senior Secured Promissory Noteresulting in the principal amount of ~~$600,000, with~~each of the new notes equaling to $119,370. The amendment required an initial payment of $30,000 for each note, which was made on May 23, 2020, and 8 monthly installments of $13,882 through January 2021. The amended notes have an interest rate of 6%.

In May and June 2020 the Company amended the following ~~terms: term~~seller notes: The convertible note with Jeff Moss with a $798,800 balance as of ~~two years;~~May 4, 2020 was amended to extend the maturity date to May 4, 2027 at 5% interest with weekly payments of $2,605. The convertible note with Dwight Hargreaves with a ~~fixed conversion price~~623,464 balance as of ~~$0.15~~June 5, 2020 was amended to extend the maturity date to June 5, 2026 at 6% interest with weekly payments of $2,316. The convertible note with Andy Galbach with a balance of $301,500 due in 2021 was forgiven and ~~a 15% interest rate. The~~another note ~~holder had previously submitted a conversion notice seeking the issuance of 4,550,000 shares~~(one of the ~~Company’s Class A common stock in connection~~Secured APF Notes) was amended to increase the principal amount to $1,239,000 at 0% interest with ~~the note for $337,500. The note holder~~weekly payments of $2,644 and the ~~Company agreed~~balance to ~~amend the conversion notice to 2,400,000 shares which will~~ be ~~issued to the noteholder as a good faith issuance.~~

~~Convertible note with total balance owing, including all interest and penalties of $252,870. The Company and the noteholder agreed that note would be settled with a cash payment of $80,000~~ paid on November 12, 2019 and the issuance of two new notes in the principal amounts of $35,000 and $137,870 with the following terms: term of one year; a fixed conversion price of $0.15 cents and a 15% interest rate and the future issuance of 300,000 Class A Common Shares and 30,000 Class C Common Stock.

May 27, 2022.

~~Subsequent to September 30, 2019, the Company issued 10,000 shares of Class C common stock to a contractor for services rendered.~~

On November 6, 2019, the Company, completed its acquisition of Deluxe Sheet Metal, Inc., an Indiana corporation (“DSM”), DSM Holding, LLC, an Indiana limited liability company (“DHL”), Lonewolf Enterprises, LLC, an Indiana limited liability company (“LWE”), and Kevin Smith (the “Seller”). Pursuant to a securities purchase agreement (the “SPA”) among the Company, DSM, DHL, LWE, and the Seller, the Company acquired all of the outstanding capital stock of DSM, all of the outstanding LLC membership interests of DHL, and certain real estate and improvements thereto from LWE (the “LWE Real Estate”) for the consideration and on the terms and subject to the conditions set forth in the SPA.

~~The total purchase price was $8,400,000 (the “Purchase Price~~”), which is the sum of the cash paid at closing (the “Cash Consideration”), by wire transfer of immediately available funds to the accounts designated by Seller, and promissory notes (the “Promissory Note Consideration”), also delivered at closing.

The Cash Consideration consisted of $6,003,657, plus the addition of working capital, less any Long-Term Liability (as defined in the SPA) of DSM and DHL satisfied at Closing, as set forth in the SPA, but not less certain liabilities, as set forth in the SPA. Additionally, the Note Consideration consisted of a secured promissory note issued in favor of Seller only, by the Company, DSM, and DHL and shall consist of (i) a Secured Promissory Note to Kevin M. Smith in the amount of $1,900,000.00 (“Note 2”), and (ii) a Secured Promissory Note to Kevin M. Smith in the amount of $496,343.00 (“Note 1” and collectively, the “Notes”), in the form set forth in an exhibit to the SPA, secured by a subordinated security interest in the assets listed in a related security agreement (the “Security Agreement”) (discussed below). The parties to the SPA agreed that the Company has the right to change the senior lender from time to time while Notes remain unpaid so long as at all times, there is no breach or default or Event of Default under the Notes, the SPA, or the other transaction documents.

The Company, DSM, and DHL collectively issued the Notes to the Seller. The terms of the Notes are as follows: Note 1 is in the amount of $1,900,000 accrues at 4.25% interest, and Note 2 is in the amount of $496,343 and accrues interest at a rate of 8.75%, and each included a loan fee of $5,000. Note 2 has an amortization rate of 10 years with a balloon payment due 36 months. Note 1 is due January 25, 2020, and the obligations of the Company, DSM, and DHL under the Notes are secured by a subordinated security interest granted pursuant to the security agreement entered into by the parties.

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

There are statements in this 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 forward-looking statements are subject to risks and uncertainties that are beyond 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, and actual results could differ from those contemplated by these forward looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates 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 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 any forward-looking statements.

Overview and Highlights

Company Background

Alpine 4 Technologies Ltd. ("we", “our”, or the "Company") was incorporated under the laws of the State of Delaware on April 22, 2014. ~~Alpine 4 Technologies, Ltd (ALPP) is~~We are a publicly traded conglomerate that is acquiring businesses that fit into its disruptive DSF business model of Drivers, Stabilizers, and 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 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 fertile ground for competitive advantages. This unique perspective has culminated in the development of our ~~Blockchain enabled~~Blockchain-enabled Enterprise Business Operating System called SPECTRUMebos.

~~The~~

As of the date this Report was filed, the Company was a holding company that owned ~~five~~seven operating subsidiaries: ALTIA, LLC; Quality Circuit Assembly, Inc.; American Precision Fabricators, Inc.; Morris Sheet Metal, Corp; and JTD Spiral, Inc. ~~(As~~; Deluxe Sheet Metal, Inc,; and Excel Fabrication, LLC. As discussed in more detail below, we previously had an additional subsidiary, Venture West Energy Services (formerly Horizon Well Testing, LLC). However, as of December 31, 2018, we discontinued operations on this company. In the first quarter of 2020, we also created three additional subsidiaries to act as silo holding companies, organized by industries. These silo subsidiaries are A4 Construction Services, Inc. (“A4 Construction”)

, A4 Manufacturing, Inc. (“A4 Manufacturing”), and A4 Technologies, Inc. (“A4 Technologies”). All three are Delaware corporations. Each is authorized to issue 1,500 shares of common stock with a par value of $0.01 per share, and the Company is the sole shareholder of each of these three subsidiaries.

Business Strategy

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 be creative gave American businesses a competitive advantage over the rest of the world. IWe believe that Alpine 4 also exemplifies this spirit in our subsidiaries and that our greatest competitive advantage is our highly diverse business structure combined with a culture of collaboration.

It is our mandate to 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 ~~I will discuss~~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)

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 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 I stated earlier, our greatest competitive advantage is our highly diversified business structure combined with a collaborative business culture, that helps drive out competition in our markets by bringing; resources, planning, technology and capacity that our competitors simply don’t 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 their peers don’t have.

How We Do It:

Optimization vs. Asset Producing

The process to purchase a perspective company can be long and arduous. During our due diligence period, we are validating and determining three major points, not just the historical record of the company we are buying. Those three major points are what we call the “What is, What Should Be and What Will Be”.

•	“The What Is” (TWI). TWI is the defining point of where a company is holistically in a myriad of metrics; Sales, Finance, Ease of Operations, Ownership and Customer Relations to name a few. Subsequently, this is usually the point where most acquirers stop in their due diligence. We look to define this position not just from a number’s standpoint, but also how does this perspective map out to a larger picture of culture and business environment.

•	“The What Should Be” (TWSB). TWSB is the validation point of inflection where we use many data inputs to assess if TWI is out of the norm with competitors, and does that data show the potential for improvement.

•	“The What Will Be” (TWWB). TWWB is how we seek to identify the net results or what we call Kinetic Profit (KP) between the TWI and TWSB. The keywords are *Kinetic Profit*. KP is the profit waiting to be achieved by some form of action or as we call it, the Optimization Phase of acquiring a new company.

Optimization: During the Optimization Phase, we seek to root up employees with in-depth training on various topics. Usually, these training sessions include; Profit and Expense Control, Production Planning, Breakeven Analysis and Profit Engineering to name a few. But the end game is to guide these companies to: become net profitable with the new debt burden placed on them post-acquisition, mitigate the loss of sales due to acquisition attrition (we typically plan on 10% of our customers leaving simply due to old ownership not being involved in the company any longer), potential replacement of employees that no longer wish to be employed post-acquisition and other ancillary issues that may arise. The Optimization Phase usually takes 12-18 months post-acquisition and a company can fall back into Optimization if it is stagnant or regresses in its training.

Asset Producing: Asset Producing is the ideal point where we want our subsidiaries to be. To become Asset Producing, subsidiary management must have completed prescribed training formats, proven they understand the ~~KPI’s~~key performance indicators that run their respective departments and finally, the subsidiaries they manage must have posted a net profit for 3 consecutive months.

Going Concern

The accompanying financial statements have been prepared on a ~~going concern~~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 and had accumulated a deficit of ~~$29,774,346~~$31,495,140 as of ~~September 30, 2019.~~March 31, 2020 a large amount was from non-cash issuance of stock to executives in 2015-2017. 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 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. Our net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove successful. Our financial statements contain additional note disclosures describing the management's assessment of our ability to continue as a going concern.

The management of Alpine 4 understands basis for including a going concern in this filing. However, the management points out that over the past 46 years, Alpine 4 has consistently been able to operate under the current working capital environment and the going concern is nothing new or a recent event. It is also not something that is unique to Alpine 4 and various other companies carry a Going Concern on their financial statements. In order to mitigate the risk

related with the going concern uncertainty, the Company has a three-fold plan to resolve these risks. First, the acquisitions of QCA, APF, Morris, Deluxe and ~~Morris~~most recently Excel have allowed for an increased level of cash flow to the Company. Second, the Company is considering other potential acquisition targets that, like QCA, Morris, Deluxe and ~~Morris,~~Excel, should increase income and cash flow to the Company. Third, the Company is exploring ~~debt options~~equity alternatives that can supplement ~~on going~~ongoing cash needs.

Results of Operations

The following are the results of our operations for the three months ended ~~September 30, 2019,~~March 31, 2020, as compared to the three months ended ~~September 30, 2018.~~

Three Months
Ended
September 30,
2019

Three Months
Ended
September 30,
2018
$ Change

Revenue $ 7,088,182 $ 4,342,203 $ 2,745,979
Cost of revenue 5,311,323 2,119,913 3,191,410
Gross Profit 1,776,859 2,222,290 (445,431 )

Operating expenses:
General and administrative expenses 1,739,867 2,387,092 (647,225 )
Total operating expenses 1,739,867 2,387,092 (647,225 )
Income (loss) from operations 36,992 (164,802 ) 201,794

Other income (expenses)
Interest expense 698,844 701,114 (2,270 )
Change in value of derivative liabilities (3,389,116 ) 1,012,743 (4,401,859 )
Other (income) (77,918 ) (55,949 ) (21,969 )
Total other income (expenses) (2,768,190 ) 1,657,908 (4,426,098 )

Loss before income tax 2,805,182 (1,822,710 ) 4,627,892

Income tax expense - - -

Income (loss) from continuing operations 2,805,182 (1,822,710 ) 4,627,892

Discontinue operations - (1,051,916 ) 1,051,916

Net income (loss) $ 2,805,182 $ (2,874,626 ) $ 5,679,808

R~~evenue~~

March 31, 2019.

			Three Months Ended March 31, 2020		Three Months Ended March 31, 2019		$ Change

Revenue		$	8,835,596	$	7,125,989	$	1,709,607
Cost of revenue			7,075,852		5,008,456		2,067,396
Gross Profit			1,759,744		2,117,533		(357,789)

Operating expenses:
	General and administrative expenses		2,863,389		2,466,502		396,887
	Total operating expenses		2,863,389		2,466,502		396,887
Loss from operations			(1,103,645)		(348,969)		(754,676)

Other income (expenses)
	Interest expense		(1,649,227)		(1,031,630)		(617,597)
	Change in value of derivative liabilities		2,298,609		(107,871)		2,406,480
	Gain on extinguishment of debt		154,592		-		154,592
	Change in fair value of contingent consideration		500,000		-		500,000
	Other income		50,059		58,132		(8,073)
	Total other income (expenses)		1,354,033		(1,081,369)		2,435,402

Income (Loss) before income tax			250,388		(1,430,338)		1,680,726

Income tax expense			-		-		-

Income (Loss) from continuing operations			250,388		(1,430,338)		1,680,726

Discontinued operations			-		2,419,849		(2,419,849)

Net income		$	250,388	$	989,511	$	(739,123)

Revenue

Our revenues for the three months ended ~~September 30, 2019,~~March 31, 2020, increased by ~~$2,745,979~~$1,709,607 as compared to the three months ended ~~September 30, 2018.~~March 31, 2019. In ~~2019,~~2020, the increase in revenue related to ~~$3,820,472~~$2,394,164 for Deluxe (acquired in November 2019); $627,338 for Excel (acquired in February 2020); and $384,130 for Morris (acquired in January 2019), offset by a decrease of ~~$233,794~~$1,179,951 for APF; ~~$183,234~~$447,416 for QCA and $68,658 relating to the 6th Sense Auto and Brake Active

services of ~~ALTIA and $657,465 for QCA.~~ALTIA. The increase in revenue was driven by the ~~acquisition~~acquisitions of ~~Morris.~~Morris, Deluxe and Excel. We expect our revenue to continue to grow over the remainder of ~~the year.~~

2020.

Cost of revenue

Our cost of revenue for the three months ended ~~September 30, 2019,~~March 31, 2020, increased by ~~$3,191,410~~$2,067,396 as compared to the three months ended ~~September 30, 2018.~~March 31, 2019. In 2019, the increase in our cost of revenue related to ~~$3,117,797~~$1,879,969 for ~~Morris (acquired in January 2019); $184,531~~Deluxe; $487,552 for ~~APF~~Excel; and ~~$24,562 relating to the 6th Sense Auto and Brake Active services of ALTIA;~~$475,673 for Morris; offset by a decrease of ~~$135,480~~$450,109 for ~~QCA. The increase in cost of revenue is principally the result of the increase in revenues as described above. We expect our cost of revenue to increase over the next year as our revenue increases.~~

~~Operating expenses~~

Our operating expenses for the three months ended September 30, 2019, decreased by $647,225 as compared to the three months ended September 30, 2018. The decrease consisted primarily a decrease in general and administrative expenses at APF offset by additional general and administrative expenses associated with the operations of Morris which were acquired in January 2019.

~~Other income (expenses)~~

Other income (expenses) for the three months ended September 30, 2019, increased by $4,426,098 as compared to 2018. This increase was primarily due to the change in the value of the derivative liability.

D~~iscontinued operations~~

~~In December 2018, we decided to shut down the operations of our VWES subsidiary. In February 2019, VWES filed for Chapter 7 bankruptcy.~~

~~VWES has been presented as discontinued operations in the accompanying consolidated financial statements.~~

The operating results for VWES have been presented in the accompanying consolidated statement of operations for the three months ended September 30, 2019 and 2018 as discontinued operations and are summarized below:

Three Months Ended
September 30,

2019 2018
Revenue $ - $ 452,966
Cost of revenue - 369,222
Gross Profit - 83,744
Operating expenses - 1,169,913
Loss from operations - (1,086,169 )
Other income (expenses) - 34,253
Net loss $ - $ (1,051,916 )

As of September 30, 2019, VWES’ bankruptcy was completed and the Company removed all the assets and liabilities of VWES resulting in a gain on the disposition of discontinued operations of $2,515,028.

~~The following are the results of our operations for the nine months ended September 30, 2019, as compared to the nine months ended September 30, 2018.~~

Nine Months
Ended
September 30,
2019

Nine Months
Ended
September 30,
2018
$ Change

Revenue $ 20,690,014 $ 10,570,032 $ 10,119,982
Cost of revenue 15,542,194 6,478,090 9,064,104
Gross Profit 5,147,820 4,091,942 1,055,878

Operating expenses:
General and administrative expenses 5,509,996 4,255,035 1,254,961
Total operating expenses 5,509,996 4,255,035 1,254,961
Loss from operations (362,176 ) (163,093 ) (199,083 )

Other expenses
Interest expense 2,736,968 1,642,562 1,094,406
Change in value of derivative liabilities 689,369 766,718 (77,349 )
Gain on extinguishment of debt - (6,305 ) 6,305
Other (income) (206,681 ) (173,608 ) (33,073 )
Total other expenses 3,219,656 2,229,367 990,289

Loss before income tax (3,581,832 ) (2,392,460 ) (1,189,372 )

Income tax expense - - -

Loss from continuing operations (3,581,832 ) (2,392,460 ) (1,189,372 )

Discontinue operations 2,419,849 (1,720,538 ) 4,140,387

Net loss $ (1,161,983 ) $ (4,112,998 ) $ 2,951,015

R~~evenue~~

Our revenues for the nine months ended September 30, 2019, increased by $10,119,982 as compared to the nine months ended September 30, 2018. In 2019, the increase in revenue related to, $1,763,064 for APF (acquired in April 2018), and $9,561,843 for Morris (acquired in January 2019) offset by a decrease of $405,391 relating to the 6th Sense Auto and Brake Active services of ALTIA and $799,534 for QCA. The increase in revenue was driven by the acquisitions of APF and Morris. We expect our revenue to continue to grow over the remainder of the year.

~~Cost of revenue~~

Our cost of revenue for the nine months ended September 30, 2019, increased by $9,064,104 as compared to the nine months ended September 30, 2018. In 2019, the increase in our cost of revenue related to $32,158APF; $294,804 for QCA ~~$1,399,133 for APF (acquired in April 2018),~~ and ~~$7,814,224 for Morris (acquired in January 2019) offset by a decrease of $181,411~~$30,885 relating to the 6th Sense Auto and Brake Active services of ALTIA. The increase in cost of revenue among all the different segments was the result of the increase in revenues as described above. We expect our cost of revenue to increase over the next year as our revenue increases.

Operating expenses

Our operating expenses for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, increased by ~~$1,254,961~~$396,887 as compared to the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. The increase consisted primarily due to the cost of ~~an increase~~operating the additional operations offset by a reduction in expenses due to ~~general~~cross sharing of resources between corporate and ~~administrative expenses associated with the operations of APF and Morris which were acquired in April 2018 and January 2019, respectively.~~

our subsidiaries.

Other expenses

Other expenses for the ~~nine~~three months ended ~~September 30, 2019, increased~~March 31, 2020, decreased by ~~$990,289~~$2,435,402 as compared to ~~2018.~~the same period in 2019. This ~~increase~~decrease was primarily due to the ~~increase~~change in ~~interest expense due to the increase in outstanding debt in 2019 compared to 2018~~derivative liability and the ~~amortization~~change in fair value of ~~debt discounts.~~

contingent consideration.

Discontinued operations

In December 2018, we decided to shut down the operations of our VWES subsidiary. In February 2019, VWES filed for Chapter 7 bankruptcy.

VWES has been presented as discontinued operations in the accompanying consolidated financial statements.

The operating results for VWES have been presented in the accompanying consolidated statement of operations for the nine months ended September 30, 2019 and 2018 as discontinued operations and are summarized below:

Nine Months Ended
September 30,

2019 2018
Revenue $ - $ 2,938,441
Cost of revenue - 2,489,273
Gross Profit - 449,168
Operating expenses 95,179 2,267,843
Loss from operations (95,179 ) (1,818,675 )
Other income (expenses) - 98,137
Net loss $ (95,179 ) $ (1,720,538 )

As of ~~September 30,~~March 31, 2019, VWES’ bankruptcy was completed, and the Company removed all the assets and liabilities of VWES, resulting in a gain on the disposition of discontinued operations of $2,515,028.

Liquidity and Capital Resources

We have financed our operations since inception from 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 the selling shares of our common stock and or debt instruments.

Management expects to have sufficient working capital for continuing operations from either the sale of its products or through the raising of additional capital through private offerings of our securities. Additionally, the Company is monitoring additional businesses to acquire which management 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.

The Company also may elect to seek bank financing or to engage in debt financing through a placement agent. If the Company is unable to raise sufficient capital from operations or through sales of its securities or other means, we may need to delay implementation of our business plans.

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

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States, which require that we make certain assumptions and estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during each reporting period. On an ongoing basis, management evaluates its estimates, including those related to collection of receivables, impairment of goodwill, contingencies, calculation of derivative liabilities and income taxes. Management bases its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the circumstances. Actual results under circumstances and conditions different than those assumed could result in material differences from the estimated amounts in the financial statements.

For a summary of our critical accounting policies, refer to Note 2 of our unaudited consolidated financial statements included under Item 1 – Financial Statements in this Form 10-Q.

Item 3. Qualitative and Qualitative Disclosures About Market Risk.

As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item.

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, ~~September 30, 2019.~~March 31, 2020. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer.

D~~Disclosure~~isclosure 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, to allow timely decisions regarding required disclosure.

Based upon that evaluation, we have 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, many of which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) inadequate control activities and monitoring processes over financial reporting.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2019,~~March 31, 2020, that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Kevin Cannon et al. v. Alpine 4 Technologies Ltd., Jeff Hail, et al, Arizona Superior Court, Maricopa County, Cas No. CV2017-055699 . On October 4, 2017, Kevin Cannon and Michelle Hanby, individually and on behalf of It’s a Date LLC and Brake Plus NWA, Inc., filed a lawsuit in the Arizona Superior Court, Maricopa County, against the Company and several other defendants, including Jeff Hail, the Company’s Sr. Vice President. The claim against the Company alleged tortious interference of contract by the Company. The Company brought a motion to dismiss the Complaint for failure to state a claim on which relief could be granted. The Court permitted the plaintiffs to amend their complaint, which they did. The Company has filed another motion dismiss the Complaint for failure to state a claim on which relief could be granted. Following negotiations with the plaintiffs, the Company and the plaintiffs moved for dismissal of the Company. On January 28, 2019, the court dismissed all claims against the Company with prejudice.

None

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

During the quarter ended ~~September 30, 2019,~~March 31, 2020, the Company issued ~~32,956,827~~4,648,879 shares of its restricted Class A common stock for note ~~conversions and issued 200,000 shares of Class B common stock and 2,772,606 shares of Class C common stock to officer, directors and employees for services rendered.~~

conversions.

The shares of Class A ~~Class B~~ and Class CB common stock 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 3. Defaults Upon Senior Securities.

None

Item 5. Other Information

Not Applicable

~~Not Applicable~~

Item 6. Exhibits.

3.1	Certificate of Incorporation (previously filed with the Commission as an exhibit to the Company's Form 10 and incorporated herein by reference)

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 to the Company's Form 8-K on July 18, 2014, and incorporated herein by reference)

3.4	Certificate of Amendment to Certificate of Incorporation (previously filed with the Commission as an exhibit to the Company's Form 8-K on July 18, 2014, and incorporated herein by reference)

10.13	APF Securities Agreement (incorporated by reference to Alpine 4's Current Report on Form 8-K filed with the Commission on April 9, 2018)

10.14	Secured Promissory Notes (incorporated by reference to Alpine 4's Current Report on Form 8-K filed with the Commission on April 9, 2018)

10.15	Secured Convertible Notes (incorporated by reference to Alpine 4's Current Report on Form 8-K filed with the Commission on April 9, 2018)

10.16	Security Agreement (incorporated by reference to Alpine 4's Current Report on Form 8-K filed with the Commission on April 9, 2018)

10.17	Consulting Services Agreement (incorporated by reference to Alpine 4's Current Report on Form 8-K filed with the Commission on April 9, 2018)

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

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

101.INS*	XBRL Instance Document

101.SCH*	XBRL Taxonomy Extension Schema Document

101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*	XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF*	XBRL Taxonomy Extension Definition Linkbase Definition

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.

Dated: ~~November 19, 2019~~July 6, 2020

	By: /s/ Kent B. Wilson
	Kent B. Wilson
	Chief Executive Officer, Chief Financial Officer, President and Director (Principal Executive Officer, Principal Accounting Officer)

ALPINE 4 TECHNOLOGIES, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2019			2018
	(unaudited)
ASSETS

CURRENT ASSETS:
Cash	$	251,019		$	207,205
Accounts receivable		4,631,642			2,610,354
Inventory		3,107,885			2,175,795
Capitalized contract costs		64,234			64,234
Prepaid expenses and other current assets		1,117,719			222,200
Assets of discontinued operations		-			121,296
Total current assets		9,172,499			5,401,084

Property and equipment, net		11,693,599			7,990,556
Intangible asset, net		1,331,723			677,210
Right of use assets, net		721,004			-
Goodwill		3,007,453			3,193,861
Other non-current assets		346,655			290,238
Assets of discontinued operations		-			387,727

TOTAL ASSETS	$	26,272,933		$	17,940,676

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	3,777,733		$	3,102,970
Accrued expenses		2,846,355			1,254,853
Deferred revenue		-			25,287
Derivative liabilities		1,850,947			1,892,321
Deposits		12,509			12,509
Notes payable, current portion		6,629,858			3,585,603
Notes payable, related parties, current portion		401,820			192,000
Convertible notes payable, current portion, net of discount of $113,741 and $942,852		1,787,943			2,644,735
Financing lease obligation, current portion		234,682			105,458
Operating lease obligation, current portion		254,535			-
Acquisition contingency		500,000			-
Net liabilities of discontinued operations		-			2,752,447
Total current liabilities		18,296,382			15,568,183

Notes payable, net of current portion		5,521,502			4,517,441
Convertible notes payable, net of current portion		1,122,688			450,000
Financing lease obligations, net of current portion		11,455,105			8,295,176
Operating lease obligations, net of current portion		474,473			-
Deferred tax liability		608,304			608,304

TOTAL LIABILITIES		37,478,454			29,439,104

STOCKHOLDERS' DEFICIT:
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding at September 30, 2019 and December 31, 2018		-			-
Class A Common stock, $0.0001 par value, 100,000,000 shares authorized, 95,370,161 and 26,567,410 shares issued and outstanding at September 30, 2019 and December 31, 2018		9,537			2,657
Class B Common stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 and 5,000,000 shares issued and outstanding at September 30, 2019 and December 31, 2018		500			500
Class C Common stock, $0.0001 par value, 10,000,000 shares authorized, 9,870,200 shares issued and outstanding at September 30, 2019		987			-
Additional paid-in capital		18,557,801			17,018,509
Accumulated deficit		(29,774,346	)		(28,520,094	)
Total stockholders' deficit		(11,205,521	)		(11,498,428	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	26,272,933		$	17,940,676

ALPINE 4 TECHNOLOGIES, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	Three Months ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018

Revenue	$	7,088,182		$	4,342,203		$	20,690,014		$	10,570,032
Cost of revenue		5,311,323			2,119,913			15,542,194			6,478,090
Gross Profit		1,776,859			2,222,290			5,147,820			4,091,942

Operating expenses:
General and administrative expenses		1,739,867			2,387,092			5,509,996			4,255,035

Total operating expenses		1,739,867			2,387,092			5,509,996			4,255,035
Income (loss) from operations		36,992			(164,802	)		(362,176	)		(163,093	)

Other income (expenses)
Interest expense		(698,844	)		(701,114	)		(2,736,968	)		(1,642,562	)
Change in value of derivative liability		3,389,116			(1,012,743	)		(689,369	)		(766,718	)
Gain on extinguishment of debt		-			-			-			6,305
Other income		77,918			55,949			206,681			173,608
Total other income (expenses)		2,768,190			(1,657,908	)		(3,219,656	)		(2,229,367	)

Loss before income tax		2,805,182			(1,822,710	)		(3,581,832	)		(2,392,460	)

Income tax (benefit)		-			-			-			-

Income (loss) from continuing operations		2,805,182			(1,822,710	)		(3,581,832	)		(2,392,460	)

Discontinued operations:
Loss from operations of discontinued operations		-			(1,051,916	)		(95,179	)		(1,720,538	)
Gain on disposition of discontinued operations		-			-			2,515,028			-
Total discontinued operations		-			(1,051,916	)		2,419,849			(1,720,538	)

Net income (loss)	$	2,805,182		$	(2,874,626	)	$	(1,161,983	)	$	(4,112,998	)

Weighted average shares outstanding :
Basic		101,810,802			30,358,570			62,450,846			27,813,506
Diluted		237,269,687			30,358,570			62,450,846			27,813,506

Basic Income (loss) per share
Continuing operations	$	0.03		$	(0.06	)	$	(0.06	)	$	(0.09	)
Discontinued operations		-		$	(0.03	)		0.04		$	(0.06	)
	$	0.03			(0.09	)	$	(0.02	)		(0.15	)

Diluted income (loss) per share
Continuing operations	$	(0.00	)	$	(0.06	)	$	(0.06	)	$	(0.09	)
Discontinued operations		-		$	(0.03	)		0.04		$	(0.06	)
	$	(0.00	)		(0.09	)	$	(0.02	)		(0.15	)

ALPINE 4 TECHNOLOGIES, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(unaudited)

	Class A Common Stock				Class B Common Stock							Class C Common Stock				Additional Paid-in			Accumulated			Total Stockholders'
	Shares		Amount		Shares			Amount				Shares		Amount		Capital			Deficit			Deficit
Balance, December 31, 2018		26,567,410	$	2,657		5,000,000			$	500			-	$	-	$	17,018,509		$	(28,520,094	)	$	(11,498,428	)

Issuance of shares of common stock for convertible note payable and accrued interest		1,670,000		167													26,421						26,588
Derivative liability resolution																	10,993						10,993
Share-based compensation expense																	19,341						19,341
Net income for the three months																				989,511			989,511

Balance, March 31, 2019		28,237,410		2,824		5,000,000				500			-		-		17,075,264			(27,530,583	)		(10,451,995	)

Issuance of shares of common stock for convertible note payable and accrued interest		33,975,924		3,398													232,551						235,949
Derivative liability resolution																	332,703						332,703
Share-based compensation expense																	19,556						19,556
Net loss for the three months																				(4,956,676	)		(4,956,676	)

Balance, June 30, 2019		62,213,334		6,222		5,000,000				500			-		-		17,660,074			(32,487,259	)		(14,820,463	)

Issuance of shares of common stock for convertible note payable and accrued interest		32,956,827		3,295													258,004						261,299
Issuance of shares of common stock for dividend													7,097,594		710		91,559			(92,269	)		-
Conversion of Class B to Class A		200,000		20		(200,000	)			(20	)												-
Issuance of shares of common stock for services						200,000				20			2,772,606		277		38,347						38,644
Derivative liability resolution																	490,047						490,047
Share-based compensation expense																	19,770						19,770
Net loss for the three months																				2,805,182			2,805,182

Balance, September 30, 2019		95,370,161	$	9,537		5,000,000			$	500			9,870,200	$	987	$	18,557,801		$	(29,774,346	)	$	(11,205,521	)

Balance, December 31, 2017		23,222,087	$	2,322		1,600,000			$	160			-	$	-	$	16,573,632		$	(20,433,875	)	$	(3,857,761	)

Adoption of ASC 606																				(178,202	)		(178,202	)
Issuance of shares of common stock for convertible note payable and accrued interest		120,000		12													15,588						15,600
Issuance of common stock for modification of debt		100,000		10													14,990						15,000
Issuance of shares for debt discount		333,333		33													56,633						56,666
Reclassification of shares from mezzanine		379,403		38													(38	)					-
Derivative liability resolution																	125,759						125,759
Stock-based compensation expense																	15,840						15,840
Change in fair value of warrant modification																	4,310						4,310
Net loss for the three months																				(661,078	)		(661,078	)

Balance, March 31, 2018		24,154,823		2,415		1,600,000				160			-		-		16,806,714			(21,273,155	)		(4,463,866	)

Issuance of shares of common stock for convertible note payable and accrued interest		713,033		72													16,762						16,834
Derivative liability resolution																	(182,425	)					(182,425	)
Stock-based compensation expense																	17,555						17,555
Shares issued for employee compensation						3,400,000				340							176,460						176,800
Net loss for the three months																				(577,294	)		(577,294	)

Balance, June 30, 2018		24,867,856	$	2,487		5,000,000			$	500			-	$	-	$	16,835,066		$	(21,850,449	)	$	(5,012,396	)

Issuance of shares of common stock for convertible note payable and accrued interest		669,251		66													33,604						33,670
Derivative liability resolution																	58,018						58,018
Stock-based compensation expense																	18,914						18,914
Net loss for the three months																				(2,874,626	)		(2,874,626	)

Balance, September 30, 2018		25,537,107	$	2,553		5,000,000			$	500			-	$	-	$	16,945,602		$	(24,725,075	)	$	(7,776,420	)

Twelve Months Ending September 30,
2020	$	132,627
2021		132,627
2022		132,627
2023		99,028
2024		99,028
Thereafter		735,786
Total	$	1,331,723

	Finance			Operating
Twelve Months Ended September 30,	Leases			Leases
2020	$	1,206,080		$	346,998
2021		1,228,708			356,757
2022		1,248,696			142,116
2023		1,269,248			40,950
2024		1,251,104			-
Thereafter		11,843,097			-
Total		18,046,933			886,821
Less: current lease obligation		(234,682	)		(254,535	)
Less: imputed interest		(6,357,146	)		(157,813	)
Non-current capital leases obligations	$	11,455,105		$	474,473

	Classification on Balance Sheet	September 30, 2019
Assets
Operating lease assets	Operating lease right of use assets	$	721,004
Total lease assets		$	721,004

Liabilities
Current liabilities
Operating lease liability	Current operating lease liability	$	254,535
Noncurrent liabilities
Operating lease liability	Long-term operating lease liability		474,473
Total lease liability		$	729,008

Balance outstanding, December 31, 2018	$	3,094,735
Issuance of convertible notes payable for cash		103,000
Issuance of convertible notes payable for penalty interest		128,777
Repayment of notes		(787,700	)
Conversion of notes payable to common stock		(457,292	)
Discount from derivative liability		(103,000	)
Amortization of debt discounts		932,111
Balance outstanding, September 30, 2019	$	2,910,631

	Purchase Allocation
Accounts receivable	$	945,050
Inventory		675,074
Prepaid expenses and other current assets		250,040
Property and equipment		3,300,000
Customer list		790,000
Goodwill		440,100
Accounts payable		(1,234,328	)
Accrued expenses		(154,186	)
Line of credit		(165,000	)
Deferred tax liability		(470,000	)
	$	4,376,750

Description	Fair Value As of September 30, 2019		Fair Value Measurements at September 30, 2019 Using Fair Value Hierarchy
			Level 1		Level 2		Level 3
Conversion feature on convertible notes	$	1,850,947	$	-	$	-	$	1,850,947


Description	Fair Value As of December 31, 2018		Fair Value Measurements at December 31, 2018 Using Fair Value Hierarchy
			Level 1		Level 2		Level 3
Conversion feature on convertible notes	$	1,892,321	$	-	$	-	$	1,892,321

Derivative liability balance, December 31, 2018	$	1,892,321
Issuance of derivative liability during the period		103,000
Derivative liability resolution		(833,743	)
Change in derivative liability during the period		689,369
Derivative liability balance, September 30, 2019	$	1,850,947

	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018			$ Change

Revenue	$	7,088,182		$	4,342,203		$	2,745,979
Cost of revenue		5,311,323			2,119,913			3,191,410
Gross Profit		1,776,859			2,222,290			(445,431	)

Operating expenses:
General and administrative expenses		1,739,867			2,387,092			(647,225	)
Total operating expenses		1,739,867			2,387,092			(647,225	)
Income (loss) from operations		36,992			(164,802	)		201,794

Other income (expenses)
Interest expense		698,844			701,114			(2,270	)
Change in value of derivative liabilities		(3,389,116	)		1,012,743			(4,401,859	)
Other (income)		(77,918	)		(55,949	)		(21,969	)
Total other income (expenses)		(2,768,190	)		1,657,908			(4,426,098	)

Loss before income tax		2,805,182			(1,822,710	)		4,627,892

Income tax expense		-			-			-

Income (loss) from continuing operations		2,805,182			(1,822,710	)		4,627,892

Discontinue operations		-			(1,051,916	)		1,051,916

Net income (loss)	$	2,805,182		$	(2,874,626	)	$	5,679,808

	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018			$ Change

Revenue	$	20,690,014		$	10,570,032		$	10,119,982
Cost of revenue		15,542,194			6,478,090			9,064,104
Gross Profit		5,147,820			4,091,942			1,055,878

Operating expenses:
General and administrative expenses		5,509,996			4,255,035			1,254,961
Total operating expenses		5,509,996			4,255,035			1,254,961
Loss from operations		(362,176	)		(163,093	)		(199,083	)

Other expenses
Interest expense		2,736,968			1,642,562			1,094,406
Change in value of derivative liabilities		689,369			766,718			(77,349	)
Gain on extinguishment of debt		-			(6,305	)		6,305
Other (income)		(206,681	)		(173,608	)		(33,073	)
Total other expenses		3,219,656			2,229,367			990,289

Loss before income tax		(3,581,832	)		(2,392,460	)		(1,189,372	)

Income tax expense		-			-			-

Loss from continuing operations		(3,581,832	)		(2,392,460	)		(1,189,372	)

Discontinue operations		2,419,849			(1,720,538	)		4,140,387

Net loss	$	(1,161,983	)	$	(4,112,998	)	$	2,951,015