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As filed with the Securities and Exchange Commission on August 4, 2023
Registration No. 333-_____
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ALPINE 4 HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware366946-5482689
(State or other jurisdiction
of incorporation or organization)
(Primary Standard
Industrial Classification Code
Number)
(I.R.S. Employer Identification
Number)
2525 E Arizona Biltmore Circle Suite 237
Phoenix, AZ 85016
480-702-2431
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Kent Wilson
Alpine 4 Holdings, Inc.
2525 E Arizona Biltmore Circle Suite 237
Phoenix, AZ
85016
480-702-2431
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
Copies to:
C. Parkinson Lloyd, EsqMark E. Crone, Esq.
Kirton McConkie, P.C.David Aboudi, Esq.
50 East South Temple Street, Suite 400Cassi Olson, Esq.
Salt Lake City, UT 84111The Crone Law Group, P.C.
(801) 328-3600420 Lexington Avenue, Suite 2446
New York, NY 10170
(646) 861-7891
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine.



The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the Securities and Exchange Commission declares this registration statement effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUSSUBJECT TO COMPLETIONDATED August 4, 2023

Up to _______________ shares of Class A common stock
Common Warrants to Purchase Up to _____ Shares of Class A common stock
Pre-Funded Warrants to Purchase Up to _____ Shares of Class A common stock
Up to _______________ shares of Class A common stock Underlying the Common Warrants and Pre-Funded Warrants
And
Up to _______________ shares of Class A common stock underlying
Warrants to Be Offered by the Selling Stockholder
AlpineLogo.jpg
We are offering, on a “best efforts” basis, up to $_____ million in units (“Units”) of Alpine 4 Holdings, Inc. (the “Company”), at an assumed offering price of $_______ per Unit. Each Unit consists of one share of Class A common stock, $0.0001 par value per share and one common warrant (“Common Warrant”) to purchase up to ___ shares of Class A common stock. The shares of Class A common stock and Common Warrants are immediately separable and will be issued separately, but must be purchased together in this offering.
Each Common Warrant has an assumed exercise price of $_____ per share (representing 100% of the assumed public offering price per Unit to be sold in this offering) and will expire on the fifth anniversary of the original issuance date. The actual public offering price will be determined between us, A.G.P./Alliance Global Partners, our exclusive placement agent, (whom we refer to herein as “A.G.P.” or the “Placement Agent”) and the investors in the offering and may be at a discount to the current market price of our Common Stock. Therefore, the assumed public offering price used throughout this prospectus may not be indicative of the final offering price.
We are also offering pre-funded warrants (“Pre-Funded Warrants”) to purchase up to ____ shares of common stock to those purchasers whose purchase of shares of common stock in this offering would result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock immediately following the consummation of this offering, in lieu of shares of common stock that would result in beneficial ownership in excess of 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock. Each Pre-Funded Warrant is exercisable for ___ share of our common stock and has an exercise price of $____ per share. Each Pre-Funded Warrant is being offered together with the Common Warrants. The Pre-Funded Warrants and Common Warrants are immediately separable and will be issued separately in this offering, but must be purchased together in this offering. For each Pre-Funded Warrant that we sell, the number of shares of common stock we are offering will be reduced on a one-for-one basis.
Pursuant to this prospectus, we are also offering the shares of common stock issuable upon the exercise of Pre-Funded Warrants and Common Warrants offered hereby. These securities are being sold in this offering to certain purchasers under a securities purchase agreement dated ______, 2023 between us and the purchasers.
The public offering price for our securities in this offering will be determined at the time of pricing and may be at a discount to the then-current market price. The shares issuable upon exercise of the Pre-Funded Warrants or Common Warrants will be issued upon the exercise thereof. Because there is no minimum number of securities or minimum aggregate amount of proceeds for this offering to close, we may sell fewer than all of the securities offered hereby, and investors in this offering will not receive a refund in
    



the event that we do not sell an amount of securities sufficient to pursue the business goals outlined in this prospectus. Because there is no escrow account and there is no minimum offering amount, investors could be in a position where they have invested in our company, but we are unable to fulfill our objectives due to a lack of interest in this offering. Also, any proceeds from the sale of securities offered by us will be available for our immediate use, despite uncertainty about whether we would be able to use such funds to effectively implement our business plan. The offering of the shares of our Class A common stock, Pre-Funded Warrants and Common Warrants will terminate no later than _______, 2023; however, the shares of our Class A common stock underlying the Pre-Funded Warrants and the Common Warrants will be offered on a continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”).
Additionally, this prospectus relates to the resale of up to [___] shares of our Class A common stock held by certain stockholders, as well as up to [___] shares of Class A common stock issuable upon exercise of several warrants to purchase shares of Class A common stock held by the stockholders. The shares were originally issued by us on November 26, 2021, in a registered direct offering and on July 13, 2022, in a private offering. The holders of the shares of Class A common stock, as described above, are each referred to herein as a “Selling Stockholder” and collectively as the “Selling Stockholders.”
The Selling Stockholders, or their respective transferees, pledgees, donees or other successors-in-interest, may sell the Common Stock through public or private transactions at prevailing market prices, at prices related to the prevailing market prices or at privately negotiated prices. The Selling Stockholders may sell any, all or none of the securities offered by this prospectus, and we do not know when or in what amount the Selling Stockholders may sell their shares of Common Stock hereunder following the effective date of this registration statement. We provide more information about how a Selling Stockholder may sell its shares of Common Stock in the section titled “Plan of Distribution” on page 82.
Our shares of Class A common stock are listed on The Nasdaq Capital Market (“Nasdaq”) under the symbol “ALPP”. On August __, 2023, the closing price of our Class A common stock was $___ per share. There is no established public trading market for the Common Warrants or Pre-Funded Warrants, and we do not expect a market to develop. Without an active trading market, the liquidity of the Common Warrants and Pre-Funded Warrants will be limited. In addition, we do not intend to list the Common Warrants or Pre-Funded Warrants on the Nasdaq Capital Market, any other national securities exchange or any other trading system.
We are an emerging growth company as that term is defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, have elected to take advantage of certain reduced public company reporting requirements for this prospectus and future filings.
The securities offered in this prospectus involve a high degree of risk. Before deciding whether to invest in our securities, you should carefully consider the risks and uncertainties under the heading “Risk Factors” beginning on page 7 of this prospectus.
Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
Per Share and Common WarrantPer Pre-Funded Warrant and Accompanying Common WarrantTotal
Public offering price$$$
Placement Agent Fees(1)
$$$
Proceeds to us, before expenses(2)
$$$
__________________
(1)Does not include certain expenses of the placement agent. See “Plan of Distribution” beginning on page 76 of this prospectus for additional information regarding compensation to be received by the placement agent.
(2)The amount of proceeds, before expenses, to us does not give effect to any exercise of the Pre-funded Warrants or Common Warrants being issued in this offering.
Delivery of the shares of our common stock, Pre-funded Warrants and Common Warrants is expected to be made on or about _____, 2023.
Sole Placement Agent
A.G.P.
The date of this prospectus is ___, 2023.
    



TABLE OF CONTENTS
Page
Please read this prospectus carefully. It describes our business, our financial condition and our results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision. You should rely only on the information contained in this prospectus. We and the Placement Agent have not authorized anyone to provide you with any information or to make any representations about us, the securities being offered pursuant to this prospectus or any other matter discussed in this prospectus, other than the information and representations contained in this prospectus. If any other information or representation is given or made, such information or representation may not be relied upon as having been authorized by us or the Placement Agent.
The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Neither the delivery of this prospectus nor any distribution of securities in accordance with this prospectus shall, under any circumstances, imply that there has been no change in our affairs since the date of this prospectus. This prospectus will be updated and made available for delivery to the extent required by the federal securities laws.
We further note that the representations, warranties and covenants made by us in any document that is filed as an exhibit to the registration statement of which this prospectus is a part were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.
i


This prospectus includes estimates, statistics and other industry data that we obtained from industry publications, research, surveys and studies conducted by third parties and publicly available information. Such data involves a number of assumptions and limitations and contains projections and estimates of the future performance of the industries in which we operate that are subject to a high degree of uncertainty. This prospectus also includes data based on our own internal estimates. We caution you not to give undue weight to such projections, assumptions and estimates.
This prospectus contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the or symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent possible under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by any other companies.
To the extent there is a conflict between the information contained in this prospectus, on the one hand, and the information contained in any document incorporated by reference filed with the U.S. Securities and Exchange Commission (the “SEC”) before the date of this prospectus, on the other hand, you should rely on the information in this prospectus. If any statement in a document incorporated by reference is inconsistent with a statement in another document incorporated by reference having a later date, the statement in the document having the later date modifies or supersedes the earlier statement.
ii


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
history of operating losses, our ability to develop and implement our business strategies and grow our business:
our ability to execute our strategy and business plan regarding growth, acquisitions, and focusing on our strategy of Drivers, Stabilizers, and Facilitators;
the success, progress, timing and costs of our efforts to evaluate or consummate various strategic acquisitions, collaborations, and other alternatives if in the best interests of our stockholders;
our ability to timely source adequate supply of our development products from third-party manufacturers on which we depend;
the potential, if any, for future development of any of our present or future products;
our ability to identify and develop additional uses for our products;
our ability to attain market exclusivity and/or to protect our intellectual property and to operate our business without infringing on the intellectual property rights of others;
the ability of our Board of Directors to influence control over all matters put to a vote of our stockholders, including elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction; and
the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing.
In some cases, you can identify these statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expects,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes. These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this prospectus and are subject to risks and uncertainties. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. In particular, forward-looking statements include, but are not limited to, any statements that are not statements of current or historical facts, such as statements relating to our expectations for the development, manufacturing, regulatory approval, and commercialization of our products and services, the accuracy of our estimates regarding expenses, future revenues and capital requirements, our ability to execute our plans and the timing and costs of these development programs, and estimates of the sufficiency of our existing capital resources combined with future anticipated cash flows to finance our operating requirements.
Any forward-looking statements in this prospectus reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. All forward-looking statements included herein speak only as of the date of this prospectus. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements above. Except as required by law, we expressly disclaim any obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
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ABOUT THIS PROSPECTUS
The registration statement of which this prospectus forms a part that we have filed with the Securities and Exchange Commission, or SEC, includes exhibits that provide more detail of the matters discussed in this prospectus. You should read this prospectus and the related exhibits filed with the SEC, together with the additional information described under the heading “Where You Can Find More Information” before making your investment decision.
You should rely only on the information provided in this prospectus or in a prospectus supplement or any free writing prospectuses or amendments thereto. Neither we, nor the Selling Stockholders, have authorized anyone else to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should assume that the information in this prospectus is accurate only as of the date hereof. Our business, financial condition, results of operations and prospects may have changed since that date.
Neither we, the Placement Agent, nor the Selling Stockholders are offering to sell or seeking offers to purchase these securities in any jurisdiction where the offer or sale is not permitted. We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities as to distribution of the prospectus outside of the United States.
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PROSPECTUS SUMMARY
The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in our common stock. You should read the entire prospectus carefully, including the "Risk Factors" beginning on page 7, and our financial statements and the notes to the financial statements included elsewhere in this prospectus. As used throughout this prospectus, the terms "Alpine 4," "Company," "we," "us," or "our" refer to Alpine 4 Holdings, Inc.
General
Company Background
Alpine 4 Holdings, Inc. was incorporated under the laws of the State of Delaware on April 22, 2014. We are a publicly traded conglomerate that is acquiring businesses that fit into our disruptive business model of Drivers, Stabilizers, and Facilitators (“DSF”). 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.
As of the date of this prospectus, the Company is a holding company that owns twelve operating subsidiaries:
A4 Corporate Services, LLC;
Quality Circuit Assembly, Inc.;
Morris Sheet Metal, Corp;
JTD Spiral, Inc.;
Excel Construction Services, LLC;
Vayu (US), Inc.;
Thermal Dynamics International, Inc.;
Alternative Laboratories, LLC.;
Identified Technologies Corp.;
Elecjet Corp.;
DTI Services LLC (doing business as RCA Commercial); and
Global Autonomous Corp.
Who We Are:
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. We believe that Alpine 4 also exemplifies this spirit through 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 DSF acquisition strategy (Drivers,
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Stabilizer, Facilitator). Our DSF business model (which is discussed further 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 the ability to access significant market opportunities. 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.
Our DSF Strategy is discussed in more detail below in the section entitled “Business.”
Recent Developments
On May 12, 2023, a Certificate of Amendment was filed to effect a one-for-eight (1-for-8) reverse split (the “Reverse Split”) of the shares of the Company’s the Class A, Class B, and Class C common stock, and to decrease the authorized number of shares of Class A common stock from 295,000,000 shares to 200,000,000 shares (the “Class A Common Stock Decrease”). The Reverse Split and the Class A Common Stock Decrease became effective on May 12, 2023. As a result of the Reverse Split, every eight shares of the Company’s issued and outstanding Class A common stock automatically converted into one share of Class A common stock, without any change in the par value per share, and began trading on a post-split basis under the Company’s existing trading symbol, “ALPP,” when the market opened on May 15, 2023. Additionally, every eight shares of the Company’s issued and outstanding Class B common stock automatically converted into one share of Class B common stock, without any change in the par value per share, and every eight shares of the Company’s issued and outstanding Class C common stock automatically converted into one share of Class C common stock, without any change in the par value per share. The Reverse Split affected all holders of Class A, Class B, and Class C common stock uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares. A total of 180,037,350 shares of Class A common stock were issued and outstanding immediately prior to the Reverse Split, and approximately 22,504,669 shares of common stock were issued and outstanding immediately after the Reverse Split. No fractional shares were outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock was automatically entitled to receive an additional fraction of a share of common stock to round up to the next whole share. In addition, effective as of the same time as the Reverse Split, proportionate adjustments were made to all then-outstanding options and warrants with respect to the number of shares of Class A common stock subject to such options or warrants and the exercise prices thereof. The impact of this change in capital structure has been retrospectively applied to all periods presented herein except for the amounts presented within our 2022 Annual Report in the December 31, 2022 and 2021 financial statements that are included herein. Additionally, all share totals in this prospectus and the Registration Statement of which it is a part are given as post-Reverse Split figures.
Summary of Risk Factors
We face numerous risks that could materially affect our business, results of operations or financial condition. The most significant of these risks include the following:
The global supply chain is an issue for many companies as well as us. These supply chain constraints affected the Company in 2022 and may affect our ability to deliver our products on time as we continue conducting business.
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We are an "emerging growth company," and the reduced disclosure requirements applicable to "emerging growth companies" could make our Class A common stock less attractive to investors.
Growth and development of operations will depend on the acceptance of our proposed businesses. If our products are not deemed desirable and suitable for purchase and we cannot establish customer bases within our different business segments, we may not be able to generate future revenues, which would result in a failure of the business and a loss of the value of your investment.
If demand for our products slow, then our business would be materially affected, which could result in the loss of your entire investment.
Our revenue growth rate depends primarily on our ability to satisfy relevant channels and end-customer demands, identify suppliers of our necessary ingredients and to coordinate those suppliers, all subject to many unpredictable factors.
If securities or industry analysts do not publish or cease publishing research or reports or publish misleading, inaccurate or unfavorable research about us, our business or our market, our stock price and trading volume could decline.
Our stockholders may have difficulty in reselling their shares due to the limited public market or state Blue Sky laws.
The ongoing COVID-19 pandemic has caused severe disruptions in the U.S. and global economies, which has impacted the business, activities, and operations of our customers, as well as our business and operations. Additionally, through 2023, the U.S. and other economies have been impacted by supply chain disruptions, labor shortages and high inflation, all of which may have a negative impact on our business and operations.
Our existing debt levels may adversely affect our financial condition or operational flexibility and prevent us from fulfilling our obligations under our outstanding indebtedness.
Growth and development of operations will depend on the growth in our acquisition model and from organic growth from our subsidiaries’ businesses. If we cannot find desirable acquisition candidates, we may not be able to generate growth with future revenues.
For further discussion of these and other risks, see “Risk Factors,” beginning on page 7.
Implications of being an emerging growth company
We qualify as an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
inclusion of only two years, as compared to three years, of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”);
an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board (the “PCAOB”) requiring mandatory audit firm rotation;
reduced disclosure about executive compensation arrangements; and
an exemption from the requirement to seek non-binding advisory votes on executive compensation or golden parachute arrangements.
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We may take advantage of these provisions until we are no longer an emerging growth company. We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior December 31st, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
We have taken advantage of the reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different from the information you receive from other public companies that are not emerging growth companies.
The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.
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Summary of the Offering
The Offering
IssuerAlpine 4 Holdings, Inc., a Delaware corporation
Class A common stock outstanding prior to this offering.
24,224,657 shares of Class A common stock as of August 4, 2023.
Securities Offered by the Company:Up to [   ] shares of Class A common stock, Common Warrants to purchase up to [    ] shares of our Class A common stock, and Pre-Funded Warrants to purchase up to [     ] shares of Class A common stock. The shares of Class A common stock or Pre-Funded Warrants, respectively and Common Warrants are immediately separable and will be issued separately in this offering, but must initially be purchased together in this offering. Each Common Warrant has an exercise price of $[     ] per share and will expire five years from the date of issuance. The public offering price per share and accompanying Common Warrant is $[     ], and the public offering price per Pre-Funded Warrant is $[    ]. We are also registering the shares of our Class A common stock issuable upon exercise of the Common Warrants and Pre-Funded Warrants.
Pre-Funded WarrantsWe are also offering to those purchasers whose purchase of Class A common stock in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding Class A common stock immediately following the closing of this offering, in lieu of purchasing Class A common stock, Pre-Funded Warrants to purchase up to [    ] shares of our Class A common stock. Each Pre-Funded Warrant is exercisable for one share of our Class A common stock. The exercise price of each Pre-Funded Warrant is $0.0001 per share. The Pre-Funded Warrants are exercisable immediately and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.
Class A common stock offered by Selling Stockholders:___________ shares of Class A common stock, and ___________ shares of Class A common stock underlying the Selling Stockholders’ Warrants.
Class A common stock to be outstanding after this offering(1)
______________ shares of Class A common stock (assuming the exercise of all of the Warrants which make up the Units, as well as the Selling Stockholder Warrants)
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Use of proceedsWe estimate the net proceeds from the offering of the Units will be approximately $_____ million, or approximately $_____ million if the underwriters exercise their option to purchase up to _________ additional shares of Class A common stock from us in full, after deducting the underwriting fees and estimated offering expenses payable by us, assuming a public offering price of $_____ per share of Class A common stock, which was the last reported sale price of our common stock on the Nasdaq Capital Market on August ___, 2023. We may receive proceeds upon the exercise of the Warrants which make up the Units, as well as upon the exercise of the Selling Stockholder Warrants (to the extent the registration statement of which this prospectus is a part is then effective and, if applicable, the cashless exercise provision is not utilized by the holder). Any proceeds will be used for general corporate and working capital or for other purposes that the Board of Directors, in their good faith, deems to be in the best interest of the Company. No assurances can be given that any Warrants will be exercised. See Use of Proceeds.
We will not receive any proceeds from the sale of the shares of Class A common stock by the Selling Stockholders.
Nasdaq Symbol and TradingShares of our Class A common stock are currently listed on The Nasdaq Capital Market under the symbol ALPP.
Risk Factors
See Risk Factors beginning on page 7 and the other information in this prospectus for a discussion of the factors you should consider carefully before you decide to invest in our securities.
The number of shares of our Class A common stock outstanding upon completion of this offering is based on 24,224,657 shares of our Class A common stock outstanding as of August 4, 2023, and assumes
The number of shares of our common stock outstanding immediately after this offering excludes:
_______________ shares of Class A common stock issuable upon exercise of stock options, at a weighted average exercise price of $______ per share;
_______________ shares of Class A common stock issuable upon exercise of our outstanding warrants, at an exercise price of $_________ per share;
_______________ shares of Class A common stock issuable upon exercise of the placement agent warrants issued to Alliance Global Partners/A.G.P in connection prior public offerings, at exercise prices of $___________ per share; and
_______________ shares of Class A common stock reserved for future issuance under the Alpine 4 Holdings, Inc. 2021 Equity Incentive Plan.
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RISK FACTORS
Investing in our securities involves a high degree of risk and uncertainty. You should consider carefully the risks and uncertainties described below, and incorporated by reference herein, together with all of the other information in, or incorporated by reference in, this prospectus, including our financial statements and related notes incorporated by reference herein, before making an investment decision. If any of these risks occur, our business, financial condition, results of operations, and prospects could be materially and adversely affected. In that event, the trading price of our common stock could decline and you could lose part or all of your investment.
Risks Associated with Our Business and Operations
We are an "emerging growth company," and the reduced disclosure requirements applicable to "emerging growth companies" could make our common stock less attractive to investors.
We are an "emerging growth company," as defined in the JOBS Act. For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding advisory "say-on-pay" votes on executive compensation and shareholder advisory votes on golden parachute compensation. We will remain an "emerging growth company" until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more; (ii) the last date of the fiscal year following the fifth anniversary of the date of the first sale of common stock under the Company's first filed registration statement; (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; and (iv) the date on which we are deemed to be a "large accelerated filer" under the Exchange Act. We will be deemed a large accelerated filer on the first day of the fiscal year after the market value of our common equity held by non-affiliates exceeds $700 million, measured on October 31.
We cannot predict if investors will find our common stock less attractive to the extent we rely on the exemptions available to emerging growth companies. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
However, we are choosing to "opt out" of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
Significant time and management resources are required to ensure compliance with public company reporting and other obligations. Taking steps to comply with these requirements will increase our costs and require additional management resources, and does not ensure that we will be able to satisfy them.
We are a public reporting company. As a public company, we are required to comply with applicable provisions of the Sarbanes-Oxley Act of 2002, as well as other federal securities laws, and rules and regulations promulgated by the SEC and the various exchanges and trading facilities where our Class A common stock may trade, which result in significant legal, accounting, administrative and other costs and expenses. These rules and requirements impose certain corporate governance requirements relating to director independence, distributing annual and interim reports, stockholder meetings, approvals and voting, soliciting proxies, conflicts of interest, and codes of conduct, depending on where our shares trade. Our management and other personnel will need to devote a substantial amount of time to ensure that we comply with all applicable requirements.
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As we review our internal controls and procedures, we may determine that they are ineffective or have material weaknesses, which could impact the market's acceptance of our filings and financial statements.
In connection with the preparation of the Company’s 2022 Annual Report, we conducted a review of our internal control over financial reporting for the purpose of providing the management report required by these rules. During the course of our review and testing, we have identified deficiencies and have been unable to remediate them before we were required to provide the required reports. Furthermore, because we have material weaknesses in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. Even if we are able to remediate the material weaknesses, we may not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting, which could harm our operating results, cause investors to lose confidence in our reported financial information and cause the trading price of our stock to fall. In addition, as a public company we are required to file in a timely manner accurate quarterly and annual reports with the SEC under the Securities Exchange Act of 1934 (the "Exchange Act"), as amended. Any failure to report our financial results on an accurate and timely basis could result in sanctions, lawsuits, delisting of our shares from the market or trading facility where our shares may trade, or other adverse consequences that would materially harm our business.
Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly.
Our executive officers have limited experience being officers of a public company. It may be time consuming, difficult and costly for us to continue to develop, implement, and update the internal controls and reporting procedures required by Sarbanes-Oxley. We may need to hire additional financial reporting, internal controls and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with Sarbanes-Oxley's internal controls requirements, we may not be able to obtain the independent accountant certifications that Sarbanes-Oxley Act requires publicly traded companies to obtain.
We have a history of losses, and we expect losses to continue.
We have had operating losses since our inception. We expect our operating losses to continue as we continue to expend substantial resources to complete commercialization of our products, obtain regulatory clearances or approvals; build our marketing, sales, manufacturing and finance capabilities, and conduct further research and development. The further development and commercialization of our products will require substantial development, regulatory, sales and marketing, manufacturing and other expenditures. We have only generated revenues from product sales and services. As of March 31, 2023 and December 31, 2022, our accumulated deficit was approximately $77.5 million and $71.7 million, respectively.
Growth and development of operations will depend on the growth of our acquisition model as well as from organic growth from our subsidiaries’ businesses. If we cannot find desirable acquisition candidates, we may not be able to generate growth with future revenues.
We expect to continue our strategy of acquiring businesses, which management believes will result in growth in projected annualized revenue by the end of 2023. However, there is no guarantee that we will be successful in realizing future revenue growth from our acquisition model. As such, we are highly dependent on suitable candidates to acquire, which supply of such candidates cannot be guaranteed and is driven from the market for mergers and acquisitions. If we are unable to locate or identify suitable acquisition candidates, or to enter into transactions with such candidates, or if we are unable to integrate the acquired businesses, we may not be able to grow our revenues to the extent anticipated, or at all.
We may make acquisitions which could divert the attention of management and which may not be integrated successfully into our existing business.
We may pursue acquisitions to increase our market penetration, enter new geographic markets and expand the scope of services we provide. We cannot guarantee that future acquisitions will be completed on acceptable terms or that we will be able to integrate successfully the operations of any acquired business into our existing business. The acquisitions could be of significant size and involve operations in multiple jurisdictions. The acquisition and
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integration of another business would divert management attention from other business activities. This diversion, together with other difficulties we may incur in integrating an acquired business, could have a material adverse effect on our business, financial condition and results of operations. In addition, we may borrow money or issue capital stock to finance acquisitions. Such borrowings might not be available on terms as favorable to us as our current borrowing terms and may increase our leverage, and the issuance of capital stock could dilute the interests of our stockholders.
As we acquire companies or technologies in the future, they could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our operating results and the value of your investment.
As part of our business strategy, we regularly evaluate investments in, or acquisitions of, complementary businesses, joint ventures, services and technologies, and we expect that periodically we will continue to make such investments and acquisitions in the future. Acquisitions and investments involve numerous risks, including:
the potential failure to achieve the expected benefits of the combination or acquisition;
difficulties in and the cost of integrating operations, technologies, services and personnel;
diversion of financial and managerial resources from existing operations;
risk of entering new markets in which we have little or no experience;
potential write-offs of acquired assets or investments;
potential loss of key employees;
inability to generate sufficient revenue to offset acquisition or investment costs;
the inability to maintain relationships with customers and partners of the acquired business;
the difficulty of incorporating acquired technology and rights into our products and services and of maintaining quality standards consistent with our established brand;
potential unknown liabilities associated with the acquired businesses;
unanticipated expenses related to acquired technology and its integration into existing technology;
negative impact to our results of operations because of the depreciation and amortization of amounts related to acquired intangible assets, fixed assets and deferred compensation, and the loss of acquired deferred revenue;
the need to implement controls, procedures and policies appropriate for a public company at companies that prior to the acquisition lacked such controls, procedures and policies; and
challenges caused by distance, language and cultural differences.
In addition, if we finance acquisitions by issuing additional convertible debt or equity securities, our existing stockholders may be diluted which could affect the market price of our stock. Further, if we fail to properly evaluate and execute acquisitions or investments, our business and prospects may be seriously harmed, and the value of your investment may decline.
We place significant decision-making powers with our subsidiaries’ management, which presents certain risks.
We believe that our practice of placing significant decision-making powers with local management is important to our successful growth and allows us to be responsive to opportunities and to customers’ needs. However, this practice presents certain risks, including the risk that we may be slower or less effective in our attempts to identify or react to problems affecting an important business than we would under a more centralized structure, or that we would be slower to identify a misalignment between a subsidiary’s and our overall business strategy. Further, if a
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subsidiary location fails to follow our compliance policies, we could be made party to a contract, arrangement or situation that requires the assumption of large liabilities or has less advantageous terms than is typically found in the market.
We have limited management resources and will be dependent on key executives. The loss of the services of the current officers and directors could severely impact our business operations and future development, which could result in a loss of revenues and adversely impact the business.
We rely on a small number of key individuals, which the Company has increased during 2022, to implement its business and operations and, in particular, the professional expertise and services of Kent B. Wilson, our President, Chief Executive Officer, and Secretary, Jeff Hail, our Chief Operating Officer, and Christopher Meinerz, our Chief Financial Officer. Mr. Wilson serves full time in his capacities with Alpine 4 to work to develop and grow the Company. Nevertheless, we may not have sufficient managerial resources to successfully manage the increased business activity envisioned by our business strategy. In addition, our future success depends in large part on the continued service of Mr. Wilson and the executive team. If Mr. Wilson or any member of the executive team chooses not to serve as an officer or if Mr. Wilson or any member of the executive team is unable to perform his or her duties, this could have an adverse effect on the Company’s business operations, financial condition and operating results, especially if we are unable to replace Mr. Wilson or Mr. Hail with other individuals qualified to develop and market our business. The loss of their services could result in a loss of revenues, which could result in a reduction of the value of any ownership of our shares.
Competition that we face is varied and strong.
Our subsidiaries’ products and industries as a whole are subject to intense competition. There is no guarantee that we can sustain our market position or expand our business.
We compete with a number of entities in providing products to our customers. Such competitors include a variety of large nationwide corporations, including but not limited to public entities and companies that have established loyal customer bases.
Many of our current and potential competitors are well established and have significantly greater financial and operational resources than we do, as well as better name recognition. As a result, these competitors may have greater credibility with both existing and potential customers. They also may be able to offer more competitively priced products and services and more aggressively promote and sell their products. Our competitors may also be able to engage in discounted products or a more aggressive sale structure than we will be able to, which could adversely affect sales, cause us to decrease our prices to remain competitive, or otherwise reduce the overall gross profit earned on our products.
Our success in business and operations will depend on general economic conditions.
The success of Alpine 4 and its subsidiaries depends, to a large extent, on certain economic factors that are beyond our control. Factors such as general economic conditions, levels of unemployment, interest rates, tax rates at all levels of government, competition and other factors beyond our control may have an adverse effect on the ability of our subsidiaries to sell their products, to operate, and to collect sums due and owing to them.
Changes in geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business and operating results.
Our operations and performance may depend on global, regional, economic and geopolitical conditions. Russia’s invasion and military attacks on Ukraine have triggered significant sanctions from North American and European leaders. These events are currently escalating and creating increasingly volatile global economic conditions. Resulting changes in North American trade policy could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a “trade war.” A trade war could result in increased costs for raw materials that we use in our manufacturing and could otherwise limit our ability to sell our products abroad. These increased costs would have a negative effect on our financial condition and profitability. Furthermore, the military conflict between Russia and Ukraine may increase the likelihood of supply interruptions and further hinder
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our ability to find the materials we need to make our products. If the conflict between Russia and Ukraine continues for a long period of time, or if other countries become further involved in the conflict, we could face significant adverse effects to our business and financial condition.
We may not be able to successfully implement our business strategy, which could adversely affect our business, financial condition, results of operations and cash flows. If we cannot successfully implement our business strategy, it could result in the loss of value for our shareholders.
Successful implementation of our business strategy depends on our being able to acquire additional businesses and grow our existing subsidiaries, as well as factors specific to the industries in which our subsidiaries operate, and the state of the financial industry and numerous other factors that may be beyond our control. Adverse changes in the following factors could undermine our business strategy and have a material adverse effect on our business, our financial condition, and results of operations and cash flow:
The competitive environment in the industries in which our subsidiaries operate that may force us to reduce prices below the optimal pricing level or increase promotional spending;
Our ability to anticipate changes in consumer preferences and to meet customers' needs for our products in a timely cost-effective manner; and
Our ability to establish, maintain and eventually grow market share in these competitive environments.
Implementation of our business strategy could also be affected by a number of factors beyond our control, such as increased competition, legal developments, government regulation, general economic conditions, or increased operating costs or expenses. In addition, to the extent we have misjudged the nature and extent of industry trends or our competition, we may have difficulty in achieving our strategic objectives. Any failure to implement our business strategy successfully may adversely affect our business, financial condition and could result in the loss of value for our shareholders.
We have a diverse business model through our various subsidiaries’ industries, and our failure to properly manage or execute could adversely affect our operations, financial results and reputation.
Our business model may include acquiring businesses with products and services that can be highly complex and may be subject to demanding regulatory requirements. The products of some business acquisition targets may require significant production and supply-chain flexibility causing optimized solutions across an integrated platform. The products designed, manufactured, and serviced by such business acquisition targets also may be complex and require complicated configuration management and direct order fulfillment capabilities to end customers.
Our business model of acquiring businesses generally requires working capital, management, and technical personnel, and the development and maintenance of systems and procedures to manage diverse manufacturing, regulatory, and service requirements for multiple programs of varying sizes simultaneously, including in multiple locations and geographies. We also depend on securing and ramping new customers and programs as well as transitioning production for new customers and programs, which creates added complexities related to managing the start-up risks of such projects, especially for companies that did not previously outsource such activities.
Although we believe that our operations utilize the technologies, equipment, and processes that are currently required by our customers, we cannot be certain that we will maintain or develop the capabilities required by our customers in the future. The emergence of new technologies, industry standards or customer requirements may render our technical personnel, equipment, inventory or processes obsolete or noncompetitive. In addition, we may have to acquire new skills, technologies, and equipment to remain competitive, as well as offer new or additional services, all of which may require significant expense or capital investment that could reduce our liquidity and negatively affect our operating results. Our failure to anticipate and adapt to our customers’ changing technological needs and requirements, or to perform to their expectations or standards, as well as our need to maintain our personnel and other resources during times of fluctuating demand, could have an adverse effect on our business.
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Our revenue growth rate depends primarily on our ability to satisfy relevant channels and end-customer demands, identify suppliers and vendors of our necessary materials and to coordinate those suppliers and vendors, all subject to many unpredictable factors.
We may not be able to identify and maintain the necessary relationships with suppliers of product and services as planned. Delays or failures in deliveries could materially and adversely affect our growth strategy and expected results. In addition, one of our biggest challenges is securing an adequate supply of materials. Competition for product is intense, and commodities costs subject to price volatility.
Our ability to execute our business plan also depends on other factors, including:
ability to keep satisfied vendor relationships;
hiring and training qualified personnel in local markets;
managing marketing and development costs at affordable levels;
cost and availability of labor;
the availability of, and our ability to obtain, adequate supplies of ingredients that meet our quality standards; and
securing required governmental approvals in a timely manner when necessary.
Our financial condition and results of operations for 2023 may continue to be adversely affected by the COVID-19 pandemic.
The impact of the worldwide COVID-19 pandemic continues to be felt in many geographies and aspects of society. The pandemic has resulted in and may continue to result in disruptions to the global economy, as well as businesses, supply chains and capital markets around the world.
Impacts to our business have included temporary closures of many of our government and university customers and our suppliers, disruptions or restrictions on our employees’ and customers’ ability to travel, and delays in product installations or shipments to and from affected countries. In an effort to halt the outbreak of COVID-19, a number of countries, including the United States, implemented and some continue to implement significant restrictions on travel, shelter in place or stay at home orders, and business closures. While some of these restrictions were loosened in certain jurisdictions, some markets have returned to restrictions in the face of increases in new COVID-19 cases, particularly as more contagious strains of the virus emerge. Many of our employees in jurisdictions in which we have significant operations continue to work remotely. Much of the commercial activity in sales and marketing, and customer demonstrations and applications training, is still either being conducted remotely or postponed. Even where customers have re-opened their sites, some still operate at productivity levels that are below pre-pandemic levels in an effort to accommodate safety protocols and as a result of pandemic-related supply chain disruptions. Any resurgence of the virus or the emergence of new strains of the virus, particularly any new strains which are more easily transmitted or which are resistant to existing vaccines, may require us or our customers to close or partially close operations once again. These travel restrictions, business closures and operating reductions at Alpine 4, our customers, our distributors, and/or our suppliers have in the past adversely impacted and may continue to adversely impact our operations, including our ability to manufacture, sell or distribute our products, as well as cause temporary closures of our distributors, or the facilities of suppliers or customers. Further, global supply chains continue to be disrupted, causing shortages, which has impacted our ability to manufacture and supply our products. We could also experience increased compensation expenses associated with employee recruiting and employee retention to the extent employment opportunities continue to multiply post-pandemic, causing the search for and retention of talent to become more competitive. This disruption of our employees, distributors, suppliers and customers has historically impacted and may continue to impact our global sales and future operating results. We are continuing to monitor and assess the ongoing effects of the COVID-19 pandemic on our commercial operations in 2023 and going forward. The pandemic has adversely affected the economies and financial markets of many countries, which has affected and may continue to affect demand for our products and our operating results.
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Our existing debt levels may adversely affect our financial condition or operational flexibility and prevent us from fulfilling our obligations under our outstanding indebtedness.
As of the date of this prospectus, we had total debt of $20.2 million including lines of credit, related party and non-related party notes payable and convertible notes payable. This level of debt or any increase in our debt level could have adverse consequences for our business, financial condition, operating results and operational flexibility, including the following: (i) the debt level may cause us to have difficulty borrowing money in the future for working capital, capital expenditures, acquisitions or other purposes; (ii) our debt level may limit operational flexibility and our ability to pursue business opportunities and implement certain business strategies; and (iii) we have a higher level of debt than some of our competitors or potential competitors, which may cause a competitive disadvantage and may reduce flexibility in responding to changing business and economic conditions, including increased competition and vulnerability to general adverse economic and industry conditions. Additionally, there are two lines of credit set to mature in August and September 2023, and will be due unless there is an extension and/or amendment to the current agreements. If we fail to satisfy our obligations under our outstanding debt, an event of default could result that could cause some or all of our debt to become due and payable.
We are an early stage company with a history of losses and there is substantial doubt as to our ability to continue as a going concern.
We have incurred net loss of $12.8 million and $19.5 million for the years ended December 31, 2022 and 2021, respectively, and have an accumulated deficit of approximately $71.7 million. We believe that we will continue to incur operating and net losses each quarter until at least the time we begin to generate significant revenue and margin improvements from our subsidiaries, which may not happen. We have determined under our ASC 205-40 analysis, there is substantial doubt that we will have sufficient funds to satisfy our obligations through the next twelve months from the date of issuance of this prospectus. Our ability to continue as a going concern is dependent on our ability to obtain the necessary financing and margin improvements to meet our obligations and repay our liabilities arising from the ordinary course of business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time. If we are unable to raise sufficient capital when needed, our business, financial condition and results of operations will be materially and adversely affected, and we will need to significantly modify or terminate our operations and our planned business activities.
Insurance coverage, even where available, may not be sufficient to cover losses we may incur.
Our business exposes us to the risk of liabilities arising from our operations. For example, we may be liable for claims brought by users of our products or by employees, customers or other third parties for personal injury or property damage occurring in the course of our operations. We seek to minimize these risks through various insurance contracts from third-party insurance carriers. However, our insurance coverage is subject to large individual claim deductibles, individual claim and aggregate policy limits, and other terms and conditions. We retain an insurance risk for the deductible portion of each claim and for any gaps in insurance coverage. We do not view insurance, by itself, as a material mitigant to these business risks. We cannot assure that our insurance will be sufficient to cover our losses. Any losses that insurance does not substantially cover could have a material adverse effect on our business, results of operations, financial condition and cash flows.
We face risks and uncertainties related to litigation.
We are subject to, and are and may in the future become a party to, a variety of litigation, other claims, and suits. The results of litigation and other legal proceedings, including the other claims described under Legal Proceedings in Note 11, Commitments and Contingencies, to the annual consolidated financial statements included elsewhere in this prospectus, are inherently uncertain and adverse judgments or settlements in some or all of these legal disputes may result in materially adverse monetary damages or injunctive relief against us. The litigation and other legal proceedings described under Note 11 are subject to future developments and management’s view of these matters may change in the future.
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Cybersecurity risks and cyber incidents, including cyber-attacks, could adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information and confidential information in our possession and damage to our business relationships, any of which could negatively impact our business, financial condition and operating results.
There has been an increase in the frequency and sophistication of the cyber and security threats we face, with attacks ranging from those common to businesses generally to those that are more advanced and persistent, which may target us due to our substantial reliance on information technology or otherwise. Cyber-attacks and other security threats could originate from a wide variety of sources, including cyber criminals, nation state hackers, hacktivists and other outside parties. As a result of the generally increasing frequency and sophistication of cyber-attacks, and our substantial reliance on technology, we may face a heightened risk of a security breach or disruption with respect to sensitive information resulting from an attack by computer hackers, foreign governments or cyber terrorists.
The operation of our business is dependent on computer hardware and software systems, as well as data processing systems and the secure processing, storage and transmission of information, which are vulnerable to security breaches and cyber incidents. A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. In addition, we and our employees may be the target of fraudulent emails or other targeted attempts to gain unauthorized access to proprietary or other sensitive information. The result of these incidents may include disrupted operations, misstated or unreliable financial data, fraudulent transfers or requests for transfers of money, liability for stolen information, increased cybersecurity protection and insurance costs, litigation and damage to our business relationships, causing our business and results of operations to suffer. Our reliance on information technology is substantial, and accordingly the risks posed to our information systems, both internal and those provided by third-party service providers are critical. We have implemented processes, procedures and internal controls designed to mitigate cybersecurity risks and cyber intrusions and rely on industry accepted security measures and technology to securely maintain confidential and proprietary information maintained on our information systems; however, these measures, as well as our increased awareness of the nature and extent of a risk of a cyber-incident, do not guarantee that a cyber-incident will not occur and/or that our financial results, operations or confidential information will not be negatively impacted by such an incident, especially because the cyber-incident techniques change frequently or are not recognized until launched and because cyber-incidents can originate from a wide variety of sources.
Those risks are exacerbated by the rapidly increasing volume of highly sensitive data, including our and our customers’ proprietary business information and intellectual property, and personally identifiable information of our employees and customers, that we collect and store in our data centers and on our networks. The secure processing, maintenance and transmission of this information are critical to our operations. A significant actual or potential theft, loss, corruption, exposure, fraudulent use or misuse of employee, customer or other personally identifiable or our or our customers’ proprietary business data, whether by third parties or as a result of employee malfeasance (or the negligence or malfeasance of third party service providers that have access to such confidential information) or otherwise, non-compliance with our contractual or other legal obligations regarding such data or intellectual property or a violation of our privacy and security policies with respect to such data could result in significant remediation and other costs, fines, litigation or regulatory actions against us and significant reputational harm.
Failure to maintain the security of our information and technology networks or data security breaches could harm our reputation and have a material adverse effect on our results of operations, financial condition and cash flow.
We rely on the reasonably secure processing, storage and transmission of confidential and other sensitive information in our computer systems and networks, and those of our service providers and their vendors. We are subject to various risks and costs associated with the collection, handling, storage and transmission of personally identifiable information and other sensitive information, including those related to compliance with U.S. and foreign data collection and privacy laws and other contractual obligations, as well as those associated with the compromise of our systems processing such information. In the ordinary course of our business, we collect, store a range of data,
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including our proprietary business information and intellectual property, and personally identifiable information of our employees, our fund investors and other third parties, in our cloud applications and on our networks, as well as our services providers’ systems. The secure processing, maintenance and transmission of this information are critical to our operations. We, our service providers and their vendors face various security threats on a regular basis, including ongoing cybersecurity threats to and attacks on our and their information technology infrastructure that are intended to gain access to our proprietary information, destroy data or disable, degrade or sabotage our systems. Cyber-incident techniques change frequently, may not immediately be recognized and can originate from a wide variety of sources. There has been an increase in the frequency, sophistication and ingenuity of the data security threats we and our service providers face, with attacks ranging from those common to businesses generally to those that are more advanced and persistent. Although we and our services providers take protective measures and endeavor to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to unauthorized access, theft, misuse, computer viruses or other malicious code, including malware, and other events that could have a security impact. We may be the target of more advanced and persistent attacks because, as an alternative asset manager, we hold a significant amount of confidential and sensitive information about, among other things, our fund investors, portfolio companies and potential investments. We may also be exposed to a more significant risk if these acts are taken by state actors. Any of the above cybersecurity threats, fraudulent activities or security breaches suffered by our service providers and their vendors could also put our confidential and sensitive information at risk or cause the shutdown of a service provider on which we rely. We and our employees have been and expect to continue to be the target of fraudulent calls and emails, the subject of impersonations and fraudulent requests for money, including attempts to redirect material payment amounts in a transaction to a fraudulent bank account, and other forms of spam attacks, phishing or other social engineering, ransomware or other events. Cyber-criminals may attempt to redirect payments made at the closings of our investments to unauthorized accounts, which we or our services providers we retain, such as paying agents and escrow agents, may be unable to detect or protect against. The COVID-19 pandemic has exacerbated these risks due to heavier reliance on online communication and the remote working environment, which may be less secure, and there has been a significant increase in hacking attempts by cyber-criminals. The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by others, including by our service providers. If successful, such attacks and criminal activity could harm our reputation, disrupt our business, cause liability for stolen assets or information and have a material adverse effect on our results of operations, financial condition and cash flow.
We rely heavily on our back office informational technology infrastructure, including our data processing systems, communication lines, and networks. Although we have back-up systems and business-continuation plan in place, our back-up procedures and capabilities in the event of a failure or interruption may not be adequate. Any interruption or failure of our informational technology infrastructure could result in our inability to provide services to our clients, other disruptions of our business, corruption or modifications to our data and fraudulent transfers or requests for transfers of money. Further consequences could include liability for stolen assets or information, increased cybersecurity protection and insurance costs and litigation. We expect that we will need to continue to upgrade and expand our back-up and procedures and capabilities in the future to avoid disruption of, or constraints on, our operations. We may incur significant costs to further upgrade our data processing systems and other operating technology in the future.
Our technology, data and intellectual property and the technology, data and intellectual property of our funds’ portfolio companies are also subject to a heightened risk of theft or compromise to the extent that we and our funds’ portfolio companies engage in operations outside the United States, particularly in those jurisdictions that do not have comparable levels of protection of proprietary information and assets, such as intellectual property, trademarks, trade secrets, know-how and customer information and records. In addition, we and our funds’ portfolio companies may be required to forgo protections or rights to technology, data and intellectual property in order to operate in or access markets in a foreign jurisdiction. Any such direct or indirect loss of rights in these assets could negatively impact us, our funds and their investments.
A significant actual or potential theft, loss, corruption, exposure or fraudulent, unauthorized or accidental use or misuse of investor, employee or other personally identifiable or proprietary business data could occur, as a result of third-party actions, employee malfeasance or otherwise, non-compliance with our contractual or other legal
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obligations regarding such data or intellectual property or a violation of our privacy and security policies with respect to such data. If such a theft, loss, corruption, use or misuse of data were to occur, it could result in significant remediation and other costs, fines, litigation and regulatory actions against us by (i) the U.S. federal and state governments, (ii) the EU or other jurisdictions, (iii) various regulatory organizations or exchanges and (iv) affected individuals, as well as significant reputational harm.
Cybersecurity has become a top priority for regulators around the world. Many jurisdictions in which we operate have laws and regulations relating to data privacy, cybersecurity and protection of personal information and other sensitive information, including, without limitation the General Data Protection Regulation (Regulation (EU) 2016/679) (the “GDPR”) in the EU and the Data Protection Act 2018 in the U.K. (the “U.K. Data Protection Act”), comprehensive privacy laws enacted in California, Colorado and Virginia, the Hong Kong Personal Data (Privacy) Ordinance, the Korean Personal Information Protection Act and related legislation, regulations and orders and the Australian Privacy Act. China and other countries have also passed cybersecurity laws that may impose data sovereignty restrictions and require the localization of certain information. We believe that additional similar laws will be adopted in these and other jurisdictions in the future, further expanding the regulation of data privacy and cybersecurity. Such laws and regulations strengthen the rights of individuals (data subjects), mandate stricter controls over the processing of personal data by both controllers and processors of personal data and impose stricter sanctions with substantial administrative fines and potential claims for damages from data subjects for breach of their rights, among other requirements. Some jurisdictions, including each of the U.S. states as well as the EU through the GDPR and the U.K. through the U.K. Data Protection Act, have also enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data, which would require heightened escalation and notification processes with associated response plans. We expect to devote resources to comply with evolving cybersecurity and data privacy regulations and to continually monitor and enhance our information security and data privacy procedures and controls as necessary. We or our fund’s portfolio companies may incur substantial costs to comply with changes in such laws and regulations and may be unable to adapt to such changes in the necessary timeframe and/or at reasonable cost. Furthermore, if we experience a cybersecurity incident and fail to comply with the applicable laws and regulations, it could result in regulatory investigations and penalties, which could lead to negative publicity and may cause our fund investors and clients to lose confidence in the effectiveness of our security and privacy measures.
The materialization of one or more of these risks could impair the quality of our operations, harm our reputation, negatively impact our businesses and limit our ability to grow.
We rely significantly on the use of information technology, as well as those of our third-party service providers. Our failure or the failure of third-party service providers to protect our website, networks, and systems against cybersecurity incidents, or otherwise to protect our confidential information, could damage our reputation and brand and substantially harm our business, financial condition, and results of operations.
To the extent that our services are web-based, we collect, process, transmit and store large amounts of data about our customers, employees, vendors and others, including credit card information and personally identifiable information, as well as other confidential and proprietary information. We also employ third-party service providers for a variety of reasons, including storing, processing and transmitting proprietary, personal and confidential information on our behalf. While we rely on tokenization solutions licensed from third parties in an effort to securely transmit confidential and sensitive information, including credit card numbers, advances in computer capabilities, new technological discoveries or other developments may result in the whole or partial failure of this technology to protect this data from being breached or compromised. Similarly, our security measures, and those of our third-party service providers, may not detect or prevent all attempts to hack our systems or those of our third-party service providers. DDoS attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, security breaches or other cybersecurity incidents and similar disruptions that may jeopardize the security of information stored in or transmitted by our website, networks and systems or that we or our third-party service providers otherwise maintain, including payment card systems, may subject us to fines or higher transaction fees or limit or terminate our access to certain payment methods. We and our service providers may not anticipate or prevent all types of attacks until after they have already been launched, and techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-party service providers, and we may be unable to implement adequate preventative measures. We may also experience
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security breaches that may remain undetected for an extended period. In addition, cybersecurity incidents can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or by persons with whom we have commercial relationships.
Breaches of our security measures or those of our third-party service providers or any cybersecurity incident could result in unauthorized access to our website, networks and systems; unauthorized access to and misappropriation of customer and/or employee information, including personally identifiable information, or other confidential or proprietary information of ourselves or third parties; viruses, worms, spyware or other malware being served from our website, networks or systems; deletion or modification of content or the display of unauthorized content on our website; interruption, disruption or malfunction of operations; costs relating to cybersecurity incident remediation, deployment of additional personnel and protection technologies, response to governmental investigations and media inquiries and coverage; engagement of third party experts and consultants; litigation, regulatory action and other potential liabilities. If any of these cybersecurity incidents occur, or there is a public perception that we, or our third-party service providers, have suffered such a breach, our reputation and brand could also be damaged and we could be required to expend significant capital and other resources to alleviate problems caused by such cybersecurity incidents. As a consequence, our business could be materially and adversely affected and we could also be exposed to litigation and regulatory action and possible liability. In addition, any party who is able to illicitly obtain a customer’s password could access the customer’s transaction data or personal information. Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data security and other laws, and cause significant legal and financial exposure, adverse publicity and a loss of confidence in our security measures, which could have an material adverse effect on our business, financial condition, and results of operations. This risk is heightened as governmental authorities throughout the U.S. and around the world devote increasing attention to data privacy and security issues.
While we maintain privacy, data breach and network security liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. Additionally, even though we continue to devote resources to monitor and update our systems and implement information security measures to protect our systems, there can be no assurance that any controls and procedures we have in place will be sufficient to protect us from future cybersecurity incidents. Failure by us or our vendors to comply with data security requirements, including (if applicable) the California Consumer Privacy Act’s (“CCPA”) new “reasonable security” requirement in light of the private right of action, or rectify a security issue may result in class action litigation, fines and the imposition of restrictions on our ability to accept payment cards, which could adversely affect our operations. As cyber threats are continually evolving, our controls and procedures may become inadequate and we may be required to devote additional resources to modify or enhance our systems in the future. As a result, we may face interruptions to our systems, reputational damage, claims under privacy and data protection laws and regulations, customer dissatisfaction, legal liability, enforcement actions or additional costs, any and all of which could adversely affect our business, financial condition, and results of operations. In addition, although we seek to detect and investigate data security incidents, security breaches and other incidents of unauthorized access to our information technology systems and data can be difficult to detect and any delay in identifying such breaches or incidents may lead to increased harm and legal exposure of the type described above.
Environmental, social and governance matters may impact our business and reputation.
Increasingly, in addition to the importance of their financial performance, companies are being judged by their performance on a variety of environmental, social and governance (“ESG”) matters, which are considered to contribute to the long-term sustainability of companies’ performance.
A variety of organizations measure the performance of companies on ESG topics, and the results of these assessments are widely publicized. In addition, investment in funds that specialize in companies that perform well in such assessments are increasingly popular, and major institutional investors have publicly emphasized the importance of ESG measures to their investment decisions. Topics taken into account in such assessments include, among others, companies’ efforts and impacts on climate change and human rights, ethics and compliance with law, diversity and the role of companies’ board of directors in supervising various sustainability issues.
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ESG goals and values are embedded in our core mission and vision, and we actively take into consideration their expected impact on the sustainability of our business over time and the potential impact of our business on society and the environment, including offsetting or reducing carbon emissions and sound pollution from launches. However, in light of investors’ increased focus on ESG matters, there can be no certainty that we will manage such issues successfully, or that we will successfully meet society’s expectations as to our proper role. This could lead to risk of litigation or reputational damage relating to our ESG policies or performance.
Further, our emphasis on ESG issues may not maximize short-term financial results and may yield financial results that conflict with the market’s expectations. Our ability to implement our business strategy could be affected by changing customer preferences and requirements, such as growing demand for more environmentally friendly products, packaging, or supplier practices, or by failure to meet such customer expectations or demand. We risk negative stockholder reaction, including from proxy advisory services, as well as damage to our brand and reputation, if we do not act responsibly, or if we are perceived to not be acting responsibly in key ESG areas, including product quality and safety, diversity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency, and addressing human capital factors in our operations. We have and may in the future make business decisions that may reduce our short-term financial results if we believe that the decisions are consistent with our ESG goals, which we believe will improve our financial results over the long-term. These decisions may not be consistent with the short-term expectations of our stockholders and may not produce the long-term benefits that we expect, in which case our business, financial condition, and operating results could be harmed.
If we fail to protect or incur significant costs in defending or enforcing our intellectual property and other proprietary rights, our business, financial condition, and results of operations could be materially harmed.
Our success depends, in large part, on our ability to protect our intellectual property and other proprietary rights. We rely primarily on patents, trademarks, copyrights, trade secrets and unfair competition laws, as well as license agreements and other contractual provisions, to protect our intellectual property and other proprietary rights. However, a significant portion of our technology is not patented, and we may be unable or may not seek to obtain patent protection for this technology. Moreover, existing U.S. legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights offer only limited protection, may not provide us with any competitive advantages, and our rights may be challenged by third parties. The laws of countries other than the United States may be even less protective of our intellectual property rights. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property or otherwise gaining access to our technology. Unauthorized third parties may try to copy or reverse engineer our products or portions of our products or otherwise obtain and use our intellectual property. Moreover, many of our employees have access to our trade secrets and other intellectual property. If one or more of these employees leave our employment to work for one of our competitors, then they may disseminate this proprietary information, which may as a result damage our competitive position. If we do not protect our intellectual property and other proprietary rights, then our business, results of operations or financial condition could be materially harmed.
We may be sued by third parties for alleged infringement of their proprietary rights, which could be costly, time-consuming and limit our ability to use certain technologies in the future.
We may become subject to claims that our technologies infringe upon the intellectual property or other proprietary rights of third parties. Defending against, or otherwise addressing, any such claims, whether they are with or without merit, could be time-consuming and expensive, and could divert our management’s attention away from the execution of our business plan. Moreover, any settlement or adverse judgment resulting from these claims could require us to pay substantial amounts or obtain a license to continue to use the disputed technology, or otherwise restrict or prohibit our use of the technology. We cannot assure you that we would be able to: obtain from the third party asserting the claim a license on commercially reasonable terms, if at all; develop alternative technology on a timely basis, if at all; or obtain a license to use a suitable alternative technology to permit us to continue offering, and our customers to continue using, our affected product. An adverse determination could also prevent us from offering our products to others. Infringement claims asserted against us may have a material adverse effect on our business, results of operations or financial condition.
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Risks Related to our Construction Business
Our dependence on suppliers of materials could increase our costs and impair our ability to complete contracts on a timely basis or at all, which would adversely affect our profits and cash flow.
We rely almost exclusively on third-party suppliers to provide the materials (including sheet metal and other HVAC duct system components and materials) for our construction contracts. If we are unable to retain qualified suppliers, or if our suppliers do not perform as anticipated for any reason, our execution and profitability could be harmed. By contract, we remain liable to our customers for the performance or failures of our suppliers.
We generally do not bid on construction projects unless we have commitments from suppliers for the materials and equipment at prices that have been included in the bid. Thus, to the extent that we cannot obtain commitments from our suppliers for materials and equipment, our ability to bid for contracts may be impaired. In addition, if a supplier is unable to deliver materials, equipment or services according to the negotiated terms of a supply/services agreement for any reason, including the deterioration of our financial condition, we may suffer delays and be required to purchase the materials, equipment and services from another source at a higher price or incur other unanticipated costs. This may reduce the profit to be realized, or result in a loss, on a contract.
The timing of the award and performance of new construction contracts could have an adverse effect on our operating results and cash flow.
A substantial portion of MSM & TDI’s revenues and earnings is generated from project awards. The timing of the project awards is unpredictable and outside of our control. Awards, including expansions of existing projects, often involve complex and lengthy negotiations and competitive bidding processes. These processes can be impacted by a wide variety of factors, including a customer’s decision to not continue with the development of a project, governmental approvals, financing contingencies, commodity prices, environmental conditions, and overall market and economic conditions. We may not win contracts that we have bid technical problems may arise; we could have difficulty obtaining permits or approvals; local laws, labor costs or labor conditions could change; bad weather could delay construction; raw materials prices could increase; suppliers or subcontractors may fail to perform as expected; or site conditions may be different than expected. Additionally, in certain circumstances, we guarantee project completion or the achievement of certain acceptance and performance levels by a scheduled date. Failure to meet schedule or performance requirements typically results in additional costs to us, and in some cases may also create liability for consequential and liquidated damages. Performance problems for existing and future projects could cause our actual results of operations to differ materially from those anticipated and upon due to price and/or a customer’s perception of our ability to perform. Many of our competitors may be more inclined to take greater or unusual risks or terms and conditions in a contract that we might not deem acceptable. Because a portion of MSM & TDI’s revenues is generated from projects, our results of operations can fluctuate quarterly and annually depending on whether and when large project awards occur and the commencement and progress of work under contracts already awarded. As a result, we are subject to the risk of losing new awards to competitors or the risk that revenue may not be derived from awarded projects as quickly as anticipated.
In addition, the timing of the revenues, earnings, and cash flows from our contracts can be delayed by a number of factors, including adverse weather conditions; other subcontractors delaying the progression of proceeding work; delays in receiving material and equipment from suppliers and services from subcontractors; and changes in the scope of work to be performed. Such delays, if they occur, could have adverse effects on our operating results for current and future periods until the affected contracts are completed.’
U.S. government construction contracts are subject to a competitive bidding process that can consume significant resources without generating any revenue.
U.S. government construction contracts are often awarded only after formal, protracted competitive bidding processes and, in many cases, unsuccessful bidders for U.S. government contracts are provided the opportunity to protest contract awards through various agency, administrative and judicial channels. TDI derives revenue from U.S. government construction contracts that were awarded through a competitive bidding process. Much of the business
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that we expect to seek in the foreseeable future likely will be awarded through competitive bidding. Competitive bidding presents a number of risks, including the following:
the need to bid on programs in advance of the completion of their design, which may result in unforeseen technological difficulties and cost overruns;
the substantial cost and managerial time and effort that must be spent to prepare bids and proposals for contracts that may not be awarded to us;
the need to estimate accurately the resources and cost structure that will be required to service any contract we are awarded; and
the expense and delay that may arise if our competitors protest or challenge contract awards made to us pursuant to competitive bidding, and the risk that any such protest or challenge could result in the delay of our contract performance, the distraction of management, the resubmission of bids on modified specifications, or in termination, reduction or modification of the awarded contract.
We may not be provided the opportunity to bid on contracts that are held by other companies and are scheduled to expire if the government extends the existing contract. If we are unable to win particular contracts that are awarded through a competitive bidding process, then we may not be able to operate for a number of years in the market for goods and services that are provided under those contracts. If we are unable to win new contract awards over any extended period consistently, then our business and prospects will be adversely affected.
We are subject to procurement rules and regulations, which increase our performance and compliance costs under our U.S. government construction contracts.
We must comply with, and are affected by, laws and regulations relating to the formation, administration, and performance of U.S. government construction contracts. These laws and regulations, among other things, require certification and disclosure of all cost and pricing data in connection with contract negotiation, define allowable and unallowable costs and otherwise govern our right to reimbursement under certain cost-based U.S. government contracts, and restrict the use and dissemination of classified information and the exportation of certain products and technical data. These requirements, although customary in U.S. government construction contracts, increase our performance and compliance costs. These costs might increase in the future, reducing our margins, which could have a negative effect on our financial condition. Although we believe we have procedures in place to comply with these regulations and requirements, the regulations and requirements are complex and change frequently. Our failure to comply with these regulations and requirements under certain circumstances could lead to suspension or debarment from U.S. government contracting or subcontracting for a period of time and could have a negative effect on our reputation and ability to receive other U.S. government contract awards in the future.
Our construction work for the U.S. government in overseas locations may expose us to increased security risks.
As a government construction contractor for US agencies that operate overseas, we work in international locations where there are high security risks, which could result in harm to our employees, and remote assets. Some of our services are performed in or adjacent to high risk locations where the country or location is experiencing political, social or economic issues, or war or civil unrest. As such international locations and the risks associated with them change rapidly, precautions may be insufficient to avoid such risks, which could harm our business and operating results.
Risks Related to our Manufacturing Business
We may experience component shortages, delays, price fluctuations and supplier quality concerns.
We generally do not have long-term supply agreements. We have experienced from time to time and are currently experiencing significant component shortages related to semiconductors and longer lead-times due to supplier capacity constraints. Supply chain constraints and delays can be caused by world events, such as government policies, tariffs, trade wars, trade disputes and trade protection measures, terrorism, armed conflict, natural disasters, economic recession, increased demand due to economic growth, preferential allocations,
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transportation challenges, and other localized events. Further, we rely on a limited number of suppliers for many of the components used in the assembly process and, in some cases, may be required to use suppliers that are the sole provider of a particular component. Such suppliers may encounter quality problems, labor disputes or shortages, financial difficulties or business continuity issues that could prevent them from delivering components timely or at all. Supply shortages and delays in deliveries of components may result in delayed production of assemblies, which reduces our revenue and operating profit for the periods affected. Additionally, a delay in obtaining a particular component may result in other components for the related program being held for longer periods of time, increasing working capital, risking inventory obsolescence, and negatively impacting our cash flow. Due to the highly competitive nature of our industry, an inability to obtain sufficient inventory on a timely basis or successfully execute on our business continuity processes, could also harm relationships with our customers and lead to loss of business to our competitors.
Increased competition may result in reduced demand or reduced prices for our services.
The industries in which we operate are highly competitive. We compete against numerous providers with national or global operations, as well as those which operate only on a local or regional basis. In addition, current and prospective customers continually evaluate the merits of designing, manufacturing, and servicing products internally and may choose to design, manufacture or service products (including products or product types that we currently design, manufacture, or service for them) themselves rather than outsource such activities. Consolidations and other changes in our industry may result in a changing competitive landscape. Our manufacturing processes are generally not subject to significant proprietary protection, and companies with greater resources or a greater market presence may enter our market or otherwise become increasingly competitive. Increased competition could result in significant price reductions, reduced sales and margins, or loss of market share.
Our products and manufacturing activities are subject to extensive government regulation, which could limit or prevent the sale of our products in some markets.
The manufacture, packaging, labeling, advertising, promotion, distribution, and sale of our products are subject to regulation by numerous national and local governmental agencies in the United States and other countries, including the FDA and the FTC. Failure to comply with FDA regulatory requirements may result in, among other things, injunctions, product withdrawals, recalls, product seizures, fines, and criminal prosecutions. Any action of this type by the FDA could materially adversely affect our ability to market our products successfully. The manufacture of nutritional or dietary supplements and related products in the United States requires compliance with dietary supplement GMPs, which are based on the food-model GMPs, with additional requirements that are specific to dietary supplements. We believe our manufacturing processes comply with these GMPs for dietary supplements. Nevertheless, any FDA action determining that our processes were non-compliant with dietary supplement GMPs, could materially adversely affect our ability to manufacture and market our products.
We cannot predict the nature of any future laws, regulations, interpretations, or applications, nor can we determine what effect additional governmental regulations or administrative orders, when and if promulgated, could have on our business. These potential effects could include, however, requirements for the reformulation of certain products to meet new standards, the recall or discontinuance of certain products, additional record keeping and reporting requirements, expanded documentation of the properties of certain products, expanded or different labeling, or additional scientific substantiation. Any or all of these requirements could have a material adverse effect on our business, financial condition, or results of operations.
If we experience dietary supplement product recalls, we may incur significant and unexpected costs, and our business reputation could be adversely affected.
We may be exposed to dietary supplement product recalls and adverse public relations if our dietary supplement products are mislabeled or alleged to cause injury or illness, or if we are alleged to have violated governmental regulations. A dietary supplement product recall could result in substantial and unexpected expenditures, which would reduce operating profit and cash flow. In addition, a dietary supplement product recall may require significant management attention. Dietary supplement product recalls may hurt the value of our brands and lead to decreased demand for our dietary supplement products. Dietary supplement product recalls also may lead to increased scrutiny
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by federal, state or international regulatory agencies of our operations and increased litigation and could have a material adverse effect on our business, results of operations, financial condition and cash flows.
We may incur material product liability claims, which could increase our costs and adversely affect our reputation, revenues and operating income.
As a manufacturer and distributor of dietary supplement products designed for human consumption, we are subject to dietary supplement product liability claims if the use of our dietary supplement products is alleged to have resulted in injury. Our dietary supplement products consist of vitamins, minerals, dietary supplements and other ingredients that are classified as foods and dietary supplements, and, in most cases, are not necessarily subject to pre-market regulatory approval in the United States. Some of our dietary supplement products contain innovative ingredients that do not have long histories of human consumption. Previously unknown adverse reactions resulting from human consumption of these ingredients could occur. In addition, some of the dietary supplement products we sell are produced by third-party manufacturers. We may be in the future subject to various product liability claims, including, among others, that our dietary supplement products include inadequate instructions for use or inadequate warnings concerning possible side effects and interactions with other substances. A product liability claim against us could result in increased costs and could adversely affect our reputation with our customers, which, in turn, could have a material adverse effect on our business, results of operations, financial condition and cash flows.
We rely on our manufacturing operations to produce the vast majority of the nutritional supplements that we sell, and disruptions in our manufacturing system or losses of manufacturing certifications could affect our results of operations adversely.
We currently operate our dietary supplement manufacturing facility in Fort Meyers, Florida. All our domestic manufacturing products for sale to the United States are subject to GMPs promulgated by the FDA and other applicable regulatory standards, including in the areas of environmental protection and worker health and safety. Any significant disruption in our operations at this facility, including any disruption due to any regulatory requirement, could affect our ability to respond quickly to changes in consumer demand and could have a material adverse effect on our business, results of operations, financial condition and cash flows. Although we have implemented GMPs in our facility, there can be no assurance that products manufactured in our plants will not be contaminated or otherwise fail to meet our quality standards. Any such contamination or other quality failures could result in costly recalls, litigation, regulatory actions or damage to our reputation, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Compliance with new and existing laws and governmental regulations could increase our costs significantly and adversely affect our results of operations.
The processing, formulation, safety, manufacturing, packaging, labeling, advertising and distribution of our dietary supplement products are subject to federal laws and regulation by one or more federal agencies, including the FDA, the FTC, the CPSC, the USDA and the EPA. These activities are also regulated by various state, local and international laws and agencies of the states and localities in which our products are sold. Government regulations may prevent or delay the introduction, or require the reformulation, of our products, which could result in lost revenues and increased costs to us. For instance, the FDA regulates, among other things, the composition, safety, manufacture, labeling and marketing of dietary ingredients and dietary supplements (including vitamins, minerals, herbs, and other dietary ingredients for human use). Dietary supplements and dietary ingredients that do not comply with FDA’s regulations and/or the Dietary Supplement Health and Education Act of 1994 will be deemed adulterated or misbranded. Manufacturers and distributors of dietary supplements and dietary ingredients are prohibited from marketing products that are adulterated or misbranded, and the FDA may take enforcement action against any adulterated or misbranded dietary supplement on the market. The FDA has broad enforcement powers. If we violate applicable regulatory requirements, the FDA may bring enforcement actions against us, which could have a material adverse effect on our business, prospects, financial condition, and results of operations. The FDA may not accept the evidence of safety for any new ingredient that we may wish to market, may determine that a particular supplement or ingredient presents an unacceptable health risk based on the required submission of serious adverse events or other information, and may determine that a particular claim or statement of nutritional value that we use to support the marketing of a supplement is an impermissible drug claim, is not substantiated, or is an unauthorized
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version of a “health claim.” See Item 1 “Business—Regulation—Food and Drug Administration” for additional information. Any of these actions could prevent us from marketing particular nutritional supplement products or making certain claims or statements with respect to those products. The FDA could also require us to remove a particular product from the market. Any future recall or removal would result in additional costs to us, including lost revenues from any products that we are required to remove from the market, any of which could be material. Any product recalls or removals could also lead to an increased risk of litigation and liability, substantial costs, and reduced growth prospects. Additional or more stringent laws and regulations of dietary supplements and other products have been considered from time to time. These developments could require reformulation of some products to meet new standards, recalls or discontinuance of some products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of some products, additional or different labeling, additional scientific substantiation, or other new requirements. Any of these developments could increase our costs significantly. In addition, regulators’ evolving interpretation of existing laws could have similar effects.
Our failure to comply with FTC regulations could result in substantial monetary penalties and could adversely affect our operating results.
The FTC exercises jurisdiction over the advertising of dietary supplements and requires that all advertising to consumers be truthful and non-misleading. The FTC actively monitors the dietary supplement space and has instituted numerous enforcement actions against dietary supplement companies for failure to have adequate substantiation for claims made in advertising or for the use of false or misleading advertising claims. Failure to comply with applicable regulations could result in substantial monetary penalties, which could have a material adverse effect on our financial condition or results of operations.
Risks Related to our Aerospace / Drones Business
Manufacturing and providing services for our drones and UAVs is highly dependent upon the availability of certain suppliers, thereby making us vulnerable to supply problems that could harm our business.
Our manufacturing processes within our drone and UAV manufacturing business rely on a limited number of third parties to supply certain key components and manufacture our products. Alternative sources of production and supply may not be readily available or may take several months to scale up and develop effective production processes. If a disruption in the availability of parts or in the operations of our suppliers were to occur, our ability to produce drones and UAVs to meet our contract requirements as well as our ability to provide support could be materially adversely affected. In certain cases, we have developed backup plans and have alternative procedures should we experience a disruption. However, if these plans are unsuccessful or if we have a single source, delays in the production and support of our drones and UAVs for an extended period of time could cause a loss of revenue and/or higher production and support costs, which could significantly harm our business and results of operations.
The markets in which we compete are characterized by rapid technological change, which requires us to develop new products and product enhancements and could render our existing products obsolete.
Continuing technological changes in the market for our products could make our products and services less competitive or obsolete, either generally or for particular applications. Our future success will depend upon our ability to develop and introduce a variety of new capabilities and enhancements to our existing product offerings, as well as introduce a variety of new product offerings, to address the changing needs of the markets in which we offer our products. Delays in introducing new products and enhancements, the failure to choose correctly among technical alternatives or the failure to offer innovative products or enhancements at competitive prices may cause existing and potential customers to purchase our competitors’ products. If we are unable to devote adequate resources to develop new products or cannot otherwise successfully develop new products or enhancements that meet customer requirements on a timely basis, our products could lose market share, our revenue and profits could decline, and we could experience operating losses.
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We expect to incur substantial research and development costs and devote significant resources to identifying and commercializing new products and services, which could significantly reduce our profitability and may never result in revenue for us.
Our future growth depends on penetrating new markets, adapting existing products to new applications, and introducing new products and services that achieve market acceptance. We plan to incur substantial research and development costs as part of our efforts to design, develop and commercialize new products and services and enhance existing products. We believe that there are significant investment opportunities in a number of business areas. Because we account for internal research and development as an operating expense, these expenditures will adversely affect our earnings in the future. Further, our research and development programs may not produce successful results, and our new products and services may not achieve market acceptance, create incremental revenue, or become profitable, which could materially harm our business, prospects, financial results, and liquidity.
Our UAV products and services are complex and could have unknown defects or errors, which may give rise to claims against us, diminish our brand or divert our resources from other purposes.
Our UAV products rely on complex avionics, sensors, user-friendly interfaces, and tightly integrated, electromechanical designs to accomplish their missions. Despite testing, our products have contained defects and errors and may in the future contain defects, errors, or performance problems when first introduced, when new versions or enhancements are released, or even after these products have been used by our customers for a period of time. These problems could result in expensive and time-consuming design modifications or warranty charges, delays in the introduction of new products or enhancements, significant increases in our service and maintenance costs, exposure to liability for damages, damaged customer relationships, and harm to our reputation, any of which could materially harm our results of operations and ability to achieve market acceptance. In addition, increased development and warranty costs could be substantial and could reduce our operating margins. The existence of any defects, errors, or failures in our products or the misuse of our products could also lead to product liability claims or lawsuits against us. A defect, error, or failure in one of our products could result in injury, death or property damage and significantly damage our reputation and support for our products in general.
Our future profitability may be dependent upon achieving cost reductions and projected economies of scale from increasing manufacturing quantities of our products. Failing to achieve such reductions in manufacturing costs and projected economies of scale could materially adversely affect our business.
We have limited experience manufacturing UAVs. We do not know whether or when we will be able to develop efficient, low-cost manufacturing capabilities and processes that will enable us to manufacture (or contract for the manufacture of) these products in commercial quantities while meeting the volume, speed, quality, price, engineering, design and production standards required to successfully market our products. Our failure to develop such manufacturing processes and capabilities in locations that can efficiently service our markets could have a material adverse effect on our business, financial condition, results of operations and prospects. Our future profitability is, in part, dependent upon achieving increased savings from volume purchases of raw materials and component parts, achieving acceptable manufacturing yield, and capitalizing on machinery efficiencies. We expect our suppliers to experience a sharp increase in demand for their products. The extent to which we will have reliable access to supplies that we require or be able to purchase such materials or components at cost effective prices is uncertain. There is no assurance that we will ever be in a position to realize any material, labor and machinery cost reductions associated with higher purchasing power and higher production levels. Failure to achieve these cost reductions could adversely impact our business and financial results.
The operation of UAVs in urban environments may be subject to risks, such as accidental collisions and transmission interference, which may limit demand for our UAVs in such environments and harm our business and operating results.
Urban environments may present certain challenges to the operators of UAVs. UAVs may accidentally collide with other aircraft, persons, or property, which could result in injury, death or property damage and significantly damage the reputation of and support for UAVs in general. As the usage of UAVs has increased, the danger of such collisions has increased. Further, obstructions to effective transmissions in urban environments, such as large
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buildings, may limit the ability of the operator to utilize the aircraft for its intended purpose. The risks or limitations of operating UAVs in urban environments may limit their value in such environments, which may limit demand for our UAVs and consequently materially harm our business and operating results.
Economic, political and other risks associated with our international operations could adversely affect our revenues and international growth prospects.
We recently announced procurement of licenses specific to establish a drone-based delivery service in Dubai, UAE, in the name of our subsidiary Global Autonomous Corporation (“GAC”). We have intentions to establish offices in the UAE in the future, and intend to maintain inventory and employees at that location. Our subsidiary, Vayu, has also received drone orders from Nigeria through All American Contracting.
We intend to expand our international presence as part of our business strategy. Our international operations are subject to a number of risks inherent to operating in foreign countries, and any expansion of our international operations will amplify the effects of these risks, which include, among others:
differences in culture, economic and labor conditions and practices;
the policies of the U.S. and foreign governments;
disruptions in trade relations and economic instability;
differences in enforcement of contract and intellectual property rights;
social and political unrest;
natural disasters, terrorist attacks, pandemics or other catastrophic events;
complex, varying and changing government regulations and legal standards and requirements, particularly with respect to tax regulations, price protection, competition practices, export control regulations and restrictions, customs and tax requirements, immigration, anti-boycott regulations, data privacy, intellectual property, anti-corruption and environmental compliance, including the Foreign Corrupt Practices Act;
greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; and
greater difficulty in accounts receivable collections and longer collection periods.
We are also affected by domestic and international laws and regulations applicable to companies doing business abroad or importing and exporting goods and materials. These include tax laws, laws regulating competition, anti-bribery/anti-corruption and other business practices, and trade regulations, including duties and tariffs. Compliance with these laws is costly, and future changes to these laws may require significant management attention and disrupt our operations. Additionally, while it is difficult to assess what changes may occur and the relative effect on our international tax structure, significant changes in how U.S. and foreign jurisdictions tax cross-border transactions could materially and adversely affect our results of operations and financial position.
There are other risks that are inherent in international operations, including the potential for changes in socio-economic conditions, laws and regulations, including, among others, competition, import, export, labor and environmental, health and safety laws and regulations, and monetary and fiscal policies, protectionist measures that may prohibit acquisitions or joint ventures, or impact trade volumes, unsettled political conditions; government-imposed plant or other operational shutdowns, backlash from foreign labor organizations related to our restructuring actions, corruption; natural and man-made disasters, hazards and losses, violence, civil and labor unrest, and possible terrorist attacks.
Additionally, if the opportunity arises, we may expand our operations into new and high-growth international markets. However, there is no assurance that we will expand our operations in such markets in our desired time frame. To expand our operations into new international markets, we may enter into business combination transactions, make acquisitions or enter into strategic partnerships, joint ventures or alliances, any of which may be
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material. We may enter into these transactions to acquire other businesses or products to expand our products or take advantage of new developments and potential changes in the industry. Our lack of experience operating in new international markets and our lack of familiarity with local economic, political and regulatory systems could prevent us from achieving the results that we expect on our anticipated time frame or at all. If we are unsuccessful in expanding into new or high- growth international markets, it could adversely affect our operating results and financial condition.
Our international operations require us to comply with anti-corruption laws and regulations of the U.S. government and various international jurisdictions in which we do business.
Doing business on a worldwide basis requires us to comply with the laws and regulations of the U.S. government and various international jurisdictions, and our failure to successfully comply with these rules and regulations may expose us to liabilities. These laws and regulations apply to companies, individual directors, officers, employees, and agents, and may restrict our operations, trade practices, investment decisions and partnering activities. In particular, our international operations are subject to U.S. and foreign anti-corruption laws and regulations, such as the Foreign Corrupt Practices Act, or the FCPA. The FCPA prohibits us from providing anything of value to foreign officials for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment, and requires us to maintain adequate record- keeping and internal accounting practices to accurately reflect our transactions. As part of our business, we may deal with state-owned business enterprises, the employees and representatives of which may be considered foreign officials for purposes of the FCPA. In addition, some of the international locations in which we operate lack a developed legal system and have elevated levels of corruption. As a result of the above activities, we are exposed to the risk of violating anti-corruption laws. Violations of these legal requirements are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures. We have established policies and procedures designed to assist us and our personnel in complying with applicable U.S. and international laws and regulations. However, there can be no assurance that our policies and procedures will effectively prevent us from violating these regulations in every transaction in which we may engage, and such a violation could adversely affect our reputation, business, financial condition and results of operations.
Risks Related to our Electronics Business
Competition in the electronics industry is strong. If we cannot successfully compete, our business may be adversely affected.
The production of electronic products has always had a strong lure for people interested in overseas manufacturing. We will compete against a large number of well-established product manufacturers with greater product and name recognition and with substantially greater financial and marketing capabilities than ours, as well as against a large number of small specialty producers. There can be no assurance that we can compete successfully in this complex and changing market. If we cannot, our business will be adversely affected.
A small number of customers account for a substantial majority of our electronics net revenue, and if our relationships with any of these retailers is harmed or terminated, or the level of business with them is significantly reduced, our results of operations may be harmed.
We depend on a small number of customers for a substantial majority of our electronics business and believe that in the future we will continue to generate a substantial majority of our electronic net revenue from a small number of customers. We do not typically enter into binding long-term contracts with our customers. We generally sell our devices on the basis of purchase orders, and our customers may cancel or defer orders with little or no notice and without significant or any penalties. Our ability to maintain close and satisfactory relationships with our customers is important to the ongoing success and profitability of our business. If any of our significant customers reduces, delays or cancels its orders, or the financial condition of our key customers deteriorates, our business may be seriously harmed. In addition, our customers may become competitors. If we were to lose one of our major customers, or if a major customer were to significantly reduce its volume of business with us, our electronic net
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revenue and gross profit could be materially reduced, which could have a significant adverse impact on our business, financial condition and results of operations.
Risks Related to Our Class A common stock
We may, in the future, issue additional securities, which would reduce our stockholders' percent of ownership and may dilute our share value.
Our Certificate of Incorporation, as amended to date, authorizes us to issue 200,000,000 shares of Class A common stock, 10,000,000 shares of Class B common stock and 15,000,000 Class C stock. As of the date of this prospectus, we had 24,224,657 shares of Class A common stock outstanding; 906,012 shares of Class B common stock issued and outstanding; and 1,528,460 shares of Class C common stock issued and outstanding.
The future issuance of additional shares of Class A common stock will result in additional dilution in the percentage of our Class A common stock held by our then existing stockholders. We may value any Class A common stock issued in the future on an arbitrary basis including for services or acquisitions or other corporate actions that may have the effect of diluting the value of the shares held by our stockholders, and might have an adverse effect on any trading market for our Class A common stock. Additionally, our board of directors may designate the rights terms and preferences of one or more series of preferred stock at its discretion including conversion and voting preferences without prior notice to our stockholders. Any of these events could have a dilutive effect on the ownership of our shareholders, and the value of shares owned.
Raising additional capital or purchasing businesses through the issuance of common stock will cause dilution to our existing stockholders.
We may seek additional capital through a combination of private and public equity offerings, debt financings, collaborations, and strategic and licensing arrangements, as well as issuing stock to make additional business or asset acquisitions. To the extent that we raise additional capital through the sale of common stock or securities convertible or exchangeable into common stock or through the issuance of equity for purchases of businesses or assets, your ownership interest in Alpine 4 will be diluted.
Future sales of substantial amounts of our Class A common stock into the public and the issuance of the shares upon conversion of the outstanding convertible notes will be dilutive to our existing stockholders and could result in a decrease in our stock price.
Raising additional capital may restrict our operations or require us to relinquish rights.
We may seek additional capital through a combination of private and public equity offerings, debt financings, collaborations, and strategic and licensing arrangements. To the extent that we raise additional capital through the sale of common stock or securities convertible or exchangeable into common stock, the terms of any such securities may include liquidation or other preferences that materially adversely affect your rights as a stockholder. Debt financing, if available, would increase our fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration, strategic partnerships and licensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property, future revenue streams or grant licenses on terms that are not favorable to us.
Market volatility may affect our stock price and the value of your shares.
The market price for our Class A common stock is likely to be volatile, in part because of the volume of trades of our Class A common stock. In addition, the market price of our Class A common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including, among others:
announcements of new products, brands, commercial relationships, acquisitions or other events by us or our competitors;
regulatory or legal developments in the United States and other countries;
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fluctuations in stock market prices and trading volumes of similar companies;
general market conditions and overall fluctuations in U.S. equity markets;
social and economic impacts resulting from the global COVID-19 pandemic;
variations in our quarterly operating results;
changes in our financial guidance or securities analysts' estimates of our financial performance;
changes in accounting principles;
our ability to raise additional capital and the terms on which we can raise it;
sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders;
additions or departures of key personnel;
discussion of us or our stock price by the press and by online investor communities; and
other risks and uncertainties described in these risk factors.
If securities or industry analysts do not publish or cease publishing research or reports or publish misleading, inaccurate or unfavorable research about us, our business or our market, our stock price and trading volume could decline.
The trading market for our Class A common stock will be influenced by the research and reports that securities or industry analysts may publish about us, our business, our market or our competitors. We currently have limited coverage and may never obtain increased research coverage by securities and industry analysts. If no or few securities or industry analysts cover our company, the trading price and volume of our stock would likely be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, or provides more favorable relative recommendations about our competitors, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price or trading volume to decline.
Future sales of our Class A common stock may cause our stock price to decline.
Sales of a substantial number of shares of our Class A common stock in the public market or the perception that these sales might occur could significantly reduce the market price of our Class A common stock and impair our ability to raise adequate capital through the sale of additional equity securities.
We may issue preferred stock with voting and conversion rights that could adversely affect the voting power of the holders of Class A common stock.
Pursuant to our Certificate of Incorporation, our Board of Directors may issue preferred stock with voting and conversion rights that could adversely affect the voting power of the holders of Class A common stock. In the fourth quarter of 2019, we issued shares of a newly designated Series B Preferred Stock to members of our Board of Directors. The outstanding shares of Series B Preferred Stock have voting rights in the aggregate equal to 200% of the total voting power of our other outstanding securities, giving our Board of Directors control over any matters submitted to the vote of the shareholders of Alpine 4. Any such provision may be deemed to have a potential anti-takeover effect, and the issuance of preferred stock in accordance with such provision may delay or prevent a change of control of Alpine 4. The Board of Directors also may declare a dividend on any outstanding shares of preferred stock.
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Our Class A common stock will be subject to potential delisting if we do not maintain the listing requirements of the Nasdaq, which would adversely affect the liquidity of our Class A common stock and our ability to raise additional capital or enter into strategic transactions.
Our failure to maintain our listing and our Class A common stock being delisted from Nasdaq would make it more difficult for stockholders to dispose of their shares of Class A common stock and more difficult to obtain accurate price quotations on our Class A common stock.
On June 2, 2022, the Company received a letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that, for the preceding 30 consecutive business days, the closing bid price for the Company’s Class A common stock (the “common stock”) was below the minimum $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”).
On April 18, 2023, we held our 2022 Annual Meeting of shareholders (the “Annual Meeting”). At the Annual Meeting, one of the matters voted on was a proposal to authorize the Board of Directors, at the discretion of the Board and if necessary to meet the Nasdaq Bid Price Requirement, but prior to the one-year anniversary of the date on which the Reverse Split Amendment is approved by the Company’s shareholders, to file an Amendment to the Company’s Certificate of Incorporation, as amended to date, to authorize a reverse stock split of the Company’s Class A, Class B, and Class C common stock with a ratio in the range between and including 1-for-1.5 shares and 1-for-10 shares. The goals of the Reverse Stock Split Amendment include regaining compliance with the Bid Price Requirement, although there can be no guarantee that the market price of our shares will continue to trade above the Bid Price Requirement.
On May 12, 2023, a Certificate of Amendment to the Amended and Restated Certificate of Incorporation, as amended to date, of Alpine 4, filed with the Secretary of State of Delaware, took effect. The Certificate of Amendment was filed to effect a one-for-eight (1-for-8) reverse split of the shares of the Company’s the Class A, Class B, and Class C common stock, and to decrease the number of shares of Class A common stock from 295,000,000 shares to 200,000,000 shares. The Reverse Split and the Class A common stock Decrease became effective on May 12, 2023. As a result of the Reverse Split, every 8 shares of the Company’s issued and outstanding Class A common stock automatically converted into one share of Class A common stock, without any change in the par value per share, and began trading on a post-split basis under the Company’s existing trading symbol, “ALPP,” when the market opened on May 15, 2023. Subsequently, on May 31, 2023, the Company received a letter from the Nasdaq Staff which stated that the Staff had determined that from May 15, 2023 to May 30, 2023, the closing bid price of the Company’s common stock had been at $1.00 per share or greater, and accordingly, the Company had regained compliance with Listing Rule 5550(a)(2) and this matter was closed.
There are many factors that may adversely affect our minimum bid price. Many of these factors are outside of our control. As a result, we may not be able to sustain compliance with Rule 5550(a)(2) in the long term. Any potential delisting of our Class A common stock from the Nasdaq would likely result in decreased liquidity and increased volatility for our Class A common stock and would adversely affect our ability to raise additional capital or to enter into strategic transactions, in addition to adversely impacting the perception of our financial condition and could cause reputational harm to investors and parties conducting business with us. Any potential delisting of our Class A common stock from the Nasdaq would also make it more difficult for our stockholders to sell our Class A common stock.
We will have broad discretion in how we use the net proceeds of future capital raising transactions. We may not use these proceeds effectively, which could affect our results of operations and cause our stock price to decline.
We will have considerable discretion in the application of the net proceeds of any future capital raising transactions. We intend to use the net proceeds from future capital raising transactions to fund development of our products and working capital and other general corporate purposes. As a result, investors will be relying upon management’s judgment with only limited information about our specific intentions for the use of the balance of the net proceeds of such capital raising transactions. We may use the net proceeds for purposes that do not yield a
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significant return or any return at all for our stockholders. In addition, pending their use, we may invest the net proceeds from that offering in a manner that does not produce income or that loses value.
The market price for our Class A common stock may be volatile, and an investment in our common stock could decline in value.
The stock market in general has experienced extreme price and volume fluctuations. The market prices of the securities of biotechnology and specialty pharmaceutical companies, particularly companies like ours without product revenues and earnings, have been highly volatile and may continue to be highly volatile in the future. This volatility has often been unrelated to the operating performance of particular companies. The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of our common stock:
announcements of technological innovations or new products by us or our competitors;
developments or disputes concerning patents or proprietary rights, including announcements of infringement, interference or other litigation against us or our potential licensees;
developments involving our efforts to commercialize our products, including developments impacting the timing of commercialization;
actual or anticipated fluctuations in our operating results;
changes in financial estimates or recommendations by securities analysts;
developments involving corporate collaborators, if any;
changes in accounting principles; and
the loss of any of our key management personnel.
In the past, securities class action litigation has often been brought against companies that experience volatility in the market price of their securities. Whether or not meritorious, litigation brought against us could result in substantial costs and a diversion of management’s attention and resources, which could adversely affect our business, operating results and financial condition.
We do not anticipate paying dividends on our classes of common stock and, accordingly, stockholders must rely on stock appreciation for any return on their investment.
We have never declared or paid cash dividends on our common stock and do not expect to do so in the foreseeable future. The declaration of dividends is subject to the discretion of our board of directors and limitations under applicable law, and will depend on various factors, including our operating results, financial condition, future prospects and any other factors deemed relevant by our board of directors. You should not rely on an investment in our company if you require dividend income from your investment in our company. The success of your investment will likely depend entirely upon any future appreciation of the market price of our common stock, which is uncertain and unpredictable. There is no guarantee that our common stock will appreciate in value.
We expect that our results of operations will fluctuate, and this fluctuation could cause our stock price to decline.
Our quarterly and yearly operating results are likely to fluctuate in the future. These fluctuations could cause our stock price to decline. The nature of our business involves variable factors, such as the timing of the research, development and regulatory pathways of our product candidates, which could cause our operating results to fluctuate.
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Risks Related to this Offering
Purchasers in the offering will suffer immediate dilution.
If we sell shares of our Class A common stock in future financings, stockholders may experience immediate dilution and, as a result, our stock price may decline.
We may from time-to-time issue additional shares of common stock at a discount from the current market price of our Class A common stock. As a result, our stockholders would experience immediate dilution upon the purchase of any shares of our Class A common stock sold at such discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred stock or Class A common stock. If we issue Class A common stock or securities convertible into Class A common stock, our Class A common stockholders would experience additional dilution and, as a result, our stock price may decline.
The issuance of warrants in this offering will cause you to experience additional dilution if those warrants are exercised.
In addition to the shares of Class A common stock we are issuing in this offering, we are also issuing an equal number of Warrants. The Warrants being issued in conjunction with this offering are exercisable for an equal number of shares of our common stock. If the holders of the Warrants exercise their Warrants, you will experience dilution at the time they exercise their Warrants.
We are also offering a warrant to the representative of the underwriters in this offering that is exercisable for 8% of the securities sold in this offering, excluding shares of common stock from units sold pursuant to the over-allotment option, if any. If the representative of the underwriters exercises this unit purchase option, you will experience additional dilution. If the representative of the underwriter exercises its unit purchase over-allotment option, you will experience additional dilution.
Warrants are speculative in nature.
The Warrants offered pursuant to this prospectus do not confer any rights of Class A common stock ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of our Class A commons stock at a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the Warrants may exercise their right to acquire the Class A common stock and pay an exercise price of $_____, prior to five (5) years from the date of issuance, after which date any unexercised Warrants will expire and have no further value. Moreover, following this offering, the market value of the Warrants is uncertain and there can be no assurance that the market value of the Warrants will equal or exceed their public offering price. There can be no assurance that the market price of the Class A common stock will ever equal or exceed the exercise price of the Warrants, and, consequently, whether it will ever be profitable for holders of the warrants to exercise the Warrants.
The Common Warrants and Pre-Funded Warrants will not be listed or quoted on any exchange.
There is no established public trading market for the Common Warrants or the Pre-Funded Warrants being offered in this offering, and we do not expect a market to develop. In addition, we do not intend to apply to list the Common Warrants or the Pre-Funded Warrants on any national securities exchange or other nationally recognized trading system, including Nasdaq. Without an active market, the liquidity of the Common Warrants and the Pre-Funded Warrants will be limited.
Except as otherwise provided in the Common Warrants and Pre-Funded Warrants, holders of Common Warrants and Pre-Funded Warrants purchased in this offering will have no rights as stockholders until such holders exercise their Common Warrants or Pre-Funded Warrants and acquire our Class A common stock.
Except as otherwise provided in the Common Warrants and Pre-Funded Warrants, until holders of Common Warrants and Pre-Funded Warrants acquire our Class A common stock upon exercise of the Common Warrants and Pre-Funded Warrants, holders of Common Warrants and Pre-Funded Warrants will have no rights with respect to
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our Class A common stock underlying such Common Warrants and Pre-Funded Warrants. Upon exercise of the Common Warrants or Pre-Funded Warrants, the holders will be entitled to exercise the rights of a holder of our Class A common stock only as to matters for which the record date occurs after the exercise date.
This is a best efforts offering; no minimum amount of securities is required to be sold, and we may not raise the amount of capital we believe is required for our business.
AGP has agreed to use its reasonable best efforts to solicit offers to purchase the securities in this offering. AGP has no obligation to buy any of the securities from us or to arrange for the purchase or sale of any specific number or dollar amount of the securities. There is no required minimum number of securities that must be sold as a condition to completion of this offering. Because there is no minimum offering amount required as a condition to the closing of this offering, the actual offering amount, Placement Agent fees and proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth in this prospectus. We may sell fewer than all of the securities offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this offering will not receive a refund in the event that we do not sell an amount of securities sufficient to pursue the business goals outlined in this prospectus. Thus, we may not raise the amount of capital we believe is required for our business and may need to raise additional funds, which may not be available or available on terms acceptable to us. Despite this, any proceeds from the sale of securities offered by us will be available for our immediate use, and because there is no escrow account and no minimum offering amount in this offering, investors could be in a position where they have invested in us, but we are unable to fulfill our objectives due to a lack of interest in this offering.
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DETERMINATION OF MARKET PRICE
The Selling Stockholders will offer shares of our Class A common stock at the prevailing market prices or privately negotiated prices.
The offering price of shares of our Class A common stock by the Selling Stockholders does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value.
Our Class A common stock may not trade at the market prices in excess of the offering prices for Class A common stock in any public market, will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for our Class A common stock.
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USE OF PROCEEDS
With respect to the sales of the Units, we estimate that the net proceeds to us will be approximately $___ million, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also receive proceeds upon the exercise of the Common Warrants which are part of the Units (to the extent the registration statement of which this prospectus is a part is then effective and, if applicable, the cashless exercise provision is not utilized by the holder). No assurances can be given that any of such Warrants will be exercised.
We intend to use the net proceeds from the offering of the Units and from any exercises of the Warrants for general corporate purposes and working capital, research and development, and repayment of certain outstanding debt. The Company intends to use the proceeds for the repayment of the convertible Senior Promissory Note (the “Senior Note”) issued to Mast Hill Fund L.P. in June 2023. The Senior Note bears annual interest of 12% and is currently scheduled to mature on June 29, 2024. The Senior Note proceeds were used for general corporate purposes and working capital.
We will receive none of the proceeds from the sale of the Class A common stock by the Selling Stockholders in this offering. We may receive proceeds upon the exercise of any of the warrants held by the Selling Stockholders (to the extent the registration statement of which this prospectus is a part is then effective and, if applicable, the cashless exercise provision is not utilized by the holder). Any proceeds will be used for general corporate and working capital or for other purposes that the Board of Directors, in their good faith, deems to be in the best interest of the Company. No assurances can be given that any of such Warrants will be exercised.
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MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Price of Our Class A Common Stock
Our Class A common stock trades on The Nasdaq Capital Market under the symbol “ALPP.”
Holders
As of the date of this prospectus, we had 372 registered holders of record of our Class A common stock based on 24,224,657 shares of our Class A common stock issued and outstanding, 9 registered holders of record of our Class B common stock based on 906,012 shares of our Class B common stock issued and outstanding, and 453 registered holders of record of our Class C common stock based on 1,528,460 shares of our Class C common stock issued and outstanding. This number does not include an indeterminate number of stockholders whose shares are held by brokers in street name.
Dividend Policy
We have never paid or declared any cash dividends on our Class A common stock and do not anticipate paying cash dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the operation of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our Board of Directors. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
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BUSINESS
Company Background
Alpine 4 Holdings, Inc (“we”, “our”, “Alpine 4”, the “Company”) was incorporated under the laws of the State of Delaware on April 22, 2014. We are a publicly traded conglomerate that acquires businesses that fit into our disruptive business model of Drivers, Stabilizers, and Facilitators (“DSF”). 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.
As of the date of this prospectus, we are a holding company that owns twelve operating subsidiaries:
A4 Corporate Services, LLC;
Quality Circuit Assembly, Inc. ("QCA");
Morris Sheet Metal, Corp. ("MSM");
JTD Spiral, Inc.;
Excel Construction Services, LLC ("Excel");
Vayu Aerospace Corp.;
Thermal Dynamics International, Inc. ("TDI");
Alternative Laboratories, LLC. ("Alt Labs");
Identified Technologies, Corp. ("IDT");
Elecjet Corp.;
DTI Services LLC (doing business as RCA Commercial ("RCA")); and
Global Autonomous Corp. ("GAC").
Who We Are
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. We 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 subsidiaries. The essence of our business model is based around acquiring B2B companies in a broad spectrum of industries via our DSF acquisition strategy (Drivers, Stabilizer, Facilitator). Our DSF business model (which is discussed further below) offers our shareholders an opportunity to own small-cap businesses that hold market share in their individual market space. Further, we believe our 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.
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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.
Facilitators: “Facilitators” are our “secret sauce”. Facilitators are companies that provide a product or service that an Alpine 4 subsidiary can use as leverage to create a competitive advantage.
We believe 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. We believe our greatest competitive advantage is our highly diversified business structure combined with a collaborative business culture, that helps mitigate competition in our markets by bringing resources, planning, technology and capacity that our competitors simply don’t have. We intend for DSF to reshape the environment that each subsidiary operates in by sharing and exploiting the resources each subsidiary has, thus giving them a competitive advantage over their peers.
Diversification
Our goal is to become a leading, multi-faceted holding company with subsidiaries that have diverse products and services. We are structured as a holding company with management teams who will run each subsidiary with specific industry related experience. Our CEO, Kent Wilson, will help guide our portfolio of subsidiaries as needed. We will work with our management teams to ensure that our core principles of synergy, innovation, drive, and excellence are implemented and internalized. Further, we plan to work with our capital partners to provide the proper capital allocation and make sure that each subsidiary is operating at optimal levels.
In 2016, we saw the beginning of our plan for diversification take hold with the acquisition of QCA, when we acquired 100% of QCA’s stock effective April 1, 2016.
In April 2018, we acquired 100% of American Precision Fabricators (“APF”).
On January 1, 2019, we 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” or “MSM”).
On November 6, 2019, we completed our acquisition of Deluxe Sheet Metal, Inc., an Indiana corporation, DSM Holding, LLC, an Indiana limited liability company, and the real estate assets of Lonewolf Enterprises, LLC, an Indiana limited liability company (collectively “Deluxe”).
Starting in the first quarter of 2020, we also created 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”), A4 Aerospace Corporation (“A4 Aerospace”), and A4 Defense Services, Inc. (“A4 Defense Services”). All of these holding companies 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 subsidiaries.
On February 21, 2020, the Company, through our subsidiary A4 Construction completed the acquisition of Excel Fabrication, LLC, an Idaho Limited Liability Company (“Excel”). Excel subsequently changed its name to Excel Construction Services, LLC.
On November 13, 2020, the Company and a newly formed and wholly owned subsidiary of the Company named ALPP Acquisition Corporation 1, Inc. a Delaware corporation (“Merger Sub 1”), entered into a merger agreement (the “IA Agreement”) with Impossible Aerospace Corporation, a Delaware corporation (“IA”), pursuant to which IA merged with and into Merger Sub 1 (the “IA Merger”). On November 12, 2020, the Company created
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Merger Sub 1 and became its sole shareholder. Merger Sub 1 was created solely for the purpose of the IA Merger. The IA Merger closed on December 15, 2020.
On December 29, 2020, the Company and a newly formed and wholly owned subsidiary of the Company named ALPP Acquisition Corporation 2, Inc. a Delaware corporation (“Merger Sub 2”), entered into a merger agreement (the “Vayu Agreement”) with Vayu (US), Inc., a Delaware corporation (“Vayu”), pursuant to which Vayu merged with and into Merger Sub 2 (the “Vayu Merger”). On December 29, 2020, the Company created Merger Sub 2 and became its sole shareholder. Merger Sub 2 was created solely for the purpose of the Vayu Merger. The Vayu Merger closed on February 8, 2021.
In March 2021, we announced the combination of the operations of our subsidiaries Deluxe and MSM. Both companies will be under the Morris Sheet Metal brand. The Company’s management believes that the combination of these businesses will create a more harmonious relationship between the two companies. The combining of resources should empower Morris to strengthen its brand through its strategic banking relationship, eliminate duplicative and competitive interests, and expand its footprint beyond the Indiana home base.
On May 5, 2021, we acquired all of the outstanding shares of stock of TDI.
On May 10, 2021, we acquired all of the outstanding membership interests of KAI Enterprises, LLC, a Florida limited liability company, the sole asset of which was all of the outstanding membership interests of Alt Labs.
In June 2021, we announced the combination of our subsidiaries Impossible Aerospace (“IA”) and Vayu (US) to become Vayu Aerospace Corporation (“Vayu”). Our management believes that the combination of these subsidiaries will create a more harmonious relationship between the two companies. The combining of resources should empower Vayu to strengthen its brand through its strategic banking relationship, eliminate duplicative and competitive interests, and expand its footprint beyond the Michigan home base.
On October 20, 2021, the Company, and the Company’s subsidiary, A4 Aerospace, entered into a Stock Purchase Agreement with Identified Technologies Corporation, a Delaware corporation with foreign registration in Pennsylvania (“Identified Technologies”). Pursuant to the Stock Purchase Agreement, A4 Aerospace purchased all of the outstanding capital stock of Identified Technologies, a total of 6,486,044 shares (the “ITC Shares”). The total purchase price for the ITC Shares was $4,000,000 and was paid with 111,111 shares of the Company’s Class A common stock, issued to the IDT’s shareholders. Following the closing of the transaction, A4 Aerospace owned 100% of the capital stock of Identified Technologies.
On November 29, 2021, the Company, and a newly formed and wholly owned subsidiary of the Company named ALPP Acquisition Corporation 3, Inc. a Delaware corporation (“AC3”), entered into a merger agreement with Elecjet, a Delaware corporation and the three Elecjet shareholders. Pursuant to the Agreement, AC3 merged with and into Elecjet. AC3 was created solely for the purpose of the merger with Elecjet, and Elecjet was the surviving entity following the merger.
On December 9, 2021, the Company, and the Company’s subsidiary, A4 Technologies, entered into a Membership Interest Purchase Agreement with DTI Services Limited Liability Company (doing business as RCA Commercial Electronics), an Indiana limited liability company (“DTI”), Direct Tech Sales LLC, (also having an assumed business name of RCA Commercial Electronics), an Indiana limited liability company (“Direct Tech”), PMI Group, LLC, an Indiana limited liability company (“PMI”), Continu.Us, LLC, an Indiana limited liability company (“Continu.Us”), Solas Ray, LLC, an Indiana limited liability company (“Solas”), and the two individual owners of these entities. DTI, Direct Tech, PMI, Continu.Us, and Solas were referred to in the Membership Interest Purchase Agreement collectively as “RCA.” Pursuant to the Membership Interest Purchase Agreement, the Company acquired all of the outstanding membership interests of RCA.
In Q1 2022, we formed Global Autonomous Corporation (“GAC”) with several key employees and consultants. The Company owns 71.43% of the outstanding shares of stock of GAC.
As of the date of this prospectus, the Company is exploring additional acquisition and merger transactions.
Corporate Information
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Alpine 4 maintains our corporate office located at 2525 E. Arizona Biltmore Circle, Suite 237, Phoenix, Arizona 85016. QCA rents a location at 1709 Junction Court #380 San Jose, California 95112. Morris Sheet Metal and JTD Spiral are located at 6212 Highview Dr, Fort Wayne, Indiana 46818. Excel Construction Services’ office and fabrication space are located at 297 Wycoff Cir, Twin Falls, Idaho 83301. Vayu has its headquarters at 3753 Plaza Drive, Ann Arbor, Michigan 48108. The headquarters for TDI are located at 14955 Technology Ct, Fort Myers, Florida 33912. Alt Labs has its headquarters at 4740 S. Cleveland Ave. Fort Myers, Florida 33907. Elecjet has its headquarters at 5935 W 84th St, Indianapolis, Indiana 46278. RCA Commercial Electronics has its headquarters at 5935 W 84th St, Indianapolis, Indiana 46278. Global Autonomous Corporation has its offices at 2525 E Arizona Biltmore Circle, Suite 237, Phoenix Arizona 85016.
Subsidiaries and Product Groups
At the core of our business strategy is our focus on scalable corporate platform solutions. We have built a strong portfolio of manufacturing, software, and energy driven businesses with a focus on long-term value creation. We have the following subsidiaries and product groups:
Current Revenue Generators - This represents our subsidiaries that are currently generating revenue from operations (ordered from highest to lowest based on 2022 full year revenue).
RCA is engaged in the design and wholesale distribution/sale of commercial LED lighting and electronics such as televisions, mounting solutions, projectors and screens, audio equipment, digital signage, mobile audio and video systems, and all wire and connecting products throughout the United States of America. In May 2023, RCA amended and extended its licensing agreement for the RCA trademark to include additional product lines such as computer monitors, outdoor televisions, energy storage systems and batteries through December 2027.
MSM is a commercial sheet metal contractor and fabricator. MSM designs, fabricates, and installs dust collectors, commercial ductwork, kitchen hoods, industrial ventilation systems, machine guards, architectural work, water furnaces, for commercial construction projects. MSM is a licensed contractor and a member of the Sheet Metal & Air Conditioning Contractors' National Association (“SMACNA”).
JTD is a sister company to MSM and provides specialized spiral duct work to MSM clientele.
Deluxe is a commercial sheet metal contractor and fabricator. In 2021, Deluxe was operationally merged into MSM, with all new project work operating under the MSM brand.
QCA provides contract manufacturing solutions, custom design (unless the customer comes with their own design) and engineering and manufacturing services including PCB Assembly, Cable & Harness and Box Builds & Mechanical Assembly to customers such as Apple, Rivian, and Tesla. Our customers engage our services via strategic business partnerships. Our abilities encompass a wide variety of skills, beginning with prototype development and culminating in the ongoing manufacturing of a complete product or assembly. QCA provides turnkey solutions that are tailored around each customer's specific needs. QCA’s primary aim is to provide contract-manufacturing solutions to market leading companies within the industrial, scientific, instrumentation, military, medical and green industries. QCA’s manufacturing facility has been certified by Orion Registrar, who is accredited by the American National Standards Institute (“ANSI”) National Accreditation Board, with a AS9100D (Quality Management Systems - Requirements for Aviation, Space, and Defense Organizations) certification, ISO 13485 certified for medical devices, along with the U.S. federal government under its International Traffic in Arms Regulation (“ITAR”).
Alt Labs is a dietary and nutritional supplement contract manufacturer located in Southwest Florida. Our mission is to provide our clients with successful, cutting edge and effective supplements. We intend for our honest and transparent, solution-driven approach to the entire product development and manufacturing process to offer a refreshing alternative to current industry standards. Generally, Alt Lab’s customers provide the formula for the supplements they are contracted to make. However, Alt
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Labs has the ability to assist customers in developing their formulas for certain supplements when requested by a customer. With over 17 independent production rooms, 2 pharmacy operations, and an excess of 5,000 kilograms of powder and liquid blending capacity, Alt Labs is uniquely positioned to service orders from 1,000 units to over 100,000 units. We believe we are experts in the product development cycle from concept and design to development and feasibility to efficient manufacturing and on-time delivery. We believe we offer unique, industry-leading sensory panel data to our customers to ensure that they receive the absolute best tasting products in the industry. Alt Labs manufacturing facilities have been certified cGMP (current Good Manufacturing Practice) as audited by the National Sanitation Foundation (“NSF”).
TDI is a fabricator and project management services company focusing on projects associated with the United States government, including the Department of Defense and Department of State. TDI specializes in managing complex projects, assets and infrastructure for its customers, including support and services for the engineering, design, logistics and installation of HVAC, Control and Electrical systems in government facilities inside and outside the United States.
Excel is an industrial construction company with customers in the food & beverage, dairy, mining, petrochemical, mineral, and ammonia refrigeration industries. Excel’s capabilities include a vast amount of field work including new fabrication, design build, installation, repairs, service, maintenance, turn arounds, down days planned or unplanned with quick and responsive teams for most any items required by the customer’s needs and demands.
Early Stage Growth Subsidiaries - The below subsidiaries have only recently begun to generate small revenues from their operations. We believe they could represent revenue growth potential if we are able to secure the necessary contracts for each to support their operations.
Elecjet operates as an early stage manufacturer of electronic components, as well as a developer of new battery technologies including graphene and solid-state batteries. Elecjet currently has developed two forms of battery cells, a graphene-based lithium ion cell sold in the form of a ESS battery pack and the AX class of solid state batteries.
Identified Technologies is an early stage drone software company that provides geospatial and 3D data to customers in Construction, Oil/Gas, Mining, and Quarries. Customers capture the raw data on site with small Unmanned Aerial Systems and use automated software to convert the raw imagery to geospatial data. Identified Technologies can both enable customers to deploy their own drone departments, and deploy certified pilots to capture the data as a service.
Vayu’s mission is to solve the hardest and most critical logistics challenges, anywhere in the world. Vayu aims to set the standard and lead the market in safe, reliable, and affordable vertical take-off and landing (“VTOL”) aircrafts through its unmanned aerial vehicles. Vayu currently manufactures its line of drones with all airframes designed, engineered and manufactured in the Unites States. In the second half of 2022, Vayu signed a supplier agreement with All American Contracting Solutions that has the ability to create significant value for the company over the next four years. Vayu recently received its first purchase order via the supplier agreement for 10 G1 MKIII Fixed Wing UAV's for $5.25 million with delivery expected either later this year or early 2024.
UAV Supply Agreement
On October 26, 2022, our subsidiary Vayu Aerospace Corporation, entered into an Unmanned Aerial Vehicles Supply Agreement (the “UAV Agreement”) with All American Contracting Solutions, Inc., a Georgia Corporation (“All American”).
Pursuant to the UAV Agreement, All American agreed to purchase from Vayu up to 225 units of Vayu’s model G1 drones over a four-year period from January 2023 - December 2026. Specifically, Vayu agreed to manufacture and supply All American with the amount of Unmanned Aerial Vehicles (“UAVs”) as set forth on certain purchase orders to be submitted by All American. All American agreed to purchase 100% of its UAVs from Vayu directly,
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and to not manufacture or purchase from any other third party during the term of the UAV Agreement. The parties agreed that payment for the UAVs would be made when orders were placed, according to the pricing set forth in the Agreement.
All American agreed that it would provide to Vayu a binding forecast of all of its needs for UAVs for the first calendar quarter of 2023, and a non-binding forecast for the remaining three quarters of 2023. All American will continue to provide a rolling forecast of its UAV requirements. Vayu agreed to maintain and follow quality control standards and testing programs consistent with applicable ISO regulatory standards, and that all UAVs delivered would conform to the specifications agreed to by the parties. Vayu further agreed that the UAVs would be manufactured in compliance with all applicable present and future orders, regulations, requirements and laws of any and all federal, state, provincial and local authorities and agencies. Vayu received its first purchase order from All American in July 2023 for $5.25 million with delivery expected to occur in Q4 2023 or Q1 2024.
Elecjet Batteries
In March 2022, Elecjet engaged the Battery Innovation Center (“BIC”) in Newberry, Indiana, with the purpose to provide independent third-party testing and verification of the specifications of certain of Elecjet’s AX class of solid-state batteries to show potential customers the capabilities of Elecjet’s solid-state batteries. The testing included puncture testing, folding/crumpling tests, and thermal heat tests. The AX Battery Class is a Ceramic Oxide solid-state battery and comes in the form of a 31Ah Solid-State Battery and a 10Ah Solid-State Battery. Elecjet engaged the BIC to perform several types of testing, ranging from verification of its charge capabilities, to energy density / power density, to induced failure point testing. The BIC tested two versions of the AX 31Ah the AX-01 and the AX-02. These two subclasses are designed for different market segments.
The results of the BIC showed that the AX-01 is an ultra-safe version that can withstand a variety of survivability use cases. The AX-01 has a slightly different material composition that enables its amazing survivability characteristics. The BIC confirmed that the AX-01 withstood being punctured, then folded, and finally crumpled while still holding a charge. The cell was then put through a temperature destruction test where the cell survived to a temperature of 410 degrees Fahrenheit (210 degrees Celsius). Details of the tests are described below:
Nail Puncture Test: The AX-01 was punctured by a 3mm diameter nail. The nail was left inside the battery, purposely causing the battery to short, of which it did for over an hour while being suspended in the air. The battery's temperature fluctuated but would hover at around 98.6°F (37°C) near the end of the hour with a maximum measured temperature of 101.76°F (38.76°C). Subsequently, the battery was lowered back on to the metal surface for the nail to be removed and the battery quickly returned to room temperature. One amazing feature of the battery was that during the entirety of the test, the AX-01 was holding voltage and remained functional. Note: Traditional lithium batteries typically would instantly catch on fire and go into thermal runaway the moment the battery was punctured.
Fold/Crumple Test: After the puncture test, the AX-01 was folded over its long side (AX-01 is a long rectangular shape) by a mechanical actuator. After it was folded to the point that both ends were touching each other, the battery was attempted to be folded over again by its short side. After being folded with as much force as the mechanical actuator could press out, the battery remained functional throughout the entire process and remained at room temperature. Note: Standard lithium batteries would normally catch on fire after being folded at even a small angle.
Thermal Heat Test: The battery was placed in an oven and the oven would slowly and constantly increase in temperature to test the battery's heat exposure breaking point. The temperature of the battery was brought up to 428°F (220°C) before thermal runaway occurred creating a new BIC record. Once the battery eventually caught fire, the fire was unlike other thermal runaways where a battery spews a stream of fire from a concentrated point, but rather was much more contained to the surface area across the battery. Note: Typical lithium batteries would have a thermal runaway at 266°F (130°C) and the previous highest recorded temperature before thermal runaway on cells of similar capacity, with fielded chemistries, at the BIC was 302°F (150°C).
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The BIC confirmed that the AX-01 measured a discharge energy of 111.41Wh at a C/2 rate (measured 31.70 Ah)). At a nominal volume of 0.17571 Liters for each cell and a nominal mass of 0.395 kg, this translates to 634Wh/L and 282Wh/kg of energy densities which are both dramatic improvements over current battery technology.
The AX-01 has a designed commercial cycle life of over 1,200 charge cycles. (Please note: this life cycle range was tested only in the Company’s laboratories, and we have not yet received results from the BIC, which generally takes several months to complete.)
The AX-02 is an energy dense cell that also has a high degree of survivability but trades some of the safety material features of the AX-01 for much higher power densities and higher life cycles.
The BIC confirmed that the AX-02 has the capability to charge at 4C. This means that the battery can fully charge in just 15 minutes. The AX-02 is also capable of 7C discharging and over 2,400 life cycles, both of which are currently in the process of being confirmed by the BIC.
The BIC also confirmed that the AX-02 measured a discharge energy of 113.213Wh at a C/2 rate (measured 31.4 Ah). At a nominal volume of 0.17571 Liters for each cell and a nominal mass of 0.395 kg, this translates to 644Wh/L and 287Wh/kg of energy densities which are both dramatic improvements over current battery technology.
Additionally, Elecjet has been exploring and has had discussions with different battery engineering firms, capital partners and consultants, in anticipation of bringing initial production of the Elecjet AX Class of batteries. Elecjet will initially target the United States for distribution. The Company has also taken an equity position in a battery design firm, and is exploring other strategic opportunities relating to production and design of the batteries in the United States.
Competition
Corporate
With respect to Alpine 4, as the parent holding company, in identifying, evaluating and selecting target businesses for initial business acquisitions or combinations, we may encounter intense competition from other entities having a business objective similar to ours, including private equity groups, leveraged buyout funds, and operating businesses seeking strategic business combinations. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the initial business combination of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Construction
The construction and maintenance industry is highly competitive and the markets in which we compete have numerous companies that provide similar services. Factors influencing our competitiveness include price, reputation for quality, ability to reduce customer costs, experience and expertise, financial strength, surety bonding capacity, knowledge of local markets and conditions, and customer relationships. Competitors tend to be regional firms that vary in size and depth of resources.
Manufacturing - QCA
We believe that the primary basis of competition in our targeted markets is manufacturing technology, quality, responsiveness, the provision of value-added services, and price. To remain competitive, we must continue to provide technologically advanced manufacturing services, maintain quality levels, offer flexible delivery schedules, deliver finished products on a reliable basis, and compete favorably on the basis of price.
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The electronic manufacturing services industry is large and diverse and is serviced by many companies, including several that have achieved significant market share. Because of our market’s size and diversity, we do not typically compete for contracts with a discreet group of competitors. We compete with different companies depending on the type of service or geographic area. Certain of our competitors have greater manufacturing, financial, research and development, and marketing resources. We also face competition from current and prospective customers that evaluate our capabilities against the merits of manufacturing products internally.
Manufacturing - Alt Labs
We compete with other manufacturers, distributors and marketers of vitamins, minerals, herbs, and other nutritional supplements both within and outside the U.S. The nutritional supplement industry is highly competitive, and we expect the level of competition to remain high. Our ability to scale our business and grow our revenue depends on our ability to maintain the value and reputation of our brands in the face of this competition. The nutritional supplement industry is highly fragmented and competition for the sale of nutritional supplements comes from many sources. We do not believe it is possible to accurately estimate the total number or size of our competitors. The nutritional supplement industry has undergone some consolidation in the recent past and we expect that trend may continue in the near term. We seek to differentiate ourselves by being familiar with our clients and providing a personalized experience. We believe that none have effectively combined the product, personal coaching, education and the product access provided by our sales employees and, further, that these efforts are compounded by the peer pressure our clients generate through our organized group sales presentations.
We face intense competition from competitors that are larger, more established and that possess greater resources than we do, and if we are unable to compete effectively, we may be unable to gain sufficient market share to sustain profitability. If our competitors market nutritional supplement products that are less expensive, safer or otherwise more appealing than our current and potential products, or that reach the market before our current and potential products, we may not achieve operational or financial success. The market may choose to continue utilizing existing products for any number of reasons, including familiarity with or pricing of these existing products. The failure of any of our products to compete with products marketed by our competitors would impair our ability to generate revenue, which would have a material adverse effect on our future business, financial condition, results of operations, and cash flows.
Aerospace / Drones
There has been a proliferation of startups in the drone industry, driving fragmentation and lowering prices. We believe that this fragmentation does little to address the needs of users of drones or our future customers. We expect that as the industry grows, customers will ultimately rely on companies and platforms that consolidate solutions to unify the key categories of the drone industry. We expect competition in the drone industry, which is already intense, to increase as other companies enter the drone market, as customers’ requirements evolve, and as new products and technologies are introduced. Several of our competitors have greater name recognition, much longer operating histories, greater financial resources, more and better-established customer relationships, larger sales forces and significantly greater resources. As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer requirements or devote greater resources to the development, promotion and sale of their products than us, hampering our ability to successfully compete with respect to certain of these factors. Increased competition may lead to price cuts or the introduction of products available for free or at a nominal price, fewer customer orders, reduced gross margins, longer sales cycles and loss of market share. We may not be able to compete successfully against current and future competitors, and our business, results of operations and financial condition may be harmed if we fail to meet these competitive pressures.
Electronics - RCA
We believe the principal competitive factors impacting the market for our devices are brand, price, features, quality, design, consumer service, time-to-market and availability. We believe that we compete favorably in these areas. The commercial electronics market in which we operate is highly competitive and includes large, well-established companies. Our Smart TVs face competition from large consumer electronics brands such as Amazon, Samsung, Sony, LG, Hisense, TCL and Onn, Walmart’s private-label brand.
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Many of our existing and potential competitors enjoy substantial competitive advantages, such as:
access to greater resources in connection with research and development, including regarding development of advertising solutions;
the ability to more easily undertake extensive marketing campaigns;
the capacity to leverage their sales efforts and marketing expenditures across a broader portfolio of devices and services;
the ability to implement and sustain aggressive pricing policies;
the ability to obtain favorable pricing or allocations of key components from manufacturers or suppliers, including LCD panels, which are supplied for our devices to a significant extent by affiliates of our competitors;
the ability to exert significant influence on sales channels;
broader distribution, including by selling devices internationally and more established relationships with customers;
access to larger established customer base;
access to greater resources to make acquisitions;
the ability to rapidly develop and commercialize new technologies and services;
the ability to bundle competitive offerings with other devices and services;
the ability to cross-subsidize low-margin operations from their other higher-margin operations; and
the ability to secure rights or partnerships to content, including exclusive content, that consumers may prefer over our content.
Electronics - Elecjet
The battery market is rapidly evolving and highly competitive. With the introduction of new technologies and the potential entry of new competitors into the market, we expect competition to increase in the future, which could harm our business, results of operations, or financial condition. Our prospective competitors include major manufacturers currently supplying the industry, automotive OEMs and potential new entrants to the industry. Major companies now developing batteries include Panasonic Corporation, Samsung SDI, Contemporary Amperex Technology Co. Limited, LG Energy Solutions, BYD Co. Limited and QuantumScape. They supply conventional lithium-ion batteries and in many cases are seeking to develop solid-state batteries, including potentially lithium-metal batteries. In addition, because of the importance of electrification, many automotive OEMs are researching and investing in solid-state battery efforts and, in some cases, in battery development and production. For example, Tesla, Inc. is building multiple battery gigafactories and potentially could supply batteries to other automotive OEMs, and Toyota Motors and a Japanese consortium have a multi-year initiative pursuing solid-state batteries.
A number of development-stage companies such as SES, Solid Power and Enovix are also seeking to improve conventional lithium-ion batteries or to develop new technologies for solid-state and/or lithium-metal batteries. Potential new entrants are seeking to develop new technologies for cathodes, anodes, electrolytes and additives. Some of these companies have established relationships and are in varying stages of development. We believe our ability to compete successfully with lithium-ion battery manufacturers and with other companies seeking to develop solid-state batteries will depend on a number of factors including battery price, safety, energy density, charge rate and cycle life, and on non-technical factors such as brand, established customer relationships and financial and manufacturing resources. Many of the incumbents have, and future entrants may have, greater resources than we have and may also be able to devote greater resources to the development of their current and future technologies. They may also have greater access to larger potential customer bases and have and may continue to establish
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cooperative or strategic relationships amongst themselves or with third parties that may further enhance their resources and offerings.
We would be at a competitive disadvantage if our competitors bring their next generation devices and services to market earlier than we do, if their devices or services have lower prices, better features, more content (or more preferable content) or are more technologically advanced than ours, or if any of our competitors’ devices or services were to become preferred by customers. To the extent we are unable to effectively compete against our competitors for any of these reasons or otherwise, our business, financial condition and results of operations may be harmed.
Suppliers
The Company and its subsidiaries have a diverse supply chain including both domestic and international suppliers. The Company consistently analyzes and monitors its supplier concentration and make adjustments as necessary to minimize the concentration risk.
Government Regulation
The Company and our subsidiaries are subject to standard workspace governmental regulations including, but not limited to, Occupational Safety and Health Administration (“OSHA”) and Environmental Protection Agency (“EPA”) requirements for our facilities.
Our operations are subject to various federal, state and local laws and regulations including: (i) authorization from the FCC for operation in various licensed frequency bands; (ii) FAA regulations and approvals unique to the operation of commercial or industrial drones; (iii) customers’ licenses from the FCC; (iv) licensing, permitting and inspection requirements applicable to contractors, electricians and engineers; (v) regulations relating to worker safety and environmental protection; (vi) permitting and inspection requirements applicable to construction projects; (vii) wage and hour regulations; (viii) regulations relating to transportation of equipment and materials, including licensing and permitting requirements; (ix) building and electrical codes; and (x) special bidding, procurement and other requirements on government projects.
We believe we have the licenses materially required to conduct our operations, and we are in substantial compliance with applicable regulatory requirements. The operation of our manufactured products by our customers (network providers and service providers) in the U.S. or in foreign jurisdictions in a manner not in compliance with local law could result in fines, business disruption, or harm to our reputation. The changes to regulatory and technological requirements may also alter our product offerings, impacting our market share and business. Failure to comply with applicable regulations could result in substantial fines or revocation of our operating licenses or could give rise to termination or cancellation rights under our contracts or disqualify us from future bidding opportunities.
Further, our Alt Labs subsidiary is subject to oversight by the Food and Drug Administration (“FDA”) through Part 111 of the U.S. Food and Drug Act pertaining to Good Manufacturing Practices (“GMP”) for dietary supplements, and oversight by the Federal Trade Commission (“FTC”) for labeling regulations.
Patents & Proprietary Technology
The success of our business and technology leadership is supported by our proprietary technology. We rely upon a combination of patent, trademark and trade secret laws in the United States and other jurisdictions, as well as license agreements and other contractual protections, to establish, maintain and enforce rights in our proprietary technologies. In addition, we seek to protect our intellectual property rights through nondisclosure and invention assignment agreements with our employees and consultants and through non-disclosure agreements with business partners and other third parties. As of July 31, 2023, we owned on an exclusive basis 2 US Patents. We have 4 US Patent Applications, 6 Provisional US Patent Applications. We also have 3 registered U.S. trademarks and 1 pending U.S. trademark application, and have licensed one portfolio of trademarks (RCA) as detailed in the table below:
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Patent TitleReference NumberOwner/AssigneeApplication DateExpiration Date
US Patents
Microprocessor controlled rechargeable brake light control circuitUS10807513B2Alpine 4 Technologies, Ltd.12/24/2038
Universal brake light control mechanismUS10894509B2Alpine 4 Technologies, Ltd.1/17/2039
US Patent Applications
Aircraft Battery Systems and Aircraft Including SameW02018058004A1
US20180086472A1
Impossible Aerospace Corp.9/22/2017
Ultra-fast charging high-capacity phosphorene composite activated carbon material for battery applicationUS20230216035A1Elecjet1/3/2023
Method of producing a graphene filmUS20230160087A1Elecjet11/20/2022
Provisional US Patent Applications
A solid-state battery in-situ growth self-healing binder and its preparation methodApplication #: 63/464,490Alpine 4 Holdings, Inc.5/5/2023
A self-healing conductive and thermally conductive binder for solid-state batteries and its preparation methodApplication #: 63/464,486Alpine 4 Holdings, Inc.5/5/2023
A pre-lithiated silicon cathode material and its preparation methodApplication #: 63/464,493Alpine 4 Holdings, Inc.5/5/2023
A pre-lithiated carbon anode material and its preparation methodApplication #: 63/464,507
Alpine 4 Holdings, Inc.5/5/2023
A silver-plated carbon nanotube thermal conductive past and its preparation methodApplication #: 63/464,511Alpine 4 Holdings, Inc.5/5/2023
A method for preparing a magnetron-sputtering lithium-plated material and the magnetron- sputtering lithium-plated materialApplication #: 63/464,513Alpine 4 Holdings, Inc.5/5/2023
US Trademark Applications
Continu.us97483597Direct Tech Sales, LLC (RCA Commercial Electronics)6/30/2022
US Trademark Registrations
Solas Ray3989036Direct Tech Sales, LLC (RCA Commercial Electronics)
Sensor Connect6189189Direct Tech Sales, LLC (RCA Commercial Electronics)
Elecjet5443117Elecjet Corp.
Licensed US and Canadian Trademarks
RCA853565 (US)
TMA168402 (Canada)
Licensee: Direct Tech Sales, LLC (RCA Commercial Electronics)Current license period expires at the end of 2027
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Recent Developments
Resignation of Chief Financial Officer
On March 21, 2023, Larry Zic, the Chief Financial officer of Alpine 4 Holdings notified us of his intent to resign as our Chief Financial Officer, effective March 31, 2023. Mr. Zic’s decision to resign arose from his desire to pursue other professional opportunities. Mr. Zic’s resignation was voluntary and did not arise from any disagreement on any matter relating to the operations, policies, or practices of the Company. Our Board of Directors accepted Mr. Zic’s resignation, effective March 31, 2023.
Appointment of new Chief Financial Officer
On May 30, 2023, our Board of Directors appointed Christopher Meinerz to serve as Chief Financial Officer of the Company. In his various roles, Mr. Meinerz has been involved with the raising of more than $1 billion of capital and has successfully completed a significant number of transactions, including initial public offerings, acquisitions, and divestitures.
Completion of 1-for-8 Reverse Stock Split; Reduction in Authorized Shares of Class A Common Stock
On May 12, 2023, a Certificate of Amendment (the “Certificate of Amendment”) to the Amended and Restated Certificate of Incorporation, as amended to date, of Alpine 4, filed with the Secretary of State of Delaware, took effect.
The Certificate of Amendment was filed to effect a one-for-eight (1-for-8) reverse split (the “Reverse Split”) of the shares of the Company’s the Class A, Class B, and Class C common stock, and to decrease the number of shares of Class A common stock from 295,000,000 shares to 200,000,000 shares (the “Class A Common Stock Decrease”).
The Reverse Split and the Class A Common Stock Decrease became effective on May 12, 2023. As a result of the Reverse Split, every 8 shares of the Company’s issued and outstanding Class A common stock automatically converted into one share of Class A common stock, without any change in the par value per share, and will begin trading on a post-split basis under the Company’s existing trading symbol, “ALPP,” when the market opens on May 15, 2023.
Additionally, every 8 shares of the Company’s issued and outstanding Class B common stock automatically converted into one share of Class B common stock, without any change in the par value per share, and every 8 shares of the Company’s issued and outstanding Class C common stock automatically converted into one share of Class C common stock, without any change in the par value per share.
The Reverse Split affected all holders of Class A, Class B, and Class C common stock uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares, as described below.
Holders of Class A, Class B, and Class C common stock were not required to take any action as a result of the Reverse Stock Split. Their accounts were automatically adjusted to reflect the number of shares owned.
A total of 180,037,350 shares of Class A common stock were issued and outstanding immediately prior to the Reverse Split, and approximately 22,504,669 shares of Class A common stock were issued and outstanding immediately after the Reverse Split. No fractional shares will be outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock will automatically be entitled to receive an additional fraction of a share of common stock to round up to the next whole share.
Employees
As of the date of this prospectus, we had 476 full-time employees. We believe that our relationship with our employees is good. Other than as disclosed in this prospectus or previously filed with the SEC, we have no employment agreements with our employees.
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PROPERTIES
Alpine 4 Holdings, Inc., maintains our corporate office in rented offices at 2525 E Arizona Biltmore Cir, Suite 237, Phoenix, Arizona 85016. The monthly rent obligation is approximately $8,800 per month with a lease expiration date of April 30, 2031.
Quality Circuit Assembly, Inc. rents a location at 1709 Junction Court #380, San Jose, California 95112. The monthly rent obligation is approximately $47,000 per month under a month-to-month lease.
Quality Circuit Assembly has rents a location at 160 Great Oaks Boulevard, San Jose, California 95119. The monthly rent obligation is approximately $49,000 per month with a lease expiration date of March 31, 2034.
Quality Circuit Assembly Central, rents a property at 4401 Savannah St., Fort Smith, Arkansas 72903 for $17,000 per month with a lease expiration date of December 31, 2037.
Morris Sheet Metal - South Bend (“MSM SB”) rents space at 6661 Lonewolf Dr, South Bend, Indiana 46628. The rent obligation is approximately $81,000 per month with a lease expiration date of October 31, 2034 along with a space at 109 Garst Street, South Bend, Indiana 46601. The monthly rent obligation is approximately $2,000 with a lease expiration date of January 31, 2024. During the year ended December 31, 2021, MSM SB began operating out of the Morris Sheet Metal Fort Wayne (“MSM FW”) location upon the merger of MSM SB and MSM FW.
MSM FW and JTD Spiral rent office and fabrication space at 6212 Highview Dr, Fort Wayne, Indiana 46818. The monthly rent obligation is approximately $27,000 with a lease expiration date of January 31, 2034.
Excel Construction Services rents office and fabrication space at 297 Wycoff Cir, Twin Falls, Idaho 83301. The monthly rent obligation is approximately $19,000 with a lease expiration date of February 28, 2035.
Vayu (US) has its headquarters at 3753 Plaza Drive, Ann Arbor, Michigan 48108. The monthly rent obligation is approximately $16,000 with a lease expiration date of July 31, 2025.
Alt Labs rents the building of its headquarters at 4740 S Cleveland Ave, Fort Myers, Florida 33907. The monthly rent obligation is approximately $69,000 with a lease expiration date of June 30, 2037.
Thermal Dynamics International rents space at 14955 Technology Court, Fort Myers, Florida 33912. The monthly rent obligation is approximately $22,000 with a lease expiration date of September 30, 2027.
DTI Services Limited Liability Company (RCA) rents office and warehouse space at 5935 W. 84th Street, Indianapolis, Indiana 46278. The monthly rent obligation is approximately $34,000 with a lease expiration date of February 28, 2025.
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LEGAL PROCEEDINGS
Alan Martin Lawsuit
In August 2020, in a matter relating to our former subsidiary Horizon Well Testing, LLC (“Horizon”), the Company filed a lawsuit in the United States District Court, District of Arizona (Case No.2:20-cv-01679-DJH), against Alan Martin, the seller of Horizon dba Venture West Energy Services, LLC (“VWES”). The Company brought suit seeking to avoid the claimed liability due from the Company to Alan Martin, for the Company’s 2017 purchase of Mr. Martin’s business, Horizon. On summary judgment, the court found that the Company’s claim was barred by a time-limiting clause for indemnification claims. The Company disagreed with the court’s ruling and planned to appeal. Mr. Martin filed a counterclaim in which he claimed that he remains unpaid on the promissory note, as modified, under which the Company purchased Horizon. The note balance alleged to have a principal sum due of $3.3 million, plus interest at 8% accruing from 2019 to present, plus late fees accruing at $575 per day. After confidential mediation before Hon. Eileen Willett, United States Magistrate Judge for the United States District Court for the District of Arizona, the parties settled their dispute on acceptable terms. The Company and Mr. Martin agreed to a settlement agreement whereby Mr. Martin will receive the following: $100,000 payable on or before August 3, 2023; 250,000 shares of Class A common stock issued immediately; $2,000,000 payable on or before October 31, 2023 and a $1,800,000 note payable with monthly payments of $75,000 beginning on December 1, 2023 with a final payment of $900,000 payable on or before December 1, 2024.
As of the date of this prospectus, 250,000 shares of Class A common stock have been issued to Mr. Martin.
Robert Porter Lawsuit
In August 2021, in a matter relating to Horizon, Robert Porter filed a lawsuit in the District Court of Oklahoma County, State of Oklahoma (CJ-2021-3421), alleging unjust enrichment and breach of contract with respect to shares of Company that Mr. Porter claims were owed to him pursuant to his employment contract with the Company as President of Horizon. In October 2021, the Company filed its answer denying such claims. In October 2021, the Company also filed counterclaims against Mr. Porter for conversion and breach of fiduciary duties. The Company believes this is a frivolous lawsuit and as such, no accrual has been recorded.
VWES Lawsuit
In October 2021, in a matter relating to Horizon, the Company received three complaints in the District Court of Oklahoma Country State of Oklahoma from former VWES employees Bruce Morse (CJ-2021-4316), Brian Hobbs (CJ-2021-4315), Thomas Karraker (CJ-2021-4314) for unjust enrichment, and breach of contract with respect to their employment contracts with Horizon. On January 19, 2022, the Company filed answers to all three lawsuits that denied these claims. The Company believes these are frivolous lawsuits. In July 2022, the Company and Mr. Morse settled his claims against the Company. The settlement included the cash payment of $24,375 for Mr. Morse's claimed 4,688 shares of Class A common stock, and subsequently Mr. Morse’s case has been dismissed. Subsequently, Mr. Hobbs and Mr. Karraker have also expressed interest in settling claims on similar terms, and negotiations were ongoing as of the date of this prospectus. As no formal settlement offer has been extended, no accrual has been recorded.
Gatehouse Lawsuit
In June 2022, in a matter relating to the Company’s subsidiaries, DTI Services Limited Liability Company and Direct Tech Sales, LLC (doing business as RCA, the Company received a complaint filed in the Superior Court of Marion County State of Indiana (CAUSE NO. 49D01-2203-PL-006662) by Gatehouse, LLC (“Gatehouse”), a supplier of PPP gloves for resale by RCA, seeking payment of $213,000 for supplied goods that RCA has good reason to believe are counterfeit, and thus unsalable. RCA has answered the complaint and asserted counterclaims of fraud and breach of contract. After a long delay in prosecution of the case by Gatehouse, motion practice has begun in this matter, however no scheduling, hearings, or trial date has yet been set as of the date of this prospectus.
Mark Bell Lawsuit
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In November 2022, the Company, and its subsidiaries Excel and A4 Construction, received a complaint filed by Mr. Mark Bell in the district court of Idaho (CV42-22-4066) with regard to the Company’s February 2020 purchase of Excel Fabrication LLC (“Excel”) from Mr. Bell. The matter relates to the lack of payment on a $2.3 million seller note comprising part of the purchase consideration. In December 2022 the Company counter-sued Mr. Bell for breach of contract, fraud, and misrepresentation in the February 2020 sale of Excel to the Company. The case is set for trial in June of 2024.
Starr Corporation Arbitration
In December 2022, the Company’s subsidiary Excel received a demand for binding arbitration (AAA Case No. 01-22-0004-9935) by Starr Corporation of Idaho (“Starr Corporation”), a contractor for whom Excel was performing as sub-contractor. Excel stopped its work for Starr Corporation' pursuant to its claimed contract right of termination based on Starr Corporation’s failure to make payment within the contracted period for work satisfactorily performed. Starr Corporation claims that Excel’s termination was wrongful, and seeks approximately $0.5 million, reflecting its costs in having to complete work that was called for under the contract. Excel is seeking a determination that its termination was rightful under the terms of the contract, and in addition seeks payment on its unpaid billing submittals and additional costs. Arbitration hearings are scheduled to commence in April 2024. As no formal settlement offer has been extended, no accrual has been recorded.
State University of New York at Stonybrook Lawsuit
In February 2023, we learned that a complaint was brought in the State of New York against Vayu in 2019 (prior to the Company’s ownership of Vayu) seeking a refund for two returned airframes. The case had originally been dismissed for lack of jurisdiction but was revived by virtue of New York’s highest court ruling (State of New York v Vayu, APL-2021-00148) that the State’s long arm statute applied to the 2016 transaction between Vayu and the State University of New York at Stonybrook. Total damages sought by the State of New York are less than $100,000, including interest and costs. In light of the decision by the Court of Appeals to return the case to the trial courts for adjudication, the Company has expressed its wish to settle the matter and is currently awaiting the State of New York's response to the Company's response including the possibility of the State providing information useful to the Company should it wish to subsequently seek redress from the previous owners of Vayu.
Kevin Thomas Lawsuit
In May 2023, Mr. Kevin Thomas, who sold Alternative Laboratories, LLC to the Company in May of 2021, sued the Company, and its subsidiaries Alt Labs and A4 Manufacturing, in the State circuit court for Collier County Florida (Case Number 23-CA-1981), alleging that the Company failed to deliver shares of the Company as promised by the terms of the purchase agreement. Additionally Mr. Thomas claimed that an amount of $610,000 in Employee Retention Credits was received by the Company and that portion representing the credit attributed to the 1st and 2nd quarters of 2021 (prior to the May 4th, 2021 date of sale), should be remitted to him rather than retained by the Company. The Company believes that Mr. Thomas’ complaint is wholly without merit, and the Company is in the process of answering the complaint and considering possible motions and counterclaims.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion and analysis of the results of operations and financial condition of Alpine 4 Holdings, Inc. should be read in conjunction with our Consolidated Financial Statements and the notes to those Consolidated Financial Statements that are included elsewhere in this prospectus. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. See “Cautionary Statement Regarding Forward-Looking Statements” above. Actual results could differ materially because of the factors discussed in “Risk Factors” elsewhere in this prospectus, and other factors that we may not know.
Overview and Highlights
Alpine 4 Holdings, Inc. was incorporated under the laws of the State of Delaware on April 22, 2014. 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.
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Results of Operations
The following are the results of our operations for the year ended December 31, 2022, as compared to the year ended December 31, 2021.
Year Ended December 31, 2022Year Ended December 31, 2021$ Change
Revenues, net
$104,563,002 $51,640,813 $52,922,189 
Costs of revenue
82,848,600 43,942,815 38,905,785 
Gross Profit
21,714,402 7,697,998 14,016,404 
Operating expenses:
General and administrative expenses37,531,794 27,987,920 9,543,874 
Research and development876,542 1,464,918 (588,376)
Impairment loss of intangible asset and goodwill— 367,519 (367,519)
Gain on sale of property(5,938,150)— (5,938,150)
Total operating expenses32,470,186 29,820,357 2,649,829 
Loss from operations
(10,755,784)(22,122,359)11,366,575 
Other income (expenses)
Interest expense(3,124,132)(3,289,233)165,101 
Gain on extinguishment of debt— 803,079 (803,079)
Gain on forgiveness of debt— 3,896,108 (3,896,108)
Impairment loss on equity investment— (1,350,000)1,350,000 
Other income270,609 635,526 (364,917)
Total other income (expenses)(2,853,523)695,480 (3,549,003)
Loss before income tax
(13,609,307)(21,426,879)7,817,572 
Income tax benefit
(733,994)(1,943,741)1,209,747 
Net loss
$(12,875,313)$(19,483,138)$6,607,825 
Revenues
Revenues were $104,563,002 for the year ended December 31, 2022, an increase of $52,922,189, compared to revenues of $51,640,813 for the year ended December 31, 2021. The increase in revenue is related to an increase of $38,638,161 for RCA, $1,215,772 for Alt Labs, $6,016,168 for TDI, and $2,505,905 for QCA primarily due to 2022 being the first full year of operations for RCA, Alt Labs and IDT, while QCA experienced organic growth.
Costs of revenue
Cost of revenue was $82,848,600 for the year ended December 31, 2022, an increase of $38,905,785, compared to cost of revenue of $43,942,815 for the year ended December 31, 2021. The increase in our cost of revenue is related to an increase of $28,336,699 for RCA, $2,622,282 for Alt Labs; $3,570,074 for TDI; and $2,346,823 for QCA. The increase in cost of revenue among all the different segments was the result of the increase in revenues as
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described above. Further, we have improved our gross margin percentage as we have implemented operational efficiencies at our newly acquired business.
Operating expenses
Operating expenses were $32,470,186 for the year ended December 31, 2022, an increase of $2,649,829, compared to operating expenses of $29,820,357 for the year ended December 31, 2021. The increase in our operating expenses is related to an increase of $7,675,515 for RCA (full year of operations, acquired December 2021), a decrease of $895,571 for Alt Labs; an increase of $654,020 for TDI; and an increase of $882,348 for QCA. This was offset by a gain on sale of property of $5,938,150 largely due to a gain on the sale of the Alt Labs building in Fort Myers, Florida.
Other income (expense)
Other incomes (expense) was $(2,853,523) for the year ended December 31, 2022, a decrease of $3,549,003, compared to other income (expense) of $695,480 for the year ended December 31, 2021. This decrease was primarily due to $4.7 million related to the gain on forgiveness & extinguishment of debt from 2021 that did not repeat.
Results of Operations
The following are the results of our operations for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022.
Three Months Ended March 31,
20232022$ Change
Revenue
$24,361,713 $25,592,154 $(1,230,441)
Cost of revenue
19,145,257 19,954,697 (809,440)
Gross Profit
5,216,456 5,637,457 (421,001)
Operating expenses:
General and administrative expenses10,243,023 9,201,682 1,041,341 
Research and development113,906 191,930 (78,024)
Total operating expenses10,356,929 9,393,612 963,317 
Loss from operations
(5,140,473)(3,756,155)(1,384,318)
Other income (expenses)
Interest expense(998,870)(608,961)(389,909)
Gain on extinguishment of debt— — — 
Gain on forgiveness of debt— — — 
Other income43,200 32,719 10,481 
Total other income (expense)(955,670)(576,242)(379,428)
Loss before income tax
(6,096,143)(4,332,397)(1,763,746)
Income tax expense
(327,000)(332,837)5,837 
Net loss
$(5,769,143)$(3,999,560)$(1,769,583)
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Revenue
Revenues were $24,361,713 for the quarter ended March 31, 2023, a decrease of $1,230,441, compared to revenues of $25,592,154 for the quarter ended March 31, 2022. This decrease is primarily driven by a decrease of revenue of $1.8 million within A4 Technologies - RCA and $0.5 million within A4 Technologies - ElecJet due to slowdowns in electronic sales offset by small increases in revenue across the majority our other segments primarily $0.4 million within A4 Manufacturing - Alt Labs, $0.3 million within A4 Defense - TDI, and $0.4 million within all others due to organic growth.
Cost of revenue
Cost of revenue was $19,145,257 for the quarter ended March 31, 2023, a decrease of $809,440, compared to cost of revenue of $19,954,697 for the quarter ended March 31, 2022. This decrease is driven by the decrease in revenue as our gross profit margin remained consistent at 22% year-over-year.
Operating expenses
Operating expenses were $10,356,929 for the quarter ended March 31, 2023, an increase of $963,317, compared to operating expenses of $9,393,612 for the quarter ended March 31, 2022. This increase is primarily driven by an increase in professional fees incurred as a result of services performed related to the 2021 restated financials and 2022 annual 10-K report.
Other income (expense)
Other income (expense) was $(955,670) for the quarter ended March 31, 2023, an increase of $379,428, compared to other income (expense) of $(576,242) for the quarter ended March 31, 2022. The increase is driven by higher interest expense on the new debt along with the continued higher interest rate environment for our variable rate debt.
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. In the first quarter of 2021, we raised approximately $55.0 million through the sale of our common stock in public and private transactions. On November 26, 2021, a direct offering of common stock was issued raising $22.0 million in cash. In July 2022, the Company raised $9.2 million in net cash through the sale of warrants and an additional $1 million in August 2022 when a portion of these warrants were exercised.
In April and May 2020, the Company received seven loans under the Paycheck Protection Program of the U.S. Coronavirus Aid, Relief and Economic Security (“CARES”) Act totaling $3,896,108. The loans had terms of 24 months and accrued interest at 1% per annum. The Company paid $88,160 for the loan assumed in connection with the IA acquisition, and the remaining $356,690 was forgiven. The remaining ten loans were forgiven in whole as provided in the CARES Act during the year ended December 31, 2021. The Company also assumed an Economic Injury Disaster Loan (EIDL) of $65,000 in connection with the Vayu acquisition, which was still outstanding as of December 31, 2022.
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 and improved cash flows from operations including the 2021 acquisitions. The Company also has bank lines of credit totaling $33.0 million as of December 31, 2022. Of the $33.0 million, $3.8 million was unused as of December 31, 2022. There are two lines of credit that are set to mature during 2023. These two line of credits total $8.0 million, of which $7.5 million was used as of December 31, 2022, and are shown as a current liability on the consolidated balance sheet. 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.
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The Company also may elect to seek additional financing, engage in debt financing through a placement agent, or sell shares of its common stock in public or private offering transactions.
Liquidity Outlook
The Company’s financial statements are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) applicable to a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued.
In accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued.
As shown in the accompanying consolidated financial statements, the Company has incurred significant recurring losses and negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. While the Company experienced a loss for the year ended December 31, 2022, of $12.9 million, and had a negative cash flow used in operations of $19.6 million, this was an improvement over the same period last year, for the year ended December 31, 2021, when there was a net loss of $19.5 million had a negative cash flow used in operations of $25.4 million.
The Company received a total of approximately $10.2 million in 2022 in the following two transactions:
The Company raised approximately $9.2 million in net proceeds in connection with a registered direct offering of its stock and;
The Company raised approximately $1.0 million in net proceeds in connection with certain investors exercising of 1,449,276 warrants.
The Company received a total of approximately $76.5 million in 2021 in the following two transactions:
The Company raised approximately $67.2 million in net proceeds in connection with a registered direct offering of its stock and;
The Company raised approximately $9.3 million in net proceeds in connection with an equity line of credit financing arrangement.
As of March 31, 2023, the Company had positive working capital of $4.0 million. The Company has also secured bank financing totaling $33.0 million ($33.0 million in Lines of Credit of which $0.5 million is a capital expenditures lines of credit availability) of which $3.8 million was unused at March 31, 2023. The Company has $21.7 million of outstanding debt, with $8.8 million in notes payable and $12.9 million in lines of credit. The notes payable are primarily related to seller notes issued in connection with historical acquisitions. QCA, RCA, MSM and Alt Labs have lines of credit that are collateralized by their respective accounts receivable, inventory and capital expenditure balances.
The Company plans to continue to generate additional revenue (and improve cash flows from operations) partly from the acquisitions of six operating companies which closed in 2021, combined with improved gross profit performance from the existing operating companies. The Company also plans to continue to raise funds through debt financing and the sale of shares through its public and private offerings.
Going Concern
The accompanying financial statements have been prepared on a going concern basis. While the working capital deficiency of prior years has improved, and working capital of the Company is currently positive, continued operating losses causes doubt as to the ability of the Company to continue. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the
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successful development of the Company's plan of operations, and its ultimate transition to profitable operations are necessary for the Company to continue. The uncertainty that exists with these factors raises substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
In order to mitigate the risk related to the going concern uncertainty, the Company has a three-fold plan to resolve these risks. First, the operating subsidiaries of QCA, TDI, IDT and RCA plan to expand their revenues and profits yielding increased cash flow in those operating segments. This plan will allow for an increased level of cash flow to the Company. Second, the Company has expanded its credit facilities at the subsidiary level over the past 12 months to allow for greater borrowing accessibility if needed for the expansion of product lines and sales opportunities and plans to extend or refinance any lines of credit coming due over the next 12 months in order to provide additional financing. Finally, operating companies hard hit by the supply-chain related price increases such as Morris Sheet Metal, Alternative Laboratories, and Excel Construction have begun to experience an easing in the procurement and cost overruns of limited product supply. This subsequently has added to increased cash flow to those entities and less reliance on the Company to fund those activities. Although this plan is in place to mitigate the risk related to the going concern uncertainty, substantial doubt remains due to uncertainty around the growth projections and lack of control of many of the factors included in the Company’s plan.
Entity Level Risks
The ultimate impact from COVID-19 on the Company’s operations and financial results during 2023 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, and the speed with which the economy recovers. The Company is not able to fully quantify the impact that these factors will have on the Company’s financial results during 2023 and beyond. COVID-19 did have a material negative impact on the Company’s financial performance in 2022.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable. In many instances, we could have reasonably used different accounting estimates and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. This applies in particular to useful lives and valuation of long-lived assets. Actual results could differ significantly from our estimates. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving our judgments and estimates.
For a summary of our significant accounting policies, refer to Note 2 of our consolidated financial statements included in this prospectus.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
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MANAGEMENT
As of the date of this prospectus, the officers and directors of Alpine 4 were as follows:
NameAgeBoard Member/PositionCommittee Assigned
Kent B. Wilson50Chief Executive Officer and DirectorNone
Ian Kantrowitz43VP, Investor Relations and DirectorNone
Gerry Garcia43ChairwomanAUD; Comp; NCG
Edmond Lew44DirectorAUD; Comp; NCG
Christophe Jeunot51DirectorAUD; Comp
Jonathan Withem34DirectorAUD; Comp
Andrew Call***45DirectorAUD*
Jeffrey Hail61Chief Operating OfficerN/A
Christopher Meinerz56Chief Financial OfficerN/A
SaVonnah Osmanski28VP & Corporate ControllerN/A
_______________
AUD = Audit Committee; COMP = Compensation Committee; NCG = Nominating and Corporate Governance Committee. * = Committee Chair.
*** Mr. Call was appointed to the Board of Directors on April 6, 2022, and was appointed to the Audit Committee and made chair of the Audit Committee on that date.
Kent B. Wilson
Mr. Wilson has served as our Chief Executive Officer and Secretary since June 2014. Prior to that, Mr. Wilson raised approximately two million dollars via seed capital and private placement funds to start Crystal Technology Holdings, Ltd./NextSure, LLC. This company successfully designed, built, and brought two products to market, including an internet-based insurance rating engine that allowed prospective buyers to rate and buy their auto insurance online via a virtual insurance agent. Since 2002, Mr. Wilson has been actively involved with all facets of corporate financial and operational planning and has held the title of CFO and CEO for several different companies. Mr. Wilson has also consulted for various finance departments of publicly traded companies such as JDA Software and Switch & Data, Inc. to help them identify and develop best SOX and GAAP practices and procedures. In 2011, Mr. Wilson took over as CFO of United Petroleum Company and helped guide them from a small startup with less than $1 million in revenue to a company with $20 million in revenue and a growth path for 2013 and 2014. Mr. Wilson holds a BA degree in Management and an MBA from Northcentral University. We believe Mr. Wilson’s extensive management, strategic planning, and public company experience qualify him to serve as a director.
Ian Kantrowitz
Mr. Kantrowitz served as our Director of Investor Relations from April 2014 to February 2021 and then was promoted to Vice President of Investor Relations where he currently serves. Mr. Kantrowitz also serves as a member of our Board of Directors. He is accountable for creating and presenting a consistently applied investment message to our shareholders and the investment community on behalf of Alpine 4. Furthermore, he is responsible for monitoring and presenting management with the opinions of the investment community regarding the company's performance. Prior to joining the Alpine 4 team, Mr. Kantrowitz was a project manager for two major homebuilders in Phoenix, AZ, Continental Homes and Engle Homes. Mr. Kantrowitz has also been actively involved in the automotive industry where his in-depth knowledge of the auto industry lends a valuable perspective to our in-house product, 6th Sense Auto. Additionally, he was a top performing banker for Wells Fargo Bank, ranked number 5 in the country. We believe Mr. Kantrowitz’s experience with investor relations and project management qualify him to serve as a director.
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Gerry Garcia
Mrs. Garcia has served as a Director since March 2021. Ms. Garcia has served as Director of Operations for Pensar Academy, a non-profit 501(c)(3), since July 2016. In this position, she is responsible for their budget, grants management, as well as operational programming. She also served on Pensar Academy’s board of directors from 2016 to 2018. Over the course of the last 16 years, Mrs. Garcia has also spent time serving as a member of multiple Boards of Directors for various non-profit 501(c)(3) organizations, helping guide them through the complex corporate landscape that non-profit 501(c)(3)'s need access to. Ms. Garcia holds a Bachelor of Art’s degree in Consumer and Environment Sciences from Point Loma Nazarene University and a Master’s degree in Special Education from Arizona State University. We believe her knowledge of financial/strategic planning, reporting, budget analysis, and fiduciary prudence make her qualified to serve as a director.
Edmond Lew
Mr. Lew has served as a Director since March 2021. Mr. Lew has served as a Solutions Consultant at ConvergeOne since September 2022. From April 2018 to August 2022, Mr. Lew served as an IT Engineer at TransPerfec. Mr. Lew started his career in Information Technology (“IT”) as a Systems Engineer, building out hosted applications and delivering them through terminal computing in the early 2000s. This model would evolve and later be adopted as what is now recognized as cloud computing. After working in the support, implementation, and data center sides of the industry, Mr. Lew went out on his own as an IT consultant. Mr. Lew has lent his expertise to businesses in the construction, hospitality, utilities, education, arts, logistics, law enforcement and technology fields. Additionally, Mr. Lew has given back to the community by volunteering extensively over the past 15 years with various charities and non-profits, focusing on arts and social service organizations. In the interest of becoming a more capable and effective leader, Mr. Lew has completed board governance and diversity training courses and has applied those skills in his volunteer work as well as his professional career. We believe Mr. Lew’s management and experience make him qualified to serve as a director.
Christophe Jeunot
Mr. Jeunot has served as a Director since March 2021. He has served as an independent consultant for the past 20-years, collaborating with Fortune 500 national and international companies as a Story Board Artist aiding in movie, television and branding campaigns. His clients range from Netflix and Peloton to Goldman Sachs, Exxon Mobile, Samsung and 3M, among others. Mr. Jeunot’s European perspective and creativity allows solutions to be derived through an alternative lens, lending to diverse and dynamic thinking within strategic planning sessions. Mr. Jeunot’s affinity for nature and the environment makes him a conscientious proponent for green technologies. We believe Mr. Jeunot’s management and experience make him qualified to serve as a director.
Jonathan Withem
Mr. Withem has served as a Director since March 2021. From July 2017 to November 2022, Mr. Withem served as a Project Manager at ETIX. Mr. Withem contributed to the development of custom interfaces for eCommerce and onsite sales for entertainment company ETIX. As one of the largest interactive ticketing platforms, ETIX processes over 50 million tickets in 40 countries annually. Mr. Withem has experience working with a variety of teams to create, test and release new products, in addition to client training. Mr. Withem’s expertise in project management and budgetary compliance ensures adherence to strict time frames in the achievement of established goals. Mr. Withem currently serves as a Professor at Grand Canyon University. Mr. Withem holds a Bachelor of Arts degree in Music from California Polytechnic State University San Luis Obispo. We believe Mr. Withem’s management and experience make him qualified to serve as a director.
Andrew Call
Andrew Call has served as a Director since April 2022. He has served as the Director of the School of Accountancy at the W. P. Carey School of Business at Arizona State University since July 2018, and has been the Professional Advisory Board Professor of Accounting since July 2021. Mr. Call in integral in leading the school’s initiative in research, curriculum, and outreach efforts. Mr. Call researches various financial reporting topics, including the role of equity analysts in the capital markets, managers' voluntary disclosures of accounting
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information, and the role of whistleblowers in the discovery of financial misconduct. Mr. Call has taught at both the undergraduate and graduate levels. He has specialist background in Security Analysis, Management Guidance, and Whistleblowing. He has also contributed to or been published in 17 different publications including The Accounting Review, Journal of Accounting Research, and the Journal of Accounting and Economics. We believe Mr. Call’s financial experience make him qualified to serve as a director and as Chair of our Audit Committee.
Jeff Hail
Jeff Hail has served as our Chief Operating Officer since January 2019, previously serving as Senior Vice President of Operations since April 2014. Mr. Hail’s professional experience has been both in the government and private sector. As a Buyer/Contract Officer with the Arizona Department of Transportation writing, awarding and administering highway services contracts. In the private sector, Mr. Hail experienced success by starting a number of different companies and building them to be the leaders in their niche sectors from both electronics manufacturing to e-commerce. As a result, he brings a broad-based experience level with the operational aspects of running a business in today’s realm. Mr. Hail holds a Bachelor’s of Science degree in Operations and Production Management from the W.P. Carey School of Business at Arizona State University.
Christopher Meinerz
Christopher Meinerz has served as our Chief Financial Officer since May 2023. Mr. Meinerz began his career in public accounting with BDO in Chicago, Illinois, and Grant Thornton in Madison, Wisconsin. Prior to joining the Company, Mr. Meinerz has held the title of Chief Financial Officer, Chief Operating Officer, and Chief Compliance Officer including recent appointments of Chief Financial Officer & Chief Operating Officer for Nano Hearing Aids (November 2021 – May 2023), Chief Financial Officer of Tallwave (March 2020 – April 2021, currently retained as an advisor to Board & executive management), Chief Financial Officer for Elite Roofing Supply (August 2018 – December 2019), and Chief Financial Officer for Mobivity Holdings Corp (2015-2018). In his various roles, Mr. Meinerz has been involved with the raising of more than $1 billion of capital and has successfully completed a significant number of transactions, including initial public offerings, acquisitions, and divestitures. Mr. Meinerz holds a Bachelors degree in Business Administration with degrees in Accounting and Finance from University of Wisconsin - Madison.
SaVonnah Osmanski
Miss. Osmanski has served as our Vice President, Corporate Controller since June 2021, previously serving as Senior Accountant from April 2021 to June 2021. From September 2020 to April 2021, Miss Osmanski served as Controller of M Holdings, a heavy equipment leasing company. From May 2016 to September 2020, she served as an external auditor at REDW Advisors & CPAs. Miss Osmanski is a Certified Public Accountant and holds two Bachelors of Science Degrees, one in Accounting and one in Finance from Northern Arizona University. She also holds a Masters in Accounting from the W.P Carey School of Business at Arizona State University.
Term of office. Our directors are appointed for a one-year term to hold office until the next annual meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board and hold office until removed by the Board.
Family relationships. There are no family relationships among executive officers and directors.
Director or officer involvement in certain legal proceedings. To the best of our knowledge, except as described below, during the past five years, none of the following occurred with respect to a present or former director or executive officer of the Company: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of any competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the
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Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Code of Ethics
We have adopted a Code of Business Conduct that applies to all of our directors, officers and employees, including our principal executive officer and principal financial officer. The Code of Business Conduct is posted on our website at www.alpine4.com/code-of-conduct/.
Board Meeting and Attendance
During fiscal year 2022, our Board held six (6) meetings in person or by telephone. Members of our Board were provided with information between Board meetings regarding the Company’s operations and were consulted on an informal basis with respect to pending business. Each director attended all of the Board meetings and the meetings held by all committees of our Board on which such director served during the year.
Director Independence
Independent Directors
As of the date of this prospectus, Alpine 4 was required by The Nasdaq Stock Market to have a majority of independent directors.
Accordingly, as of the date of this prospectus, the Board had concluded that five of the members of the Board of Directors would qualify as independent directors. The Board of Directors has determined that Ms. Garcia, and Messrs. Call, Lew, Jeunot, and Withem would be independent directors of the Company under the listing standards adopted by The Nasdaq Stock Market. In making these independence determinations, the Board of Directors considered all of the factors that automatically compromise director independence as specified in The Nasdaq Stock Market’s listing standards and determined that none of those conditions existed. In addition, the Board of Directors considered whether any direct or indirect material relationship, beyond those factors that automatically compromise director independence, existed between those directors, their immediate family members, or their affiliated entities, on the one hand, and us and our subsidiaries, on the other hand. The Board of Directors determined, for those directors identified as independent above, that any relationship that existed was not material and did not compromise that director’s independence. We anticipate that our independent directors will meet in an executive session at least once per year. All standing committee members are independent for the purpose of the committees on which they serve.
Board Leadership Structure
We have chosen to split the roles of Chairperson of the Board and Chief Executive Officer. Mr. Wilson serves as Chief Executive Officer while Mr. Winters previously served as the non-executive Chairperson of the Board. On April 6, 2022, the Company announced that the Board of Directors had decided to have a rotating Chair of the Board position, and appointed Gerry Garcia to serves as the non-executive Chairwoman of the Board. Ms. Garcia served as the Chairwoman of the Board from April 6, 2022, through the date of this prospectus. The Board believes that this structure is appropriate for the Company and provides the appropriate level of independent oversight necessary to ensure that the Board meets its fiduciary obligations to our stockholders, that the interests of management and our stockholders are properly aligned, and that we establish and follow sound business practices and strategies that are in the best interests of our stockholders.
The Board of Directors does not believe that one particular leadership structure is appropriate at all times and will continue to evaluate the Board’s leadership structure from time to time.
Board’s Role in Risk Management
One of the Board of Directors’ key functions is informed oversight of the Company’s risk management process. The Board of Directors does not have a standing risk management committee, but rather administers this oversight
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function directly through the Board of Directors as a whole, as well as through various standing committees of the Board of Directors that address risks inherent in their respective areas of oversight.
In particular, the Board of Directors is responsible for monitoring and assessing strategic and operational risk exposure, which may include financial, legal and regulatory, human capital, information technology and security and reputation risks.
The Audit Committee has the responsibility to consider and discuss major financial risk exposures and the steps management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken.
The Nominating and Corporate Governance Committee monitors the effectiveness of the Company’s corporate governance policies and the selection of prospective members of the Board of Directors and their qualifications, as well as environmental, social and governance (“ESG”)-related risks.
The Compensation Committee, in conjunction with the Audit Committee, assesses and monitors whether any of the Company’s compensation policies and programs have the potential to encourage excessive risk-taking. In addition, the Compensation Committee reviews and monitors matters related to human capital management, including diversity and inclusion initiatives and management of human capital risks.
Like all businesses, we also face threats to our cybersecurity, as we are reliant upon information systems and the Internet to conduct our business activities. In light of the pervasive and increasing threat from cyberattacks, the Board believes oversight of this risk is appropriately allocated to the Board, although the Board may decide to delegate this responsibility to one of the Committees of the Board. The Board, with input from management, assesses the Company’s cybersecurity risks and the measures implemented by the Company to mitigate and prevent cyberattacks and respond to data breaches. In addition, management and the Board of Directors have recently focused on risks relating to, and the impact on the Company from, the COVID-19 pandemic, and will continue to do so while the situation remains in flux.
Typically, the entire Board of Directors meets with management and the applicable committees of the Board of Directors at least annually to evaluate and monitor respective areas of oversight. Both the Board of Directors as a whole and the various standing committees receive periodic reports from individuals responsible for risk management, as well as incidental reports as matters may arise. It is the responsibility of the committee chairs to report findings regarding material risk exposures to the Board of Directors as quickly as possible. The Board of Directors’ role in risk oversight does not affect its leadership structure.
Committees of the Board
The Board of Directors has an Audit Committee, a Nominating and Corporate Governance Committee and a Compensation Committee. The current charters for each of the committees are available on our website www.alpine4.com under the “Investors” tab and then the “Governance” tab. The members of the committees are identified in the following table:
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DirectorAudit CommitteeCompensation CommitteeNominating and Corporate Governance Committee
Kent B. Wilson
Ian Kantrowitz
Gerry Garcia(1)(2)(3)
XXX
Edmond Lew(2)(3)
XXX
Christophe Jeunot(2)
XX
Jonathan Withem(2)
XX
Andrew Call(4)
X
_______________
(1)Chairwoman of the Board of Directors.
(2)Ms. Garcia, and Messrs. Lew, Jeunot, and Withem were appointed as members of the Audit Committee and the Compensation Committee in March 2021.
(3)Ms. Garcia and Mr. Lew were appointed as members of the Nominating and Corporate Governance Committee on September 18, 2021.
(4)Mr. Call was appointed to the Board on April 6, 2022, and was appointed to the Audit Committee and made chair of the Audit Committee on that date.
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EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our named executive officers with compensation exceeding $100,000 during 2022 and 2021.
Name and Principal PositionYearSalaryBonusStock AwardsOption AwardsNonequity Incentive Plan CompensationDeferred Compensation EarningsAll Other CompensationTotal
($)($)($)($)($)($)($)($)
Kent B. Wilson, Chief Executive Officer2022677,082 65,510 — — — — — 742,592 
2021424,485 784,297 164,885 — — — — 1,373,667 
Jeff Hail, Chief Operating Officer2022510,212 55,382 — — — — — 565,594 
2021361,381 288,172 34,076 — — — — 683,629 
Larry Zic, Chief Financial Officer2022405,671 10,000 116,550 — — — — 532,221 
2021235,492 18,350 — — — — — 253,842 
SaVonnah Osmanski, VP Corporate Controller2022182,307 21,000 77,700 — — — — 281,007 
202188,485 500 — — — — — 88,985 
Ian Kantrowitz, VP Investor Relations2022229,179 15,000 — — — — — 244,179 
2021165,745 293,869 27,480 — — — — 487,094 
Employment Agreements
Kent Wilson
On February 11, 2021, the Company and Kent Wilson entered into an Executive Employment Agreement (the “Wilson Agreement”). Pursuant to the Wilson Agreement, Mr. Wilson agreed to serve as the Company’s Chief Executive Officer and President, both positions he had held since June 2014, and to continue to render such services to the Company as are customarily rendered by the Chief Executive Officer and President of comparable companies.
The term of the Wilson Agreement is perpetual, and it continues until either party gives notice of termination pursuant to the terms of the agreement. The Company agreed to pay Mr. Wilson a base salary equal to 1% of the prior year’s revenue, beginning from January 1 of each year. The base salary shall not be less than $325,000 or greater than $850,000. The Company also agreed to pay an acquisition stock award bonus to Mr. Wilson on any business acquisition. The value of the acquisition stock award bonus is equal to five percent (5%) of the average three-year adjusted EBITDA of the acquired company, to be paid in shares of Class A common stock or any other class of common or preferred stock agreed between Mr. Wilson and the Company. The Company also agreed to pay an acquisition cash award bonus on any business acquisition. The value of the acquisition cash award bonus is equal to 1.5% of the average three-year adjusted EBITDA of the acquired company, to be paid on the next payroll cycle. Finally, the Company agreed to pay a profit-based cash bonus equal to two percent of the net profit for each quarter that the Company is net profitable, with a maximum payout of $25,000 in any given quarter. Mr. Wilson is entitled to standard employee benefits and life insurance. If Mr. Wilson is released by the Company for any reason other than cause (as defined in the Wilson Agreement), the Company agreed to pay severance of one year’s salary and to cover COBRA costs for Mr. Wilson and his family for one year.
On November 17, 2021, the Company and Mr. Wilson entered into an addendum to the Wilson Agreement, pursuant to which the parties removed language from the Wilson Agreement which had restricted Mr. Wilson’s authority to enter into binding contracts for or on behalf of the Company without the approval of the Company. Following the November 2021 addendum, Mr. Wilson has full authority to enter into contracts and commitments for and on behalf of the Company and all subsidiary companies.
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Jeff Hail
On February 25, 2021, the Company and Jeffrey Hail entered into an Executive Employment Agreement (the “Hail Agreement”) to formalize the terms of Mr. Hail’s employment with the Company. Prior to entering into the Hail Agreement, Mr. Hail had been serving as the Company’s Chief Operating Officer since January 2019. Pursuant to the Hail Agreement, Mr. Hail agreed to continue to serve as the Company’s Chief Operating Officer, and to continue to render such services to the Company as are customarily rendered by the Chief Operating Officer of comparable companies.
The term of the Hail Agreement is perpetual, and it continues until either party gives notice of termination pursuant to the terms of the agreement. The Company agreed to pay Mr. Hail a base salary equal to 75% of the base salary of the Company’s Chief Executive Officer, beginning on January 1 of each year. The base salary shall not be less than $273,000.
The Company also agreed to pay an acquisition stock award bonus to Mr. Hail on any business acquisition. The value of the acquisition stock award bonus is equal to two percent (2%) of the average three-year adjusted EBITDA of the acquired company, to be paid in shares of Class A common stock or any other class of common or preferred stock agreed between Mr. Hail and the Company. The Company also agreed to pay an acquisition cash award bonus on any business acquisition. The value of the acquisition cash award bonus is equal to 0.5% of the average three-year adjusted EBITDA of the acquired company, to be paid on the next payroll cycle. Further, the Company agreed to pay to Mr. Hail a profit-based stock award bonus equal to 1.5% of the net profit for each quarter that the Company is more than $500,000 net profitable. Finally, the Company agreed to pay to Mr. Hail a profit-based cash bonus equal to 1.5% of the net profit for each quarter that the Company is net profitable, with a maximum payout of $25,000 in any given quarter. Mr. Hail is entitled to standard employee benefits and life insurance. If Mr. Hail is released by the Company for any reason other than cause (as defined in the Hail Agreement), the Company agreed to pay severance of one year’s salary and to cover COBRA costs for Mr. Hail and his family for one year.
Christopher Meinerz
On May 30, 2023, the Company and Mr. Meinerz entered into an “At Will Employment Agreement” (the “Meinerz Agreement”) relating to Mr. Meinerz’s service as the Company’s Chief Financial Officer. Pursuant to the Agreement, the Company agreed to pay Mr. Meinerz a base pay rate of $275,000 annually, and to pay a bonus of $5,000 per quarter for on-time and accurate quarterly report filings and a bonus of $10,000 for annual on-time and accurate annual report filings. Additionally, the Company agreed to grant to Mr. Meinerz $25,000 shares of the Company’s Class A common stock after 90 days of successful employment with the Company. Mr. Meinerz will also receive 80 hours of annual paid time off for 2023 and 120 hours of paid time off beginning in 2024, and he will be entitled to participate in the company’s health, welfare, and retirement plans, and in the incentive plan.
Outstanding Equity Awards
There are no current outstanding equity awards as of December 31, 2022.
Director Compensation
The following table sets forth the amounts paid to the Company's directors for their service as directors of the Company during the year ended December 31, 2022.
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Name
Fees earned
or paid
in cash
Stock awardsOption awardsAll other compensationTotal
($)($)($)($)($)
Ian Kantrowitz(1)
$73,385 $— $— $— $73,385 
Kent Wilson(1)
$73,385 $— $— $— $73,385 
Christopher Jeunot$28,519 $— $— $— $28,519 
Gerry Garcia$30,154 $— $— $— $30,154 
Andrew Call$22,954 $— $— $— $22,954 
Edmond Lew$31,788 $— $— $— $31,788 
Jonathan Withem$28,231 $— $— $— $28,231 
Charles Winters(2)
$73,385 $— $— $50,640 $124,025 
__________________
(1)The compensation of Mr. Wilson and Mr. Kantrowitz, who are also executive officers of the Company, are set forth above.
(2)The all other compensation in the table below for Mr. Winters is salary earned while he was employed by the Company.
Securities Authorized for Issuance under Equity Compensation Plans
Adoption of 2016 Stock Option and Stock Award Plan
On November 10, 2016, the Company's Board of Directors adopted the Company's 2016 Stock Option and Stock Award Plan (the “2016 Plan”). Pursuant to the Plan, the Company may issue stock options, including incentive stock options and non-qualifying stock options, and stock grants to employees and consultants of the Company, as set forth in the Plan, a copy of which was filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2016. The Company has reserved 250,000 shares of the Company's Class A common stock for issuance under the Plan.
Adoption of 2021 Equity Incentive Plan
On December 8, 2021, the Company’s Board of Directors adopted the Company’s 2021 Equity Incentive Plan (the “2021 Plan”). Pursuant to the 2021 Plan, the Company may issue (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, (f) Cash Awards, and (g) Other Equity-Based Awards. The 2021 Plan will enable the Company to provide stock-based incentives that align the interests of employees, consultants and directors with those of the stockholders of the Company; promote the success of the Company’s business; and to attract and retain the types of employees, consultants and directors who will contribute to the Company’s long range success. A copy of the Plan was filed as Appendix B to the Company’s Definitive Proxy Statement filed with the Commission on February 1, 2022. The 2021 Plan was approved by the Company’s shareholders at the 2021 Annual Meeting on March 25, 2022.
Equity Compensation Plan Information
Plan category
Number of
securities to
be issued upon
exercise of
outstanding
options,
warrants
and rights
Weighted-
average
exercise price
of outstanding
options,
warrants
and rights
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a))
(a)(b)(c)
Equity compensation plans approved by security holders223,750 $1.52 651,250 
Equity compensation plans not approved by security holders
Total223,750 $1.52 651,250 
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BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth certain information regarding beneficial ownership of Alpine 4 Class A, Class B, and Class C common stock and Series B Preferred Stock as of June 30, 2023, (i) by each person (or group of affiliated persons) who owns beneficially more than five percent of the outstanding shares of common stock, (ii) by each director and executive officer of Alpine 4, and (iii) by all of the directors and executive officers of Alpine 4 as a group. The percentages are based on the following figures:
*22,744,757 shares of Class A common stock;
*906,012 shares of Class B common stock;
*1,532,210 shares of Class C common stock; and
*3 shares of Series B Preferred stock.
Except as otherwise noted, the persons named in the table have sole voting and dispositive power with respect to all shares beneficially owned, subject to community property laws where applicable. Unless otherwise noted, the address of each person listed below is c/o Alpine 4 Holdings, Inc. 2525 E Arizona Biltmore Circle, Suite 237, Phoenix, Arizona, 85016.
Name and Address of
beneficial owner (1);
Class of Securities
Title/Class of SecurityNumber of Shares
Beneficial
Ownership of
Shares Listed
Votes
Total Voting Power (2)
Kent B. Wilson
Chief Executive Officer, Director
CLASS A188,515 0.79 %188,515 
CLASS B366,936 40.50 %3,669,360 
CLASS C123,772 8.08 %618,860 
B Preferred66.67 %54,236,103 
Total Votes58,712,838 48.11 %
Ian Kantrowitz
Director
CLASS A104,177 0.43 %104,177 
CLASS B187,429 20.69 %1,874,290 
CLASS C126,218 8.24 %631,090 
B Preferred33.33 %27,118,051 
Total Votes29,727,608 24.36 %
Jeff Hail
Chief Operating
Officer
CLASS A10,816 0.05 %10,816 
CLASS B140,527 15.51 %1,405,270 
CLASS C100,938 6.59 %504,690 
B Preferred— — %— 
Total Votes1,920,776 1.57 %
Gerry Garcia
Director
CLASS A1,250 0.01 %1,250 
CLASS B— — %— 
CLASS C126 0.01 %630 
B Preferred— — %— 
Total Votes1,880 *%
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Edmond Lew
Director
CLASS A15,460 0.06 %15,460 
CLASS B— — %— 
CLASS C1,021 0.07 %5,105 
B Preferred— — %— 
Total Votes20,565 0.02 %
Christophe Jeunot
Director
CLASS A22,112 0.09 %22,112 
CLASS B— — %— 
CLASS C3,403 0.22 %17,015 
B Preferred— — %— 
Total Votes39,127 0.03 %
Jonathan Withem
Director
CLASS A— — %— 
CLASS B— — %— 
CLASS C— — %— 
B Preferred— — %— 
Total Votes— — %
Andrew Call
Director
CLASS A— — %— 
CLASS B— — %— 
CLASS C— — %— 
B Preferred— — %— 
Total Votes— — %
As Officers and Directors as a GroupCLASS A342,330 1.43 %342,330 
(8 people)CLASS B694,892 76.70 %6,948,920 
CLASS C355,478 23.20 %1,777,390 
B Preferred100.00 %81,354,154 
Total Votes90,422,794 74.09 %
There are no stockholders’ with greater than 5% ownership
_______________
*Less than 0.01%
(1)Except as otherwise indicated, the address of the stockholder is: Alpine 4 Holdings, Inc., 2525 E Arizona Biltmore Cir, Suite 237, Phoenix AZ 85016.
(2)The Voting Power column includes the effect of shares of Class B common stock, Class C common stock, and Series B Preferred Stock held by the named individuals, as indicated in the footnotes below. Each share of Class B common stock has 10 votes. Each share of Class C common stock has 5 votes. Collectively, all of the shares of Series B Preferred have voting power equal to 200% of the total voting power of all other Classes or series of outstanding shares. Each Series B Preferred share has a fractional portion of that aggregate vote.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Party Transactions
All related party transactions are discussed and considered by the senior management team before the transactions are executed and are escalated to the Board of Directors for review and approval as appropriate and necessary.
On January 25, 2023, the Company issued a $200,000 six-month note payable due July 29, 2023 to Ian Kantrowitz, our Vice President of Investor Relations and a member of the Board of Directors. The note has an annual interest rate of 30%. On July 31, 2023, the Company and Mr. Kantrowitz executed a revised note with the Company issuing a $230,000 note payable due on January 21, 2024 with all other terms remaining the same as the original note. The new principal balance represents the original note principal ($200,000) plus the accrued interest on the original note as of the maturity date ($30,000). Both notes were issued to be utilized for general corporate purposes. As of the date of the prospectus, the full $230,000 principal balance and $1,917 in accrued interest is outstanding.
On January 30, 2023, the Company issued a $50,000 six-month note payable due July 29, 2023 to Christoph Jeunot, a member of the Board of Directors, with an annual interest rate of 30%. On August 1, 2023, the Company and Mr. Jeunot executed a revised note with the Company issuing a $57,500 note payable due on January 24, 2024 with all other terms remaining the same as the original note. The new principal balance represents the original note principal ($50,000) plus the accrued interest on the original note as of the maturity date ($7,500). Both notes were issued to be utilized for general corporate purposes. As of the date of the prospectus, the $57,500 principal balance and $335 in accrued interest is outstanding.
On January 30, 2023, the Company issued a $50,000 six-month note payable due July 29, 2023 to Shannon Rigney, our Vice President of Social Media & Press Releases, with an annual interest rate of 30%. On July 31, 2023, the Company and Ms. Rigney executed a revised note with the Company issuing a $57,500 note payable due on January 25, 2024 with all other terms remaining the same as the original note. The new principal balance represents the original note principal ($50,000) plus the accrued interest on the original note as of the maturity date ($7,500). Both notes were issued to be utilized for general corporate purposes. As of the date of the prospectus, the full $57,500 principal balance and $288 in accrued interest is outstanding.
On February 1, 2023, the Company issued a $65,000 six-month note payable due August 1, 2023 to Jeffrey Hail, our Chief Operating Officer, with an annual interest rate of 30%. On August 2, 2023, the Company and Mr. Hail executed a revised note with the Company issuing a $74,750 note payable due on January 28, 2024 with all other terms remaining the same as the original note. The new principal balance represents the original note principal ($65,000) plus the accrued interest on the original note as of the maturity date ($9,750). Both notes were issued to be utilized for general corporate purposes. As of the date of the prospectus, the full $74,750 principal balance and $187 in accrued interest is outstanding.
On February 2, 2023, the Company issued a $50,000 six-month note payable due August 2, 2023 to Edmond Lew, a member of the Board of Directors, with an annual interest rate of 30%. On August 1, 2023, the Company and Mr. Lew executed a revised note with the Company issuing a $57,500 note payable due on January 28, 2024 with all other terms remaining the same as the original note. The new principal balance represents the original note principal ($50,000) plus the accrued interest on the original note as of the maturity date ($7,500). Both notes were issued to be utilized for general corporate purposes. As of the date of the prospectus, the full $57,500 principal balance and $144 in accrued interest is outstanding.
On February 3, 2023, the Company issued a $20,000 six-month note payable due August 1, 2023 to Gabriel Garcia, the spouse of our Chairwomen of the Board of Directors, with an annual interest rate of 30%. On August 3, 2023, the Company and Mr. Garcia executed a revised note with the Company issuing a $23,000 note payable due on January 27, 2024 with all other terms remaining the same as the original note. The new principal balance represents the original note principal ($20,000) plus the accrued interest on the original note as of the maturity date ($3,000). Both notes were issued to be utilized for general corporate purposes. As of the date of the prospectus, the full $23,000 principal balance and $38 in accrued interest is outstanding.
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On February 9, 2023, the Company issued a $110,000 six-month note payable due August 8, 2023 to Jeffrey Hail, our Chief Operating Officer, with an annual interest rate of 30%. On August 2, 2023, the Company and Mr. Hail executed a revised note with the Company issuing a $126,500 note payable due on February 5, 2024 with all other terms remaining the same as the original note. The new principal balance represents the original note principal ($110,000) plus the accrued interest on the original note as of the maturity date ($16,500). Both notes were issued to be utilized for general corporate purposes. As of the date of the prospectus, the full $126,500 principal balance and $0 in accrued interest is outstanding.
On February 10, 2023, the Company issued a $10,000 six-month note payable due August 9, 2023 to Kent Wilson, our Chief Executive Officer and a member of the Board of Directors, with an annual interest rate of 30%. On August 2, 2023, the Company and Mr. Wilson executed a revised note with the Company issuing a $11,500 note payable due on February 5, 2024 with all other terms remaining the same as the original note. The new principal balance represents the original note principal ($10,000) plus the accrued interest on the original note as of the maturity date ($1,500). Both notes were issued to be utilized for general corporate purposes. As of the date of the prospectus, the full $11,500 principal balance and $0 in accrued interest is outstanding.
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DESCRIPTION OF SECURITIES
Authorized Capital Stock
Our authorized capital stock consists of 230,000,000 shares of which 225,000,000 shares are common stock, par value $0.0001 per share, and 5,000,000 shares are preferred stock, par value of $0.0001 per share.
Common Stock
Pursuant to our amended Certificate of Incorporation, we are authorized to issue three classes of common stock: Class A common stock (200,000,000 shares); Class B common stock (10,000,000 shares); and Class C common stock (15,000,000 shares).
Voting Rights
Holders of our Class A, Class B, and Class C common stock have identical rights, except that holders of our Class A common stock are entitled to one vote per share; holders of our Class B common stock will be entitled to ten (10) votes per share; and holders of our Class C common stock will be entitled to five (5) votes per share. Holders of shares of Class A, Class B, and Class C common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise required by law. We have not provided for cumulative voting for the election of directors in our certificate of incorporation.
Dividends
Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of Class A, Class B, and Class C common stock shall be entitled to share equally in any dividends that our board of directors may determine to issue from time to time. In the event a dividend is paid in the form of shares of common stock or rights to acquire shares of common stock, the holders of Class A common stock shall receive Class A common stock, or rights to acquire Class A common stock, as the case may be; the holders of Class B common stock shall receive Class B common stock, or rights to acquire Class B common stock, as the case may be; and the holders of Class C common stock shall receive Class C common stock, or rights to acquire Class C common stock, as the case may be.
Liquidation Rights
Upon our liquidation, dissolution or winding-up, the holders of Class A, Class B, and Class C common stock shall be entitled to share equally all assets remaining after the payment of any liabilities and the liquidation preferences on any outstanding preferred stock.
Conversion
Class A Common
Our Class A common stock is not convertible into any other shares of our capital stock.
Class B Common
Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock shall convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain transfers described in our Certificate of Incorporation.
Once converted into Class A common stock, the Class B common stock will be classified as authorized and unissued, and may be reissued. No class of common stock may be subdivided or combined unless the other class of common stock concurrently is subdivided or combined in the same proportion and in the same manner.
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Class C Common
Each share of Class C common stock is convertible as follows:
Between the date of issuance by the Company to the holder (the “Issuance Date”) and the third anniversary of the Issuance Date, the Class C common stock may not be converted into Class A common stock.
Beginning on the third anniversary of the Issuance Date (the “Initial Conversion Date”), the shareholder may convert up to 25% of the Class C shares owned by such holder into shares of Class A common stock.
Beginning on the fourth anniversary of the Issuance Date, the shareholder may convert up to an additional 25% of the Class C shares owned by such holder into shares of Class A common stock.
Beginning on the fifth anniversary of the Issuance Date, the shareholder may convert up to an additional 25% of the Class C shares owned by such holder into shares of Class A common stock.
Beginning on the sixth anniversary of the Issuance Date, the shareholder may convert up to an additional 25% of the Class C shares owned by such holder into shares of Class A common stock.
The conversion schedule and limitations above are referred to herein as the “Conversion Schedule.
As discussed more fully below, any transfer of Class C common stock shall result in the Initial Conversion Date being deemed to be reset, and shall be the third anniversary of such Transfer, and the Conversion Schedule shall be reset and calculated from the reset Initial Conversion Date.
Once converted into Class A common stock, the Class C common stock shall not be reissued. No class of common stock may be subdivided or combined unless the other class of common stock concurrently is subdivided or combined in the same proportion and in the same manner.
Restrictions on Transfer
Class A Common
There are no restrictions on the transfer of the Class A common stock, other than restrictions required by federal and state securities laws.
Class B Common
Each share of Class B common stock shall automatically, without any further action, convert into one (1) fully paid and non-assessable share of Class A common stock upon a Transfer (as defined in the Amendment) of such share, other than a Transfer:
from a Class B Stockholder to any other Class B Stockholder who is a natural person to certain Permitted Entities, and from any of the Permitted Entities back to such Class B Stockholder and/or any other Permitted Entity established by or for such Class B Stockholder:
Certain trusts;
An Individual Retirement Account, as defined in Section 408(a) of the Internal Revenue Code, or certain pensions, profit sharing, stock bonus or other type of plans or trusts;
Certain entities, including a corporation over which such Class B Stockholder has voting control; a partnership over which such Class B Stockholder has voting control; a limited liability company over which such Class B Stockholder has voting control;
by a Class B Stockholder that is a partnership, or a nominee for a partnership, or a limited liability company, which partnership or limited liability company beneficially held more than five percent (5%) of
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the total outstanding shares of Class B common stock as of the transfer to certain persons listed in the Amendment;
Additionally, each share of Class B common stock held of record by a Class B Stockholder who is a natural person, or by such Class B Stockholder’s Permitted Entities, shall automatically, without any further action, convert into one (1) fully paid and non-assessable share of Class A common stock upon the death of such Class B Stockholder.
Shares of Class B common stock that are converted into shares of Class A common stock as provided in this section shall be retired and may not be reissued.
Class C Common
Upon the Transfer (as defined in the Amendment) of any share of Class C common stock other than a Transfer:
from a Class C Stockholder to any other Class C Stockholder who is a natural person to certain Permitted Entities, and from any of the Permitted Entities back to such Class C Stockholder and/or any other Permitted Entity established by or for such Class C Stockholder:
Certain trusts;
An Individual Retirement Account, as defined in Section 408(a) of the Internal Revenue Code, or certain pensions, profit sharing, stock bonus or other type of plans or trusts;
Certain entities, including a corporation over which such Class C Stockholder has voting control; a partnership over which such Class C Stockholder has voting control; a limited liability company over which such Class C Stockholder has voting control;
by a Class C Stockholder that is a partnership, or a nominee for a partnership, or a limited liability company, which partnership or limited liability company beneficially held more than five percent (5%) of the total outstanding shares of Class C common stock as of the transfer to certain persons listed in the Amendment;
the Initial Conversion Date shall be deemed to be reset, and shall be the third anniversary of such Transfer, and the Conversion Schedule shall be reset and calculated from the reset Initial Conversion Date.
Additionally, each share of Class C common stock held of record by a Class C Stockholder who is a natural person, or by such Class C Stockholder’s Permitted Entities, shall automatically, without any further action, convert into one (1) fully paid and non-assessable share of Class A Common Stock upon the death of such Class C Stockholder.
The transfer agent and registrar for our Class A and Class C common stock is VStock Transfer, LLC. The transfer agent’s address is 18 Lafayette Place, Woodmere, NY 11598, and its telephone number is 212.828.8436.
Preferred Stock
We are authorized by our Certificate of Incorporation to issue one or more series of preferred stock, and our Board of Directors is authorized to determine the rights, preferences, and terms of any such series without being required to seek approval of the shareholders. This is often referred to as having “blank check” preferred stock rights.
As of the date of this prospectus, we had one series of preferred stock outstanding, our Series B Convertible Preferred Stock (the “Series B Preferred Stock”).
The terms of the Series B Preferred Stock include the following:
Number of shares: The Company designated 100 shares of Series B Preferred Stock.
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The Stated Value of the Series B Preferred Stock is $1.00 per share.
No dividends will accrue.
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.
Liquidation
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.
Conversion: 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 the date of this prospectus, we had 3 shares of Series B Preferred Stock outstanding, held by the members of our Board of Directors.
Anti-Takeover Provisions of Our Charter Documents and Delaware Law
Some provisions of our Charter, our Bylaws and Delaware law could make it more difficult to acquire our company by means of a tender offer, a proxy contest, or otherwise.
Our Bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of our board of directors or a committee of our board of directors. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, for a proposal to be timely submitted for consideration at an annual meeting, notice must be delivered to our secretary not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding
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year. Our Bylaws specify the requirements as to form and content of all stockholders’ notices. These provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are not followed.
Our Charter and Bylaws both provide that vacancies on our board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office, and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders or until such director’s successor shall have been duly elected and qualified. Accordingly, the board of directors could prevent any stockholder from filling the new directorships with such stockholder’s own nominee.
Additionally, as noted, our Charter provides our Board with “blank check” preferred stock authority, by which means the Board of Directors may designate a new series of preferred stock, and determine the rights and preferences, including voting rights, without the need to seek approval from our shareholders.
Delaware Anti-Takeover Law
We are subject to Section 203 of the Delaware General Corporation Law which contains anti-takeover provisions. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years following the date that the person became an interested stockholder, unless the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a business combination includes a merger, asset or stock sale or another transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns 15% or more of the corporation’s voting stock. The existence of this provision may have an anti-takeover effect with respect to transactions that are not approved in advance by our board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by stockholders.
No Cumulative Voting
Under Delaware law, cumulative voting for the election of directors is not permitted unless a corporation’s certificate of incorporation authorizes cumulative voting. Our Charter does not provide for cumulative voting in the election of directors. Cumulative voting allows a minority stockholder to vote a portion or all of its shares for one or more candidates for seats on our board of directors. Without cumulative voting, a minority stockholder will not be able to gain as many seats on our board of directors based on the number of shares of our stock the stockholder holds as compared to the number of seats the stockholder would be able to gain if cumulative voting were permitted. The absence of cumulative voting makes it more difficult for a minority stockholder to gain a seat on our board of directors to influence our board’s decision regarding a takeover.
Stockholder Action by Written Consent
Delaware law generally provides that the affirmative vote of a majority of the shares entitled to vote on such matter is required to amend a corporation’s certificate of incorporation or bylaws, unless a corporation’s certificate of incorporation or bylaws requires a greater percentage. Our Charter permits our board of directors to amend or repeal most provisions of our Bylaws by majority vote. Generally, our Charter may be amended by holders of a majority of the voting power of the then outstanding shares of our capital stock entitled to vote. The stockholder vote or consent with respect to an amendment of our Charter or Bylaws would be in addition to any separate class vote that might in the future be required under the terms of any series of preferred stock that might be outstanding at the time such a proposed amendment were submitted to stockholders. Delaware law and the provisions of our Bylaws generally permit stockholders owning the requisite percentage of shares of common stock necessary to approve an amendment to our Charter and Bylaws to act by written consent in lieu of a meeting of our stockholders.
Limitation of Liability and Indemnification of Officers and Directors
Our Bylaws provide indemnification, including advancement of expenses, to the fullest extent permitted under applicable law to any person made or threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative by reason of the fact that such person is
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or was a director or officer of the company, or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan. In addition, our Charter provides that our directors will not be personally liable to us or our stockholders for monetary damages for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our shareholders, acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or derived an improper personal benefit from their action as directors. This provision does not limit or eliminate our rights or the rights of any stockholder to seek nonmonetary relief such as an injunction or rescission in the event of a breach of a director’s duty of care. In addition, this provision does not limit the directors’ responsibilities under Delaware law or any other laws, such as the federal securities laws. We have obtained insurance that insures our directors and officers against certain losses, and which insures us against our obligations to indemnify the directors and officers. We also have entered into indemnification agreements with our directors and executive officers.
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PLAN OF DISTRIBUTION
We are offering up to [   ] Units, based on an assumed public offering price of $[   ] per Unit, which represents the closing price of our Class A common stock on Nasdaq on August ___, 2023, gross proceeds of up to approximately $[    ] million before deduction of placement agent commissions and offering expenses, in a best-efforts offering. There is no minimum amount of proceeds that is a condition of closing of this offering. The actual amount of gross proceeds, if any, in this offering could vary substantially from the gross proceeds from the sale of the maximum amount of securities being offered in this prospectus.
A.G.P./Alliance Global Partners has agreed to act as our exclusive placement agent in connection with this offering subject to the terms and conditions of a placement agency agreement dated July 11, 2023. The placement agent is not purchasing or selling any of the securities offered by this prospectus, nor is it required to arrange the purchase or sale of any specific number or dollar amount of securities, but it has agreed to use its reasonable best efforts to arrange for the sale of all of the securities offered hereby. Therefore, we will enter into a securities purchase agreement directly with the institutional investors, at the investors option, who purchase our securities in this offering. Investors who do not enter into a securities purchase agreement shall rely solely on this prospectus in connection with the purchase of our securities in this offering.
We will deliver the securities being issued to the investors upon receipt of investor funds for the purchase of the securities offered pursuant to this prospectus. We expect to deliver the securities being offered pursuant to this prospectus on or about August __, 2023.
We have agreed to indemnify the placement agent and specified other persons against specified liabilities, including liabilities under the Securities Act, and to contribute to payments the placement agent may be required to make in respect thereof.
Fees and Expenses
This offering is being conducted on a reasonable best efforts basis and the placement agent has no obligation to buy any of the securities from us or to arrange for the purchase or sale of any specific number or dollar amount of securities. We have agreed to pay the placement agent fees set forth in the table below.
Per Unit (including Class A common stock)Per Unit (including Pre-Funded Warrants)Total
Public Offering Price(1)
$$$
Placement Agent Fees(2)
$$$
Proceeds to Company (before expenses) (3)
$$$
__________________
(1)The combined public offering price is $[   ] per share of Class A common stock and accompanying Warrant and $[   ] per Pre-Funded Warrant and accompanying Warrant.
(2)Represents a cash fee equal to seven percent (7.0%) of the aggregate purchase price paid by investors in this offering. We have also agreed to reimburse the Placement Agent for its accountable offering-related legal expenses in an amount up to $100,000 and pay the Placement Agent a non-accountable expense allowance of $10,000.
(3)The amount of offering proceeds to us presented in this table assumes No Pre-Funded Warrants are issued in lieu of shares of Class A common stock and does not give effect to any exercise of the Warrants.
We have agreed to pay to the placement agent a cash fee equal to 7% of the aggregate gross proceeds raised in this offering.
We have also agreed to reimburse the placement agent at closing for legal and other expenses incurred by the placement agent in connection with this offering in an amount equal to $100,000 and for certain non-accountable expenses, up to $10,000. We estimate the total expenses payable by us for this offering, excluding the placement agent fees and expenses, will be approximately $200,000.
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The placement agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions received by it and any profit realized on the resale of the shares sold by it while acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. As an underwriter, the Placement Agent would be required to comply with the requirements of the Securities Act and the Exchange Act, including, without limitation, Rule 415(a)(4) under the Securities Act and Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of shares by the Placement Agent acting as principal. Under these rules and regulations, the Placement Agent:
may not engage in any stabilization activity in connection with our securities; and
may not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until it has completed its participation in the distribution.
Listing
Our Class A common stock is listed on The Nasdaq Capital Market under the trading symbol “ALPP.” We do not plan to list the Pre-Funded Warrants or the Common Warrants on the Nasdaq Capital Market or any other securities exchange or trading market.
Lock-Up Agreements
We have agreed, subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any of our Class A common stock or other securities convertible into or exercisable or exchangeable for our Class A common stock for a period of 30-days after this offering is completed without the prior written consent of the Placement Agent. We have also agreed, subject to certain exceptions, not to effect or enter into an agreement to effect any issuance by us or any of our subsidiaries of shares of our Class A common stock or other securities convertible into or exercisable or exchangeable for our Class A common stock involving a variable rate transaction for a period of 90-days. Additionally, each of our officers and directors as of the date of this prospectus have agreed, subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any of our Class A common stock or other securities convertible into or exercisable or exchangeable for our Class A common stock for a period of 90-days after this offering is completed without the prior written consent of the Placement Agent.
Indemnification
We have agreed to indemnify the placement agent against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the placement agent may be required to make for these liabilities.
Determination of Offering Price and Exercise Price
The actual public offering price of the securities we are offering, and the exercise price of the Warrants included in the Units and the Pre-Funded Warrants that we are offering, will be negotiated between us and the investors in the offering based on the trading of our common stock prior to the offering, amongst other things. Other factors considered in determining the public offering price of the securities we are offering, as well as the exercise price of the Warrants included in the Units and the Pre-Funded Warrants that we are offering, will include the stage of development of our business, our business plans for the future and the extend to which they have been implemented, an assessment of our management, the general conditions of the securities markets at the time of the offering and such other factors as are deemed relevant.
The public offering price of the securities we are offering was negotiated between us and the investors, in consultation with the placement agent based on the trading of our shares of Class A common stock prior to the offering, among other things. Other factors considered in determining the public offering price of the securities we are offering include our history and prospects, the industry in which we operate, our past and present operating results, the stage of development of our business, our business plans for the future and the extent to which they have
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been implemented, the previous experience of our executive officers, general conditions of the securities markets at the time of the offering and such other factors as were deemed relevant.
Regulation M
The placement agent may be deemed to be an underwriter within the meaning of Section2(a)(11) of the Securities Act, and any commissions received by it and any profit realized on the resale of the shares sold by it while acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. As an underwriter, the placement agent would be required to comply with the requirements of the Securities Act and the Exchange Act, including, without limitation, Rule415(a)(4)under the Securities Act and Rule10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of securities by the placement agent acting as principal. Under these rules and regulations, the placement agent:
may not engage in any stabilization activity in connection with our securities; and may not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until it has completed its participation in the distribution.
Discretionary Accounts
The placement agent does not intend to confirm sales of the securities offered hereby to any accounts over which it has discretionary authority.
Other Activities and Relationships
The placement agent and certain of its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The placement agent and certain of its affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for us and our affiliates, for which they received or will receive customary fees and expenses.
In the ordinary course of their various business activities, the placement agent and certain of its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments issued by us and our affiliates. If the placement agent or its affiliates enter into a lending relationship with us, they will routinely hedge their credit exposure to us consistent with their customary risk management policies. The placement agent and its affiliates may hedge such exposure by entering into transactions that consist of either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the shares of Class A common stock offered hereby. Any such short positions could adversely affect future trading prices of the shares of Class A common stock offered hereby. The placement agent and certain of its affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
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SHARES TO BE OFFERED BY THE SELLING STOCKHOLDERS
In addition to the Units being offered by the Company, this registration statement registers the resale of certain shares of our Class A common stock by three Selling Shareholders: Armistice Capital Master Fund, Ltd. (“Armistice”); Mast Hill Fund L.P., a Delaware limited partnership (“Mast Hill”); and J.H. Darbie & Co. (“JH Darbie”).
Shares Registered for Resale by Armistice
This registration statement registers the resale of up to _________ shares of Class A common stock which were issued to Armistice in July 2022, as well as up to _________ shares of Class A common stock issuable upon exercise of the Warrants that were issued to Armistice.
July 2022 Offering of Shares and Warrants
On July 11, 2022, we entered into a securities purchase agreement with Armistice and other investors, pursuant to which we agreed to offer and sell to Armistice, in a registered direct offering, _________ shares of our Class A common stock (the “2022 Armistice Shares”) and warrants to purchase up to 1,630,435 Shares of Class A common stock (the “2022 Armistice Warrants”).
The 2022 Armistice Shares, the 2022 Armistice Warrants, and the shares of common stock issuable upon exercise of the 2022 Armistice Warrants (the “2022 Armistice Warrant Shares”) were offered by us pursuant to an effective shelf registration statement on Form S-3 (No. 333-252539), which was declared effective by the SEC on February 10, 2021, and a corresponding prospectus supplement, dated July 11, 2022.
The exercise price and number of 2022 Armistice Warrant Shares were subject to adjustment in the event of any stock dividend or split, reverse stock split, recapitalization, reorganization or similar transaction, as described in the 2022 Armistice Warrants, and the number of 2022 Armistice Warrant Shares and the exercise price were adjusted in connection with the Reverse Split that took effect on May 15, 2023.
November 2021 Offering of Shares and Warrants
On November 23, 2021, the Company entered into a securities purchase agreement with certain purchasers, pursuant to which the Company will sell to the Purchasers in a registered direct offering, an aggregate of 1,071,429 shares of Class A common stock and warrants to purchase up to 535,715 shares of Class A common stock underlying the Warrants, for aggregate gross proceeds to the Company of $24,000,000.
In connection with the November 23, 2021 transaction, we issued warrants to purchase up to 89,286 shares of Class A common stock to an investor which subsequently assigned the warrants (the “2021 Armistice Warrants”) to Armistice.
The exercise price and number of 2021 Armistice Warrant Shares also were subject to adjustment in the event of any stock dividend, or split, reverse stock split, recapitalization, reorganization or similar transaction, as described in the 2021 Armistice Warrants, and the number of 2021 Armistice Warrant Shares and the exercise price were adjusted in connection with the Reverse Split that took effect on May 15, 2023.
We are registering the resale by Armistice of the 1,719,721 shares of Class A common stock issuable upon exercise of the 2022 Armistice Warrants and the 2021 Armistice Warrants in order to permit Armistice to offer the shares for resale from time to time. Except for its participation in our financing that closed on July 13, 2022, Armistice has not had any material relationship with us within the past three years.
Shares Registered for Resale by Mast Hill
On June 29, 2023, the Company entered into a securities purchase agreement with Mast Hill, pursuant to which the Company issued and sold to Mast Hill a senior convertible promissory note in the aggregate principal amount of $1,670,000 (the “Senior Note”), convertible into shares (the “Conversion Shares”) of the Company’s Class A common stock (the “Common Stock”), pursuant to the terms, conditions, and limitations set forth in the Senior Note.
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The Company also agreed to issue to Mast Hill (i) a common stock purchase warrant (the “Mast Hill Warrant”) to purchase 200,000 shares of Common Stock (the “MH Warrant Shares”), (ii) 67,400 shares of Common Stock (the “MH First Commitment Shares”), and 1,200,000 shares of Common Stock (the “MH Second Commitment Shares”). Under the Transaction Agreement, the MH Second Commitment Shares will be returned to the Company upon the Company’s full performance of certain specified obligations under the Mast Hill transaction agreements, but will become non-returnable should certain events of default occur as defined under the terms of the Mast Hill transaction agreements.
We are registering the resale by Mast Hill of the 1,467,400 shares of Class A common stock, consisting of the MH Warrant Shares, the MH First Commitment Shares, and the MH Second Commitment Shares in order to permit Mast Hill to offer the shares for resale from time to time. Except for its participation in our financing that closed on June 29, 2023, Mast Hill has not had any material relationship with us within the past three years.
Shares Registered for Resale by JH Darbie
JH Darbie served as the finder in connection with the offer and sale of the Note to Mast Hill. JH Darbie received a warrant (the “JH Darbie Warrant”) to purchase 3,579 shares of the Company’s Common stock (the “JH Darbie Warrant Shares”).
We are registering the resale by JH Darbie of the JH Darbie Warrant Shares in order to permit JH Darbie to offer the shares for resale from time to time. Except for its participation in our financing that closed on June 29, 2023, JH Darbie has not had any material relationship with us within the past three years.
The table below lists the Selling Stockholders and other information regarding the beneficial ownership of the shares of common stock by such Selling Stockholders. The second column lists the number of shares of common stock beneficially owned by the Selling Stockholders, as of August ___, 2023, assuming exercise of all of the warrants held by such Selling Stockholders on such date, without regard to any limitations on exercises. The third column lists the shares of common stock being offered by this prospectus by the Selling Stockholders.
This prospectus generally covers the resale of the maximum number of shares of common stock issuable upon exercise of the Mast Hill Warrants and JH Darbie Warrants (collectively, the “Warrants”), determined as if the outstanding Warrants were exercised in full as of the trading day immediately preceding the date this registration statement was initially filed with the SEC, each as of the trading day immediately preceding the applicable date of determination and all subject to adjustment as provided in the registration right agreement, without regard to any limitations on the exercise of the Warrants. The fourth column assumes the sale of all of the shares offered by the Selling Stockholder pursuant to this prospectus.
Under the terms of the Warrants, the Selling Stockholders may not exercise their Warrants to the extent such exercise would cause such Selling Stockholder, together with its affiliates and attribution parties, to beneficially own a number of shares of common stock which would exceed 4.99% of our then outstanding common stock following such exercise, excluding for purposes of such determination shares of common stock issuable upon exercise of such Warrants which have not been exercised. The number of shares in the second and fourth columns do not reflect this limitation. The Selling Stockholders may sell all, some or none of their shares in this offering. See Plan of Distribution.
Selling StockholderNumber of Shares of Common Stock Owned Prior to OfferingMaximum Number of Shares of Common Stock to be Sold Pursuant to this ProspectusNumber of Shares of Common Stock Owned After the Offering
Percentage of Common Stock Owned After the Offering (3)
Armistice Capital Master Fund Ltd. (1)(2)
%
Mast Hill Fund L.P. (4)(5)
%
JH Darbie & Co. (6)(7)
%
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__________________
(1)The securities are directly held by Armistice Capital Master Fund Ltd., a Cayman Islands exempted company (the Master Fund), and may be deemed to be beneficially owned by: (i) Armistice Capital, LLC (Armistice Capital), as the investment manager of the Master Fund; and (ii) Steven Boyd, as the Managing Member of Armistice Capital. The address of the Master Fund is c/o Armistice Capital, LLC, 510 Madison Avenue, 7th Floor, New York, NY 10022.
(2)The number of shares beneficially owned includes (i) ____________ shares of Class A common stock, and (ii) 1,719,721 shares of common stock issuable upon exercise of the 2022 Armistice Warrants and the 2021 Armistice Warrants. The warrants are subject to a beneficial ownership limitation of 4.99% or 9.99%, which such limitation restricts the Selling Stockholder from exercising that portion of the warrants that would result in the Selling Stockholder and its affiliates owning, after exercise, a number of shares of common stock in excess of the beneficial ownership limitation. The amounts and percentage in the table do not give effect to the beneficial ownership limitations.
(3)Based on 24,224,657 shares of Class A common stock outstanding as of August 4, 2023, and assumes that following the offering all of the warrants will have been exercised (such that _________ shares of common stock will be outstanding), and all of the shares offered by the Selling Stockholder hereunder will have been sold.
(4)The securities listed in the table above are directly held by Mast Hill Fund L.P., a Delaware limited partnership, The address of Mast Hill is 48 Parker Road, Wellesley, MA 02482.
(5)The number of shares listed in the table above includes 200,000 MH Warrant Shares; 67,400 MH First Commitment Shares; and 1,200,000 MH Second Commitment Shares. However, under the Mast Hill securities purchase agreement, the MH Second Commitment Shares will be returned to the Company upon the Company’s full performance of certain specified obligations under the securities purchase agreement, including repayment of the Senior Note per the schedule set forth in the Senior Note, but will become non-returnable should certain events of default occur as defined under terms of the Mast Hill transaction agreements.
(6)The securities listed in the table above are directly held by JH Darbie & Co. The address of JH Darbie is 48 Wall Street, Suite 1206, New York, NY 10005.
(7)The shares listed in the table above consists of the shares issuable upon exercise of the JH Darbie Warrants.
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PLAN OF DISTRIBUTION – SELLING STOCKHOLDERS
The common stock offered by this prospectus is being offered by the three Selling Stockholders listed above. The common stock may be sold or distributed from time to time by the Selling Stockholders directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices, or at fixed prices, which may be changed. The sale of the common stock offered by this prospectus could be affected in one or more of the following methods:
ordinary brokers’ transactions;
transactions involving cross or block trades;
through brokers, dealers, or underwriters who may act solely as agents;
“at the market” into an existing market for the common stock;
in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through agents;
in privately negotiated transactions; or
any combination of the foregoing.
In order to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the state or an exemption from the state’s registration or qualification requirement is available and complied with.
The Selling Stockholders may be deemed to be “underwriters” within the meaning of Section 2(a)(11) of the Securities Act.
The Selling Stockholders may use an unaffiliated broker-dealer to effectuate all sales, if any, of the common stock that it may purchase from us pursuant to the Purchase Agreement. Such sales will be made at prices and at terms then prevailing or at prices related to the then current market price. Each such unaffiliated broker-dealer will be an underwriter within the meaning of Section 2(a)(11) of the Securities Act. Each such broker-dealer will receive commissions from the Selling Stockholders that will not exceed customary brokerage commissions.
Brokers, dealers, underwriters or agents participating in the distribution of the shares as agents may receive compensation in the form of commissions, discounts, or concessions from the Selling Stockholders and/or purchasers of the common stock for whom the broker-dealers may act as agent. The compensation paid to a particular broker-dealer may be less than or in excess of customary commissions. Neither we nor the Selling Stockholders can presently estimate the amount of compensation that any agent will receive.
We know of no existing arrangements between the Selling Stockholders or any other stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of the shares offered by this prospectus. At the time a particular offer of shares is made, a prospectus supplement, if required, will be distributed that will set forth the names of any agents, underwriters or dealers and any compensation from the selling stockholder, and any other required information.
Our common stock is quoted on the Nasdaq Capital Markets under the symbol “ALPP.”
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LEGAL MATTERS
The legal validity of the securities offered by this prospectus will be passed upon for us by Kirton McConkie, P.C., Salt Lake City, Utah.
EXPERTS
The consolidated financial statements of Alpine 4 Holdings, Inc. as of December 31, 2021 and for the year then ended, appearing in this prospectus and the registration statement, have been audited by MaloneBailey, LLP, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Alpine 4 Holdings, Inc. as of December 31, 2022 and for the year then ended have been audited by RSM US LLP, an independent registered public accounting firm, as stated in their report thereon (which report expresses an unqualified opinion and includes an explanatory paragraph relating to going concern), and included in this Prospectus and Registration Statement in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1 under the Securities Act of 1933, as amended, relating to the shares of common stock being offered by this prospectus, and reference is made to such registration statement. This prospectus and it does not contain all information in the registration statement, as certain portions have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission.
In addition, since our common stock is registered under the Securities Exchange Act of 1934, we are required to file annual, quarterly, and current reports, or other information with the SEC as provided by the Securities Exchange Act of 1934, as amended. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on the Investor Relations portion of our website, www.alpine4.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. In addition, the SEC maintains an internet site that contains the reports, proxy and information statements, and other information we electronically file with or furnish to the SEC, located at http://www.sec.gov.
Information contained in, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.
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ALPINE 4 HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Financial Statements
Contents
Page
Financial Statements
Consolidated Balance Sheet as of March 31, 2023, and December 31, 2022
F-1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Alpine 4 Holdings, Inc. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Alpine 4 Holdings, Inc. and subsidiaries (the Company) as of December 31, 2022, the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows, for the year then ended, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1A to the financial statements, the Company has suffered recurring losses from operations and recurring negative cash flows from operations. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters also are described in Note 1A. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ RSM US LLP
We have served as the Company's auditor since 2022.
Phoenix, Arizona
May 5, 2023
F-2


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Alpine 4 Holdings, Inc and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Alpine 4 Holdings, Inc. and its subsidiaries (collectively, the “Company”) as of December 31, 2021, and the related consolidated statement of operations, changes in stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ MaloneBailey, LLP
www.malonebailey.com
We have served as the Company's auditor from 2015 to 2022.
Houston, Texas
April 13, 2022, except for the restatement discussed in Note 1 as to which the date is March 16, 2023.
F-3


ALPINE 4 HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
2022
December 31,
2021
ASSETS
CURRENT ASSETS:
Cash$2,673,541 $3,715,666 
Accounts receivable, net17,139,944 11,875,176 
Contract assets1,402,788 877,904 
Inventory25,258,369 24,419,654 
Prepaid expenses and other current assets2,428,223 1,955,907 
Total current assets48,902,865 42,844,307 
Property and equipment, net19,503,485 28,101,471 
Intangible assets, net36,282,609 39,180,664 
Right of use assets16,407,566 1,460,206 
Goodwill22,680,084 22,680,084 
Other non-current assets1,855,605 357,118 
TOTAL ASSETS
$145,632,214 $134,623,850 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable$8,608,554 $7,744,957 
Accrued expenses6,749,890 5,074,006 
Contract liabilities5,284,285 6,359,449 
Notes payable, current portion3,201,136 5,690,524 
Line of credit, current portion7,426,814 4,473,489 
Financing lease obligation, current portion725,302 649,343 
Operating lease obligation, current portion1,318,885 428,596 
Total current liabilities 33,314,866 30,420,364 
Notes payable, net of current portion4,266,350 8,426,105 
Line of credit, net of current portion7,215,520 5,640,051 
Financing lease obligations, net of current portion14,592,813 15,319,467 
Operating lease obligations, net of current portion15,262,494 1,066,562 
Series C and Series D preferred stock subject to redemption 400,092 
Deferred tax liability988,150 1,861,165 
TOTAL LIABILITIES
75,640,193 63,133,806 
Commitment and contingencies (Note 11)
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $0.0001 par value, 5,000,000 shares authorized
— — 
Series B preferred stock; $1.00 stated value; 100 shares authorized, 5 and 5 shares issued and outstanding at December 31, 2022 and 2021
5 5 
Class A Common stock, $0.0001 par value, 295,000,000 shares authorized, 178,425,932 and 161,798,817 shares issued and outstanding at December 31, 2022 and 2021
17,844 16,182 
Class B Common stock, $0.0001 par value, 10,000,000 shares authorized, 8,548,088 and 8,548,088 shares issued and outstanding at December 31, 2022 and 2021
854 854 
F-4


Class C Common stock, $0.0001 par value, 15,000,000 shares authorized, 12,238,232 and 12,500,200 shares issued and outstanding at December 31, 2022 and 2021
1,224 1,250 
Additional paid-in capital141,723,921 130,348,267 
Accumulated deficit(71,751,827)(58,876,514)
Total stockholders' equity (deficit)69,992,021 71,490,044 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
$145,632,214 $134,623,850 
The accompanying notes are an integral part of these consolidated financial statements.
F-5


ALPINE 4 HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
20222021
Revenues, net
$104,563,002 $51,640,813 
Cost of revenues
82,848,600 43,942,815 
Gross Profit
21,714,402 7,697,998 
Operating expenses:
General and administrative expenses37,531,794 27,987,920 
Research and development876,542 1,464,918 
Impairment loss of intangible asset and goodwill 367,519 
Gain on sale of property(5,938,150) 
Total operating expenses32,470,186 29,820,357 
Loss from operations
(10,755,784)(22,122,359)
Other income (expenses)
Interest expense(3,124,132)(3,289,233)
Gain on extinguishment of debt 803,079 
Gain on forgiveness of debt 3,896,108 
Impairment loss on equity investment (1,350,000)
Other income270,609 635,526 
Total other income (expenses)(2,853,523)695,480 
Loss before income tax
(13,609,307)(21,426,879)
Income tax (benefit)
(733,994)(1,943,741)
Net loss
$(12,875,313)$(19,483,138)
Weighted average shares outstanding:
Basic190,779,052 164,216,808 
Diluted190,779,052 164,216,808 
Basic loss per share
$(0.07)$(0.12)
Diluted loss per share
$(0.07)$(0.12)
The accompanying notes are an integral part of these consolidated financial statements.
F-6


ALPINE 4 HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Series B Preferred StockSeries C Preferred StockSeries D Preferred Stock Class A Common StockClass B Common StockClass C Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Total
Stockholders'
Equity (Deficit)
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance, December 31, 2020
5 $5  $  $ 126,363,158 $12,636 9,023,088 $902 14,162,267 $1,417 $25,144,136 $(39,393,376)$(14,234,280)
Issuance of shares of common stock for cash— — — — — — 18,428,827 1,844 — — — — 76,491,149 — 76,492,993 
Issuance of shares of common stock for convertible note payable and accrued interest— — — — — 7,384,018 740 — — — — 1,886,156 — 1,886,896 
Conversion of Class C to Class A— — — — — — 1,617,067 162 — — (1,617,067)(162)— —  
Conversion of Class B to Class A— — — — — — 475,000 48 (475,000)(48)— — — —  
Repurchase of class C common stock— — — — — — — — — — (45,000)(5)(185,845)— (185,850)
Issuance of shares of common stock for compensation— — — — — — 199,018 21 — — — — 261,504 — 261,525 
Issuance of shares of common stock and warrants for acquisition— — — — — — 4,922,471 492 — — — — 15,066,719 — 15,067,211 
Conversion of series D preferred stock to Class A— — — — — — 1,066,868 105 — — — — 5,194,329 — 5,194,434 
Conversion of series C preferred stock to Class A— — — — — — 1,342,390 134 — — — — 6,361,153 — 6,361,287 
F-7


Share-based compensation expense— — — — — — — — — — — — 36,538 — 36,538 
Beneficial conversion feature on convertible notes— — — — — — — — — — — — 92,428 — 92,428 
Net loss— — — — — — — — — — — — — (19,483,138)(19,483,138)
Balance, December 31, 2021
5 5     161,798,817 16,182 8,548,088 854 12,500,200 1,250 130,348,267 (58,876,514)71,490,044 
Issuance of shares of common stock for compensation— — — — — — 211,236 22 — — — — 231,555 — 231,577 
Exchange of shares of common stock for compensation— — — — — — 37,500 4 — — (37,500)(4)— —  
Conversion of Series D preferred stock to Class A— — — — — — 63,907 7 — — — — 365,463 — 365,470 
Conversion of Series C preferred stock to Class A— — — — — 8,245 — — — — — 34,622 — 34,622 
Conversion of Class C Common stock to Class A— — — — — — 224,468 22 — — (224,468)(22)— —  
Share-based compensation expense— — — — — — — — — — — — 473,159 — 473,159 
Shares issued from ATM— — — — — — 1,589,005 159 — — — — 1,097,303 — 1,097,462 
Issuance of shares of common stock for cash, net of offering costs— — — — — — 14,492,754 1,448 — — — — 9,173,552 — 9,175,000 
Net loss— — — — — — — — — — — — — (12,875,313)(12,875,313)
Balance, December 31, 2022
5 $5  $  $ 178,425,932 $17,844 8,548,088 $854 12,238,232 $1,224 141,723,921 $(71,751,827)$69,992,021 
F-8


ALPINE 4 HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
20222021
OPERATING ACTIVITIES:
Net loss$(12,875,313)$(19,483,138)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation3,026,483 2,396,966 
Amortization3,148,055 1,757,393 
Gain on extinguishment of debt (803,079)
Gain on forgiveness of debt (3,896,108)
Amortization of preferred stock fair value (545,509)
Income tax benefit(733,994)(1,943,741)
Gain on sale of property(5,938,150) 
Bad debt expense202,761 3,028,757 
Employee stock compensation704,736 298,063 
Amortization of debt discounts 1,436,052 
Operating lease expense1,006,683 412,898 
Impairment loss on equity investment 1,350,000 
Impairment loss of intangible asset and goodwill 367,519 
Write off of inventory691,061 237,192 
Change in current assets and liabilities:
Accounts receivable(5,467,529)(4,235,353)
Inventory(1,529,776)(6,795,719)
Contract assets(524,884)(160,483)
Prepaid expenses and other assets(1,970,803)(87,950)
Accounts payable724,576 725,596 
Accrued expenses1,675,884 614,399 
Contract liabilities(1,075,164)332,032 
Operating lease liability(642,822)(429,529)
Net cash used in operating activities(19,578,196)(25,423,742)
INVESTING ACTIVITIES:
Capital expenditures(1,067,157)(3,571,253)
Proceeds from sale of asset140,710  
Proceeds from sale of building12,454,943  
Cash paid in international technology agreement(250,000) 
Cash paid for acquisitions (37,324,035)
Cash paid for equity investment (350,000)
Cash assumed in acquisition 81,442 
Net cash used in investing activities11,278,496 (41,163,846)
FINANCING ACTIVITIES:
Proceeds from the sale of common stock11,097,462 76,492,993 
Proceeds from issuances of notes payable, non-related party500,000 16,078 
F-9


Proceeds from issuances of convertible notes payable 408,000 
Net proceeds from lines of credit4,795,213 2,575,552 
Cash paid for debt issuance costs(266,419) 
Cash paid for equity issuance costs(825,000) 
Repurchase of common stock (185,850)
Repayment of mortgage(4,642,043) 
Repayments of notes payable, related party (238,651)
Repayments of notes payable, non-related parties(2,750,943)(7,161,807)
Repayments of convertible notes payable (1,688,464)
Cash paid on financing lease obligations(650,695)(637,180)
Net cash provided by financing activities7,257,575 69,580,671 
NET INCREASE (DECREASE) IN CASH
(1,042,125)2,993,083 
CASH , BEGINNING BALANCE
3,715,666 722,583 
CASH, ENDING BALANCE
$2,673,541 $3,715,666 
CASH PAID FOR:
Interest$2,231,600 $1,973,818 
Income taxes$ $54,058 
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
Common stock issued for convertible note payable and accrued interest$ $1,886,896 
ROU asset and operating lease obligation recognized under Topic 842$15,729,043 $95,029 
Equipment purchased on financing lease$243,843 $ 
Beneficial conversion feature on convertible notes$ $92,428 
Common stock issued for acquisition$ $15,067,211 
Remeasurement of finance lease liability$ $279,287 
Mortgage on property purchase$ $4,680,000 
Accounts receivable converted to equity investment$ $1,000,000 
Issuance of shares of series D preferred stock for acquisition$ $6,653,309 
Notes payable issued to the Sellers for the purchase of DTI$ $2,000,000 
Conversion of series D preferred stock for common stock$ $136 
Conversion of series C preferred stock for common stock$ $171 
The accompanying notes are an integral part of these consolidated financial statements.
F-10


Note 1 - Restatement of Consolidated Financial Statements
As more fully discussed in the Form 10-K/A filed on March 17, 2023, the Company restated its consolidated financial statements as of December 31, 2021 and 2020, and for the years then ended to correct errors related to purchase accounting impacting income taxes related to the deferred tax liabilities for certain acquisitions the Company made in 2020 and 2021, the classification of the Series C and Series D preferred shares issued in connection with these acquisitions, errors in the valuation of certain assets acquired for one of the acquisitions in 2021, and errors in the recording of forgiveness of PPP loans that were assumed as part of certain acquisitions in 2020 and 2021.
Note 1A – Organization and Basis of Presentation
Alpine 4 Holdings, Inc. (together with its subsidiaries, the “Company,” “we,” or “our”), 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. On March 2, 2021, the Company changed its name from Alpine 4 Technologies Ltd. to Alpine 4 Holdings, Inc.
Effective April 1, 2016, the Company purchased all of the outstanding capital stock of Quality Circuit Assembly, Inc., a California corporation (“QCA”).
Effective January 1, 2019, the Company purchased all of the outstanding capital stock of Morris Sheet Metal Corp., an Indiana corporation (“MSM”), 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” or “MSM”).
Effective November 6, 2019, the Company purchased all of the outstanding capital stock and units of Deluxe Sheet Metal, Inc., an Indiana corporation, and DSM Holding, LLC, an Indiana limited liability company, and purchased certain real estate from Lonewolf Enterprises, LLC, an Indiana limited liability company (collectively “Deluxe”).
Effective February 21, 2020, the Company purchased all of the outstanding units of Excel Fabrication, LLC., an Idaho limited liability company (“Excel”).
Effective December 15, 2020, the Company purchased the assets of Impossible Aerospace Corporation, a Delaware corporation (“IA”).
Effective February 8, 2021, the Company purchased the assets of Vayu (US), Inc., a Delaware corporation (“Vayu”).
On May 5, 2021, the Company acquired all of the outstanding shares of stock of Thermal Dynamics, Inc., a Delaware corporation (“TDI”).
On May 10, 2021, the Company acquired all of the outstanding membership interests of KAI Enterprises, LLC, a Florida limited liability company, the sole asset of which was all of the outstanding membership interests of Alternative Laboratories, LLC, a Delaware limited liability company (“Alt Labs”).
On October 20, 2021, the Company acquired 100% of the outstanding shares of Identified Technologies Corporation, a Delaware corporation (“Identified Technologies”).
On November 29, 2021, the Company, and a newly formed and wholly owned subsidiary of the Company named ALPP Acquisition Corporation 3, Inc. (“AC3”), entered into a merger agreement with ElecJet Corp., (“ElecJet”) and the three ElecJet shareholders. Pursuant to the agreement, AC3 merged with and into ElecJet with ElecJet being the surviving entity following the merger.
F-11


On December 9, 2021, the Company, and A4 Technologies, Inc., a wholly owned subsidiary of the Company (“A4 Technologies”), entered into a Membership Interest Purchase Agreement with DTI Services Limited Liability Company (doing business as RCA Commercial Electronics), (“DTI”), Direct Tech Sales LLC, (also having an assumed business name of RCA Commercial Electronics), (“Direct Tech”), PMI Group, LLC, (“PMI”), Continu.Us, LLC, (“Continu.Us”), Solas Ray, LLC, (“Solas”), and the individual owners of the interests of the various entities. DTI, Direct Tech, PMI, Continu.Us, and Solas were each referred to in the Membership Interest Purchase Agreement collectively as “RCA.” Pursuant to the MIPA, the Company acquired all of the outstanding membership interests of RCA.
In Q1 2022, the Company formed Global Autonomous Corporation (“GAC”) with several key employees and consultants. The Company owns 71.43% of the outstanding shares of stock of GAC, which has remained consistent throughout the year. There was no assignment of assets or other financial activity on the entity during the current year.
As of the date of this Report, the Company was a holding company owning, directly or indirectly, fourteen companies:
A4 Corporate Services, LLC;
ALTIA, LLC;
Quality Circuit Assembly, Inc.;
Morris Sheet Metal, Corp;
JTD Spiral, Inc.;
Excel Construction Services, LLC;
SPECTRUMebos, Inc.;
Vayu (US)
Thermal Dynamics International, Inc.;
Alternative Laboratories, LLC.;
Identified Technologies, Corp.;
ElecJet Corp.;
DTI Services Limited Liability Company (doing business as RCA Commercial Electronics); and
Global Autonomous Corporation,
Basis of presentation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).
Liquidity
The Company’s financial statements are prepared in accordance with U.S. GAAP applicable to a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued.
In accordance with Financial Accounting Standards Board (the “FASB”), Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our
F-12


ability to continue as a going concern within one year after the date that the financial statements are issued (further detail in the going concern sub-section below).
As shown in the accompanying consolidated financial statements, the Company has incurred significant recurring losses and negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. While the Company experienced a loss for the year ended December 31, 2022, of $12.9 million, and had a negative cash flow used in operations of $19.6 million, this was an improvement over the same period last year, for the year ended December 31, 2021, when there was a net loss of $19.5 million had a negative cash flow used in operations of $25.4 million.
As of December 31, 2022, the Company has positive working capital of approximately $15.6 million. The Company has also secured bank financing totaling $33.0 million ($33.0 million in Lines of Credit including $0.5 million in capital expenditures lines of credit availability) of which $3.8 million was available and unused at December 31, 2022. There are two lines of credit that are set to mature during 2023. These two line of credits total $8.0 million, of which $7.5 million was used as of December 31, 2022, and are shown as a current liability on the consolidated balance sheet.
The Company plans to continue to generate additional revenue (and improve cash flows from operations) partly from the acquisitions of the six operating companies, which closed in 2021, combined with improved gross profit performance from the existing operating companies. The Company also plans to continue to raise funds through debt financing and the sale of shares through its planned at-the-market offering.
Going Concern
The accompanying financial statements have been prepared on a going concern basis. While the working capital deficiency of prior years has improved, and working capital of the Company is currently positive, continued operating losses causes doubt as to the ability of the Company to continue. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's plan of operations, and its ultimate transition to profitable operations are necessary for the Company to continue. The uncertainty that exists with these factors raises substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
In order to mitigate the risk related to the going concern uncertainty, the Company has a three-fold plan to resolve these risks. First, the operating subsidiaries of QCA, TDI, IDT and RCA plan to expand their revenues and profits yielding increased cash flow in those operating segments. This plan will allow for an increased level of cash flow to the Company. Second, the Company has expanded its credit facilities at the subsidiary level over the past 12 months to allow for greater borrowing accessibility if needed for the expansion of product lines and sales opportunities and plans to extend or refinance any lines of credit coming due over the next 12 months in order to provide additional financing. Finally, operating companies hard hit by the supply-chain related price increases such as MSM, Alt Labs, and Excel Construction have begun to experience an easing in the procurement and cost overruns of limited product supply. This subsequently has added to increased cash flow to those entities and less reliance on the Company to fund those activities. Although this plan is in place to mitigate the risk related to the going concern uncertainty, substantial doubt remains due to uncertainty around the growth projections and lack of control of many of the factors included in the Company’s plan.
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 December 31, 2022 and 2021. Significant intercompany balances and transactions have been eliminated.
F-13


Use of estimates
The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable. In many instances, the Company could have reasonably used different accounting estimates and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. This applies in particular to useful lives of long-lived assets, reserves for accounts receivable and inventory, valuation allowance for deferred tax assets, fair values assigned to intangible assets acquired, and impairment of long-lived assets. Actual results could differ significantly from our estimates. To the extent that there are material differences between these estimates and actual results, the Company’s future financial statement presentation, financial condition, results of operations and cash flows will be affected.
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 December 31, 2022, and 2021, the Company had no cash equivalents.
The FDIC insures up to $250,000 per account with any excess amount in each account being uninsured. Total bank balances were approximately $3.2 million and $3.5 million, respectively as of December 31, 2022 and December 31, 2021. Of this amount, approximately $2.0 million and $2.0 million, respectively, were uninsured. All uninsured amounts are held with J.P. Morgan Chase.
Major Customers
The Company had no customers that made up over 10% of accounts receivable as of December 31, 2022, and 2021.
For the year ended December 31, 2022, the Company had one customer that made up 14% of total Company revenues within the A4 Technology - RCA segment. This customer had an accounts receivable balance of $1.2 million as December 31, 2022. For the year ended December 31, 2021, the Company had two customers that each made up 11% of total Company revenues with the A4 Manufacturing - QCA segment and A4 Manufacturing - Alt Labs segment. The customer within A4 Manufacturing - QCA segment had an accounts receivable balance of $1.0 million as of December 31, 2021. The customer within A4 Manufacturing - Alt Labs segment had an accounts receivable balance of $0, as of December 31, 2021, as the account receivable related to this customer was written off as bad debt expense noted in the section below.
For the year ended December 31, 2022, the Company had 9% of total revenues made up of government contracts.
Major Vendors
For the year ended December 31, 2022, there was one vendor that made up 14% of total Company purchases within the A4 Technology - RCA segment.. For the year ended December 31, 2021, there were no vendors that made up at least 10% of total purchases within the Company.
Accounts Receivable, net
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
F-14


reserves. Reserves are recorded primarily on a specific identification basis. As of December 31, 2022 and 2021, allowance for bad debt was $52,531 and $199,936, respectively. During the years ended December 31, 2022 and 2021, the Company wrote off $202,761 and $3,028,757, respectively to bad debts expense.
Inventory
Inventory for all subsidiaries is valued at weighted average. 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-process and finished goods. Inventory as of December 31, 2022 and 2021 consisted of:
December 31,
2022
December 31,
2021
Raw materials$9,116,824 $8,253,104 
Work in process3,165,876 2,480,979 
Finished goods12,975,669 13,685,571 
Inventory$25,258,369 $24,419,654 
Property and Equipment, net
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 five years to 39 years as follows:
Automobiles and trucks
5 to 7 years
Machinery and equipment10 years
Office furniture and fixtures5 years
Buildings and improvements39 years
Maintenance and repair costs are expensed as incurred. Significant improvements are capitalized and depreciated over the estimated life of the asset.
Property and equipment consisted of the following as of December 31, 2022 and 2021:
December 31,
2022
December 31,
2021
Automobiles and trucks$1,056,551 $1,251,187 
Machinery and equipment9,864,846 8,876,402 
Office furniture and fixtures186,464 167,581 
Buildings and improvements16,696,926 23,630,250 
Total Property and equipment27,804,787 33,925,420 
Less: Accumulated depreciation(8,301,302)(5,823,949)
Property and equipment, net$19,503,485 $28,101,471 
Included in Buildings and improvements in the above table are two buildings of $9,000,000 and $2,000,000 related to sale leaseback transactions. (See Note 3)
The Company recorded depreciation expense of $3,026,483 and $2,396,966 in 2022 and 2021, respectively.
F-15


Purchased Intangibles and Other Long-Lived Assets, net
The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between one and seventeen years as follows:
Software5 years
Non-compete agreements
1-15 years
Customer list
3-16 years
Patents, trademarks, and licenses
3-17 years
Proprietary technology15 years
Intangible assets consisted of the following as of December 31, 2022 and 2021:
CostWeighted Average Amortization PeriodDecember 31,
2022
December 31,
2021
Software2.0 years$128,474 $128,474 
Non-compete agreement6.3 years1,426,276 1,378,772 
Customer list11.9 years13,011,187 13,011,187 
Patents, trademarks, and licenses13.9 years7,127,408 7,174,912 
Proprietary technology13.5 years19,866,743 19,616,743 
12.9 years41,560,088 41,310,088 
Accumulated amortization
Software$(77,084)$(64,757)
Non-compete agreement(478,510)(210,465)
Customer list(1,711,327)(1,112,797)
Patents, trademarks, and licenses(962,258)(8,444)
Proprietary technology(2,048,300)(732,961)
(5,277,479)(2,129,424)
Intangibles assets, net$36,282,609 $39,180,664 
Expected amortization expense of intangible assets over the next 5 years and thereafter is as follows:
Years Ending December 31,
2023$3,152,048 
20243,152,048 
20252,919,686 
20262,900,686 
20272,762,686 
Thereafter21,395,455 
Total$36,282,609 
The Company recorded amortization expense of $3,148,055 and $1,757,393 in 2022 and 2021, respectively.
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Other Long-Term Assets
Other long-term assets consisted of the following as of December 31, 2022 and 2021:
December 31,
2022
December 31,
2021
Deposits$578,545 $149,517 
Other1,277,060 207,601 
$1,855,605 $357,118 
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 the third quarter of 2022, there was a triggering event related to the customer list for Alt Labs which required an analysis to be performed. This analysis was performed in conjunction with a third-party valuation expert. As a result of the analysis, it was determined that the value of the estimated future cash flows were greater than the carrying value of the reporting unit's assets. No impairment was recognized during the year ended December 31, 2022.
During the year ended December 31, 2021, due to the significant impact of COVID-19, the Company determined that the customer list for Excel was impaired and took a charge to earnings of $359,890.
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 December 31, 2022 and 2021, the reporting units with goodwill were QCA, Morris, Alt Labs, TDI, Identified Technology, ElecJet, and RCA.
During the year ended December 31, 2021, the Company determined that the goodwill for Excel was impaired and took a charge to earnings of $7,629. During the 2022 fourth quarter, we conducted our annual goodwill impairment test and no impairment charges were recorded. The estimated fair values of all our reporting units exceeded their carrying amounts. Based on the analysis, the ElecJet reporting unit is considered an at-risk reporting unit. Our methods and assumptions were consistent with those discussed below in the Fair Value Measurement subsection. This reporting unit is primarily considered at-risk as it is a start-up subsidiary with minimal to no revenue to offset its research & development expenses. The DCF model includes revenue growth assumptions of us executing large new customer and/or supplier agreements within the next two years and then steadily increasing revenue at a more normalized rate thereafter. If we fail to execute these customer and/or supplier arrangements, this would negatively impact the key growth assumptions.
Leases
The Company accounts for its leases under ASC 842, Leases (“ASC 842”). Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease
F-17


term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. The Company excludes short-term leases having initial terms of 12 months or less as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.
Fair Value Measurement
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.
We apply the provisions of fair value measurement to various nonrecurring measurements for our financial and nonfinancial assets and liabilities. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, convertible notes, notes payable and lines of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches. For the income approach, we use a discounted cash flow models developed in connection with our third-party valuation specialists that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates; and estimated discount rates. For the market approach, we use analyses based primarily on market comparables. We base these assumptions on historical data and experience, industry projections, and general economic conditions.
The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. As of December 31, 2022 and 2021, the Company had no financial assets or liabilities that were required to be fair valued on a recurring basis as all of our financial assets and liabilities were Level 1.
Equity Investments
The Company’s equity investments consisted of investment in one private company in which the Company does not have the ability to exercise significant influence over their operating and financial activities. This investment is carried at cost as there is no market for the membership units, accordingly, no quoted market price is available. The investment is tested for impairment, at least annually, and more frequently upon the occurrences of certain events. As of December 31, 2021, in accordance with the ASC 321 guidelines, the Company recognized a loss on impairment for the entire value of $1,350,000. The current book value for this investment as of December 31, 2022 is $0.
Research and Development
The Company focuses on quality control and development of new products and the improvement of existing products. All costs related to research and development activities are expensed as incurred. During the years ended December 31, 2022 and 2021, research and development cost totaled $876,542 and $1,464,918, respectively.
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Revenue Recognition
The Company recognizes revenue under ASC Topic 606, Revenue from contract with Customers ("Topic 606"). The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
Revenue is recognized under Topic 606, at a point in time and over a period of time, in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
executed 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 Company’s subsidiaries are all located in North America, as well as the customer base in which the Company’s revenue is derived from. The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
QCA and Alt Labs
QCA (Circuit boards and cables) and Alt Labs (Supplements) are contract manufacturers and 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 as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
ElecJet
ElecJet is a manufacturer of electric components, and a research and development company for battery technology and recognizes revenue when the products have been shipped to the customer. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
Identified Technologies
Identified Technologies provides 3D mapping drone software and data for industrial job sites and recognizes revenue when the service has been provided to the customer. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
Direct Tech Sales (“RCA”)
RCA is engaged in the design, manufacture and wholesale distribution of electronics such as televisions, mounting solutions, projectors and screens, audio equipment, digital signage, mobile audio and video systems, and all wire and connecting products throughout the United States of America. RCA recognizes revenue when the products have been shipped to the customer which is also when title transfers. If a deposit for a product or service is received prior to completion, the payment is recorded as deferred revenue until such point the product or services meets our revenue recognition policy. Management assesses the materiality and likelihood of warranty work and
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returns, and records reserves as needed, and have determined that the warranty and returns would be immaterial for the periods presented.
MSM, Excel and TDI
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 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 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 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 December 31, 2022 and 2021, accounts receivable included retainage billed under terms of our contracts. These retainage amounts represent amounts which have been contractually invoiced to customers where payments have been partially withheld pending the achievement of certain milestones, satisfaction of other contractual conditions or completion of the project. The Company has recorded a receivable for retainage of approximately $2.0 million and $1.6 million as of December 31, 2022, and 2021, respectively.
F-20


The following table presents our revenues disaggregated by type with the sales of goods recognized upon delivery and the sales of services recognized over the time of the contract as described above:
Year ended December 31,
20222021
Sale of goods
Circuit boards and cables$18,780,769 $15,700,902 
Supplements12,889,992 11,674,220 
Electronics41,191,146 1,543,469 
Total sale of goods72,861,907 28,918,591 
Sale of services
Construction contracts30,098,249 22,462,399 
Drone 3D mapping1,602,846 259,823 
Total sale of services31,701,095 22,722,222 
Total revenues$104,563,002 $51,640,813 
Earnings (loss) per share
The Company presents both basic and diluted net income (loss) per share on the face of the consolidated statements of operations. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted per share calculations give effect to all potentially dilutive shares of common stock outstanding during the period, including stock options and warrants, using the treasury-stock method. If antidilutive, the effect of potentially dilutive shares of common stock is ignored. The amount of anti-dilutive shares related to stock options and warrants as of December 31, 2022 and 2021, were 21,664,165 and 7,317,778, respectively. The following table illustrates the computation of basic and diluted earnings per share (“EPS”) inclusive of all classes of common stock as the only difference between the classes of common stock are related to the voting rights (Note 6) for the years ended December 31, 2022 and 2021:
For the Year Ended December 31, 2022
For the Year Ended December 31, 2021
Net lossSharesPer Share AmountNet lossSharesPer Share Amount
Basic EPS
Loss available to stockholders$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
Effect of Dilutive Securities
Stock options and warrants  —   — 
Dilute EPS
Loss available to stockholders plus assumed conversions$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
Stock-based compensation
The Company follows the guidelines in ASC 718-10 Compensation-Stock Compensation, which requires companies to measure the cost of employee and non-employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Stock-based compensation expense for stock options is recognized on a straight-line basis over the requisite service period. The Company may issue compensatory shares for services including, but not limited to, executives, management, accounting, operations, corporate communication, financial and administrative consulting services. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model.
F-21


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.
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
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.
In June 2016, the FASB issued ASC 326, Financial Instruments - Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The new standard is effective in the first quarter of fiscal 2023 and is expected to have an immaterial impact on the Company's financial statements.
Note 3 – 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 discounts lease payments based on an estimate of its incremental borrowing rate.
F-22


As of December 31, 2022, the future minimum finance and operating lease payments are as follows:
Years Ending December 31,
Finance
Leases
Operating
Leases
2023$1,925,840 $2,287,038 
20241,952,462 2,443,909 
20251,880,402 1,960,387 
20261,867,799 1,805,158 
20271,910,388 1,770,300 
Thereafter14,952,719 13,253,279 
Total payments24,489,610 23,520,071 
Less: imputed interest(9,171,495)(6,938,692)
Total obligation15,318,115 16,581,379 
Less: current portion(725,302)(1,318,885)
Non-current capital leases obligations$14,592,813 $15,262,494 
Finance Leases
As of December 31, 2022, all finance leases in the table above were related to property and equipment, and are included as part of property and equipment, net on the consolidated balance sheet. Depreciation expense associated with the finance leases within property and equipment was $1,251,817 and $1,244,059 for the years ended December 31, 2022 and 2021, respectively. Of this amount, $151,398 and $422,259 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expenses on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021. Interest expense related to the finance leases for the years ended December 31, 2022 and 2021 was $1,255,231 and $1,301,842, respectively, and is recorded within Interest Expense on the Consolidated Statement of Operations. At December 31, 2022, the weighted average remaining lease terms were 11.95 years, and the weighted average discount rate was 8.01%.
Operating Leases
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheet:
Classification on Balance SheetDecember 31,
2022
December 31,
2021
Assets
Operating lease assetsOperating lease right of use assets$16,407,566 $1,460,206 
Total lease assets$16,407,566 $1,460,206 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,318,885 $428,596 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability15,262,494 1,066,562 
Total lease liability$16,581,379 $1,495,158 
On May 3, 2021, the Company entered into a lease agreement for the building on 4740 Cleveland in Ft. Myers, Florida. The lease had a term of 72 months with monthly payments ranging from $40,833 to $49,583 from May 2021 to July 2021 and $58,333 from August 2021 through the end of the term. The Company determined the lease to be an operating lease and recognized a right-of-use asset and operating lease liability of $3,689,634 based on the
F-23


present value of the minimum lease payments discounted using an incremental borrowing rate of 3.96%. This lease was terminated on August 27, 2021, when the Company purchased the building.
In December 2021, the Company acquired RCA. As part of this purchase the Company entered into a lease agreement for office and warehouse space under a non-cancellable operating lease. The lease has a term of 89 months with monthly payments ranging from $31,350 to $35,207. The Company determined the lease to be an operating lease and recognized a right-of-use asset of $1,196,764 and operating lease liability of $1,226,128 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 4%.
On June 23, 2022, the Company entered into a sale lease back agreement for the building on 4740 Cleveland in Ft. Myers, Florida. The lease had a term of 180 months with monthly payments ranging from $67,708 to $89,306. The Company determined the lease to be an operating lease and recognized a right-of-use asset and an operating lease liability of $8,725,000 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 7.00%.
On June 26, 2022, the Company amended its lease effective July 1, 2022 for the warehouse in Ann Arbor, Michigan for an additional 12,800 sq ft through July 31, 2025, with total monthly lease payments ranging from $16,000 to $16,800. As a result of this amendment, the Company remeasured the right of use asset and liability and recorded an additional $543,595 in right of use asset on the date of the modification based on the present value of the minimum lease payment discounted using an incremental borrowing rate of 5.13%.
On June 13, 2022, the Company entered into a lease effective October 1, 2022 for a building in San Jose, California through March 1, 2033, with total monthly lease payments ranging from $49,156 to $66,062. The Company determined the lease to be an operating lease and recognized a right-of-use asset of and operating lease liability of $5,506,357 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 4%.
On September 9, 2022, the Company amended its lease effective as of October 1, 2022 for the warehouse in Ft. Myers, Florida through September 30, 2027, with total monthly lease payments ranging from $21,637 to $23,682. As a result of this amendment, the Company remeasured the right of use asset and liability and recorded an additional $1,179,091 in right of use asset on the date of the modification based on the present value of the minimum lease payment discounted using an incremental borrowing rate of 6.25%.
The operating lease expense for the years ended December 31, 2022 and 2021 was $1,006,683 and $386,056, respectively. Of this amount, $329,938 and $0 is recorded in Cost of Revenues on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, respectively. The remaining $676,745 and $386,056 is recorded within General & Administrative expenses on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, respectively. The cash paid under operating leases during the years ended December 31, 2022 and 2021 was $1,087,951 and $402,688, respectively. As of December 31, 2022, the weighted average remaining lease terms were 11.83 years and the weighted average discount rate was 6%.
Note 4 – Debt
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. In August 2020, the company filed a lawsuit against Alan Martin regarding his note payable. The balance as of December 31, 2022, and 2021, was $2,857,500, and accrued interest of $1,710,577 and $1,170,861, respectively, which are reflective in the current liabilities. The default rate is 10% and the daily late charge is $575. (See a description of the Company’s ongoing legal proceedings relating to this transaction in Note 11, Commitments and Contingencies, below.)
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-
F-24


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. In May 2020, the Company amended the three supplemental notes of $116,667 each with the sellers of Morris. The notes were due January 1, 2020. Each of the new notes as of the date of amendment had accrued interest of $2,703. This was added to the note resulting in the principal amount of 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 $10,000 with one final payment of $13,882 through January 2021. The amended notes have an interest rate of 6%. As of December 31, 2022, the outstanding balance on these notes and supplemental notes were paid in full.
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. On April 8, 2021, the Company entered into a settlement agreement with the seller wherein the outstanding balance on the first note amounting to $1,883,418 including accrued interest and net other costs was settled in full through a payment of approximately $887,000 and the exchange of 1,617,067 shares of the Company’s Class C common shares held by the seller for the same number of shares of the Company’s Class A common stock. The Company recognized a gain on extinguishment of debt totaling $803,079 during the year ended December 31, 2021, as a result of the settlement of the note.
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. The ending balance for this loan as of December 31, 2022 and 2021, was $2,062,318. (See a description of the Company’s ongoing legal proceedings relating to this transaction in Note 11, Commitments and Contingencies, below.)
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 balance on this note as of December 31, 2022 and 2021, was $23,405 and $52,504, respectively.
In connection with the RCA acquisition in December 2021, the Company issued two subordinated secured promissory notes for an aggregate of $2,000,000. The notes are amortized over 10 years, bear interest at 3.75% per annum and require monthly payment of at least $19,590. After three years, the unpaid principal amount on the notes will be immediately due.
In April and May 2020, the Company received seven loans under the Paycheck Protection Program of the U.S. Coronavirus Aid, Relief and Economic Security (“CARES”) Act totaling $3,896,108. During the year ended December 31, 2021, the Company also acquired four loans with a book value totaling $1,799,725 due to acquisitions, and fair value of $65,000. The loans have terms of 24 months and accrue interest at 1% per annum. The Company paid $88,160 for the loan assumed in connection with the IA acquisition, and the remaining $356,690 was forgiven. The remaining ten loans were forgiven as provided by the CARES Act during the year ended December 31, 2021. The Company recognized a gain on forgiveness of debt of $0 and $3,896,108 for the years ended December 31, 2022 and December 31, 2021, respectively. The Company also assumed an Economic Injury Disaster Loan (EIDL) of $65,000 in connection with the Vayu acquisition, which was still outstanding as of December 31, 2022.
On August 27, 2021 the Company entered into $4.7 million agreement for the purchase of a building located at 4740 Cleveland in Ft. Myers, Florida. The loan bears interest at a rate of 3.95% per annum for a term of 10-years and requires monthly payments of $24,722. The loan is secured by the building and a guarantee by the Company. On June 23, 2022, the Company sold the building at 4740 S. Cleveland Ave. Fort Myers, Florida, for $13,200,000. The Company determined that it had transferred control of the building to the buyer, has derecognized the asset, and recognized a gain on the sale of $5,822,450 and paid off the outstanding mortgage of $4,642,043. Under ASC 842, Leases, the Company simultaneously entered into a sale leaseback transaction where the building was then leased back (See Note 3).
F-25


In January 2022, Alt Labs entered into a note payable for $500,000 with an interest rate of 3.85% for 60 monthly payments of $9,186. The outstanding balance on this note as of December 31, 2022, was $414,498.
In May 2022, Morris entered into an equipment finance note for $61,000 with an interest rate of 10% for 60 monthly payments of $1,314. The outstanding balance on this note as of December 31, 2022, was $53,595.
In January 2022, Morris entered into an equipment finance note for $89,153 with an interest rate of 5.86% for 60 monthly payments of $1,722. The outstanding balance on this note as of December 31, 2022, was $74,644.
In March 2022, Morris entered into an equipment finance note for $93,433 with an interest rate of 5.86% for 60 monthly payments of $1,804. The outstanding balance on this note as of December 31, 2022, was $79,653.
In May 2021, Morris entered into a revolving line of credit totaling $2.5 million with a variable interest rate based on the current WSJ Prime rate, which was 7.50% per annum as of December 31, 2022. The business assets of Morris are pledged as collateral on this line of credit. The term end date for this line was October 2022, but has been extended through May 2023. The total line of credit used as of December 31, 2022 and December 31, 2021, was $2.49 million and $1.73 million respectively, with approximately $7 thousand available to be drawn on as of December 31, 2022.
In September 2021, QCA entered into a revolving line of credit totaling $5.5 million that includes a capital expenditure line of credit $0.5 million, with a variable interest rate based on the current WSJ Prime rate plus 2.5%. As of December 31, 2022, the interest rate was 10.00%. AR, inventory, and equipment are pledged as collateral on this line of credit. The term end date on this line of credit is September 2023. The line of credit used as of December 31, 2022 and December 31, 2021 was $5.0 million and $2.0 million, respectively, with approximately $51 thousand available to be drawn on as of December 31, 2022.
In April 2022, Alt Labs entered into three revolving lines of credit totaling $5.0 million with a variable interest rate based on the current WSJ Prime rate plus 2.5%. As of December 31, 2022, the interest rate was 10.00%. AR, inventory, and equipment are pledged as collateral on these lines of credit. The term end date for two of the three lines of credit is March 2024, while the term date of the third line of credit is March 2026. The total lines of credit used as of December 31, 2022 was $1.84 million, with approximately $17 thousand available to be drawn on as of December 31, 2022. Alt Labs had an existing line of credit totaling $750 thousand as of December 31, 2021. This was paid out and closed as part of opening the new lines of credit in 2022.
In September 2022, RCA entered into a revolving line of credit totaling $20.0 million with an interest rate of 1.75% plus the secured overnight financing rate (SOFR). AR, inventory, and equipment are pledged as collateral on these lines of credit. The term end date for this line of credit is September 2027. The total lines of credit used as of December 31, 2022 was $5.54 million, with approximately $3.80 million available to be drawn on as of December 31, 2022. RCA had an existing line of credit totaling $10.0 million, with a used total of $5.64 million as of December 31, 2021. The balance of the existing line of credit was paid off and closed as part of the opening of the new line of credit in September 2022.
The Company is required to maintain covenants including financial ratios as a condition of the line of credit agreements. As of the date of this Report, the Company was not in compliance with these covenants as the 10-K report was not filed within 90 days from the year ended December 31, 2022. However, the Company received waivers extended through May 5th, 2023. As such, the Company will be in compliance with the covenants as of the date of this report.
F-26


The outstanding balances for the loans as of December 31, 2022 and 2021 were as follows:
December 31,
2022
December 31,
2021
Lines of credit, current portion$7,426,814 $4,473,489 
Equipment loans, current portion68,410 61,640 
Term notes, current portion3,132,726 5,628,884 
Total current10,627,950 10,164,013 
Line of credit, net of current portion7,215,520 5,640,051 
Long-term portion of equipment loans and term notes4,266,350 8,426,105 
Total notes payable$22,109,820 $24,230,169 
Future scheduled maturities of outstanding debt are as follows:
Years Ending December 31,
2023$10,627,950 
20245,104,159 
2025155,254 
2026734,607 
20275,422,850 
Thereafter65,000 
Total$22,109,820 
Note 5 - Preferred Stock Subject to Redemption
Series C Preferred Stock
The Company designated 2,028,572 shares of Series C Preferred Stock with a stated value of $3.50 per share. No dividends will accrue on the Series C Preferred Stock. If dividends are declared on the Company’s Class A, Class B, or Class C Common Stock, the holders of the Series C Preferred Stock will participate in such dividends on a per share basis, pari passu with the Classes of Common Stock.
Voting Rights - The Series C Preferred Stock will vote together with the Class A Common Stock on a one-vote-for-one-Preferred-share basis. As long as any shares of Series C Preferred Stock are outstanding, the Company may not, without the affirmative vote or written consent of the holders of a majority of the then outstanding shares of the Series C Preferred Stock, (a) alter or change the powers, preferences or rights given to the Series C Preferred Stock or alter or amend the Certificate of Designation, (b) amend its Certificate of Incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Series C Preferred Stock, or (c) enter into any agreement or arrangement with respect to any of the foregoing.
Liquidation - Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a "Liquidation"), the holders of the Series C Preferred Stock shall participate on a per share basis with the holders of the Class A, Class B, and Class C Common Stock of the Company, and shall be entitled to share equally, on a per share basis, all assets of the Company of whatever kind available for distribution to the holders of all classes of the Common Stock. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each record holder of Series C Preferred Stock.
Conversion - The Series C Preferred Stock shall be convertible automatically into shares of the Company's Class A Common Stock (the “Automatic Conversion”) as follows: 
Each share of Series C Preferred Stock will automatically convert into shares of the Company’s Class A Common Stock on the earlier to occur of (a) the fifth day after the twenty-four month anniversary of the original issue date or (b) the fifth day after the date on which the Company’s Class A Common Stock first
F-27


trades on a national securities exchange (including but not limited to NASDAQ, NYSE, or NYSE American but excluding OTCQX Market) (such date, the “Automatic Conversion Date”).
The number of shares of the Company’s Class A Common Stock into which the Series C Preferred Stock shall be converted shall be determined by multiplying the number of shares of Series C Preferred Stock to be converted by the $3.50 stated value, and then dividing that product by the Conversion Price. The Conversion Price shall be equal to the Variable Weighted Average Price (“VWAP”) of the five Trading Days prior to the Automatic Conversion Date. “VWAP” shall be defined as the volume weighted average price of the Company’s Class A Common Stock on the OTC Markets or other stock exchange or trading medium where such shares are traded as reported by Bloomberg, L.P. using the VWAP function. If for any reason, VWAP cannot be thus determined, “VWAP” shall mean the average closing or last sale prices over the five Trading Days prior to the Automatic Conversion Date of the Company’s Class A Common Stock on the OTC Markets or such other exchange or trading medium.
Restrictions on Resales of Class C Common Stock - The sale of shares of the Company’s Class A Common Stock issued at the time of conversion by any holder into the market or to any private purchaser shall be limited to not more than twenty-five percent (25%) of all conversion shares received by such holder at the time of the automatic conversion in any given 120-day period.
Company Redemption Rights - At any time on or prior to the Automatic Conversion Date, the Company shall have the right to redeem all (but not less than all) shares of the Series C Preferred Stock issued and outstanding at any time after the original issue date, upon three (3) business days’ notice, at a redemption price per share of Series C Preferred Stock then issued and outstanding (the “Corporation Redemption Price”), equal to the stated value of $3.50 per share.
During the year ended December 31, 2020, the Company issued 1,714,286 shares of Series C Preferred Stock in connection with the acquisition of assets of IA that were valued at $5,848,013. The difference in stated value will be accreted over a 24 month period or upon conversion from Series C Preferred Stock to Class A Common stock. As of December 31, 2022, and 2021, 1,714,286 and 1,704,137, respectively, of these shares had been converted to Class A common stock. Prior to conversion the Company recognized accretion to interest expense in the amount of $0 and $69,661 for the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2022 and 2021, 0 and 10,149 shares of Series C Preferred Stock were outstanding, respectively.
Series D Preferred Stock
The Company designated 1,628,572 shares of Series D Preferred Stock with a stated value of $3.50 per share. No dividends will accrue on the Series D Preferred Stock. If dividends are declared on the Company’s Class A, Class B, or Class C Common Stock, the holders of the Series D Preferred Stock will participate in such dividends on a per share basis, pari passu with the Classes of Common Stock.
Voting Rights - The Series D Preferred Stock will vote together with the Class A Common Stock on a one-vote-for-one-Preferred-share basis. As long as any shares of Series D Preferred Stock are outstanding, the Company may not, without the affirmative vote or written consent of the holders of a majority of the then outstanding shares of the Series D Preferred Stock, (a) alter or change the powers, preferences or rights given to the Series D Preferred Stock or alter or amend the Certificate of Designation, (b) amend its Certificate of Incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Series D Preferred Stock, or (c) enter into any agreement or arrangement with respect to any of the foregoing.
Liquidation - Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a "Liquidation"), the holders of the Series D Preferred Stock shall participate on a per share basis with the holders of the Class A, Class B, and Class C Common Stock of the Company, and shall be entitled to share equally, on a per share basis, all assets of the Company of whatever kind available for distribution to the holders of all classes of the Common Stock. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each record holder of Series D Preferred Stock.
F-28


Conversion - The Series D Preferred Stock shall be convertible automatically into shares of the Company's Class A Common Stock (the “Automatic Conversion”) as follows:
Each share of Series D Preferred Stock will automatically convert into shares of the Company’s Class A Common Stock on the earlier to occur of (a) the fifth day after the twenty-four month anniversary of the original issue date or (b) the fifth day after the date on which the Company’s Class A Common Stock first trades on a national securities exchange (including but not limited to NASDAQ, NYSE, or NYSE American but excluding OTCQX Market) (such date, the “Automatic Conversion Date”).
The number of shares of the Company’s Class A Common Stock into which the Series D Preferred Stock shall be converted shall be determined by multiplying the number of shares of Series D Preferred Stock to be converted by the $3.50 stated value, and then dividing that product by the Conversion Price. The Conversion Price shall be equal to the Variable Weighted Average Price (“VWAP”) of the five Trading Days prior to the Automatic Conversion Date. “VWAP” shall be defined as the volume weighted average price of the Company’s Class A Common Stock on the OTC Markets or other stock exchange or trading medium where such shares are traded as reported by Bloomberg, L.P. using the VWAP function. If for any reason, VWAP cannot be thus determined, “VWAP” shall mean the average closing or last sale prices over the five Trading Days prior to the Automatic Conversion Date of the Company’s Class A Common Stock on the OTC Markets or such other exchange or trading medium.
Restrictions on Resales of Class A Common Stock - The sale of shares of the Company’s Class A Common Stock issued at the time of conversion by any holder into the market or to any private purchaser shall be limited to not more than twenty-five percent (25%) of all conversion shares received by such holder at the time of the automatic conversion in any given 90-day period.
Company Redemption Rights - At any time on or prior to the Automatic Conversion Date, the Company shall have the right to redeem all (but not less than all) shares of the Series D Preferred Stock issued and outstanding at any time after the original issue date, upon three (3) business days’ notice, at a redemption price per share of Series D Preferred Stock then issued and outstanding (the “Corporation Redemption Price”), equal to the stated value of $3.50 per share.
Registration Rights - The shares issued on conversion of the Series D Preferred Stock have piggyback registration rights beginning on that date which his six months after the date on which the Company’s Class A Common Stock trades on a national securities exchange, and are subject to standard underwriter holdback limitations.
During the year ended December 31, 2021, the Company issued 1,432,224 shares of Series D Preferred Stock in connection with the acquisition of assets of Vayu that were valued at $6,653,309. The difference in stated value will be accreted over a 24-month period or upon conversion from Series D Preferred Stock to Class A Common stock. As of December 31, 2022 and 2021, 1,432,224 and 1,353,570, respectively, of these shares had been converted to Class A common stock. Prior to conversion the Company recognized accretion to interest income in the amount of $0 and $615,170 for the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2022 and 2021, 0 and 78,674 shares of Series D Preferred Stock were outstanding, respectively.
Note 6 – Stockholders' Equity
Preferred Stock
The Company is authorized to issue 5,000,000 shares of $0.0001 par value preferred stock.
F-29


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 December 31, 2022 and 2021, 5 and 5 shares of Series B Preferred Stock were outstanding and were issued to certain members of the Board of Directors for services rendered.
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. Other than the voting rights, the Class A and Class B common stock are identical. Any holder of Class C common stock may convert 25% of his or her shares at any time after the 3rd to 6th anniversary into shares of Class A common stock on a share-for-share basis. Other than the voting rights the Class A and Class C common stock are identical.
The Company had the following transactions in its common stock during the year ended December 31, 2022:
In January 2022, the Company issued 72,152 shares of Class A common stock for no additional consideration upon conversion of 10,149 shares of Series C Preferred Stock and 78,674 of Series D Preferred Stock.
In January 2022, the Company amended the Corporation's Amended and Restated Certificate of Incorporation increasing the authorized capital stock from 195,000,000 to 295,000,000.
F-30


In March 2022, the Company issued 39,386 shares of Class A common stock for services with a value of $99,252.
In April 2022, the Company issued 171,850 shares of Class A common stock at a value of $132,325 as employee compensation.
During May and June 2022, the Company issued 76,119 shares of Class A common stock for cash of $55,144 in connection with a registered at-the-market offering (the "ATM Offering").
In July 2022, the Company sold 14,492,754 shares of Class A common stock and 14,492,754 warrants to certain investors, under a registered direct offering, for net proceeds of $9,175,000. The warrants have an exercise price of $0.69 per share and a term of 5 years.
In July 2022, the Company issued 60,600 shares of Class A common stock for cash of $42,318 in connection with its ATM offering.
In August 2022, certain investors exercised 1,449,276 warrants at an exercise price of $0.69, for net proceeds of $1,000,000.
In September 2022, certain shareholders converted 37,500 shares of Class C common stock for 37,500 shares of Class A common stock.
In October 2022, certain shareholders converted 201,806 shares of Class C common stock for 201,806 shares of Class A common stock.
In November 2022, certain shareholders converted 22,662 shares of Class C common stock for 22,662 shares of Class A common stock.
The Company had the following transactions in its common stock during the year ended December 31, 2021:
On February 11, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors to purchase 8,333,333 shares of the Company’s Class A common stock for aggregate gross proceeds of approximately $50 million. A.G.P./Alliance Global Partners served as the placement agent and received a cash fee of 7% of the aggregate gross proceeds and warrants to purchase shares of the Company’s Class A Common Stock equal to 5% of the number of shares sold in the offering with an exercise price of $6.60 per share and are not exercisable until August 16, 2021. Net proceeds from the sale of shares amounted to approximately $45 million.
In February 2021, the Company issued 1,524,064 shares of Class A common stock to an investor for cash for total proceeds of approximately $9.3 million.
On March 17, 2021, the Company repurchased 45,000 shares of Class C common stock for $185,850.
On April 30, 2021, the Company issued 1,617,067 shares of Class A common stock for no additional consideration upon conversion of that number of shares of Class C common stock by the holder of the Class C common stock.
On May 5, 2021, the Company issued 281,223 shares of Class A common stock that were valued at $1,102,394 in connection with the acquisition of TDI.
On May 10, 2021, the Company issued 361,787 shares of Class A common stock that were valued at $1,432,677 in connection with the acquisition of Alt Labs.
On May 17, 2021, the Company issued 350,000 shares of Class A common stock for no additional consideration upon conversion of that number of shares of Class B common stock by the holder of the Class B common stock.
F-31


On October 20, 2021, the Company issued 888,881 shares of Class A common stock that were valued at $3,617,746 in connection with the acquisition of Identified Technology.
On November 9, 2021, the Company issued 2,409,248 shares of Class A common stock for no additional consideration upon conversion of 1,704,137 shares of Series D Preferred Stock and 1,353,570 shares of Series C Preferred Stock.
On November 15, 2021 the Company issued 125,000 shares of Class A common stock for no additional consideration upon conversion of that number of shares of Class B common stock by the holder of the Class B common stock .
On November 26, 2021, the Company closed on a registered direct offering where it sold to certain investors a total of 8,571,430 shares of the Company’s Class A common stock and 4,285,715 warrant to purchase shares of Class A common stock for net proceeds of $22,189,152.
On November 29, 2021, the Company issued 1,803,279 shares of Class A common stock that were valued at $4,562,996 in connection with the ElecJet acquisition.
On November 29, 2021, the Company granted 983,636 contingent shares of Class A common stock that were valued at $2,488,599 in connection with the ElecJet acquisition. These contingent shares represent equity compensation for post-acquisition services and are accounted for under ASC 718. Of this amount, 655,758 of the contingent shares valued at $1,659,063 are performance based and management determined the performance conditions were deemed not probable and as such, no expense was recognized for the years ended December 31, 2022 and 2021. The remaining 327,878 shares are a time-based award and is recognized based on the grant-date fair value of the shares of $829,536 over the vesting period of 3-years. As such, the Company recognized $0 and $299,555 of stock based compensation expense related to this award for the years ended December 31, 2021 and 2022, respectively.
On December 9, 2021, in connection with the acquisition of DTI Services Limited Liability Company, the Company issued 1,587,301 shares of its Class A Common Stock that were valued at $3,682,539.
On December 20, 2021, the Company issued 100,000 shares of Class A common stock in connection with the HWT legal proceedings.
On December 29, 2021, the Company issued 99,018 shares of Class A common stock to management in connection with the acquisition of DTI Services Limited Liability Company.
During the year ended December 31, 2021 , the Company issued 7,384,018 shares of Class A common stock for the conversion of total debt and accrued liabilities totaling $1,886,898.
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.
F-32


The following summarizes the stock option activity for the years ended December 31, 2022 and 2021:
OptionsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
1,790,000 $0.19 7.09$6,176,855 
Granted 
Forfeited 
Exercised 
Outstanding at December 31, 2021
1,790,000 $0.19 6.09$3,098,055 
Granted2,084,620 $0.77 
Forfeited(781,712)$0.32 
Exercised $— 
Outstanding at December 31, 2022
3,092,908 $0.55 7.94$463,494 
Vested and expected to vest at December 31, 2022
3,092,909 $0.55 7.94$463,494 
Exercisable at December 31, 2022
1,084,500 $0.14 5.37$463,494 
The following table summarizes information about options outstanding and exercisable as of December 31, 2022:
Options OutstandingOptions Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$0.05 891,500 5.38$0.05 891,500 $0.05 
0.10 85,000 5.280.10 85,000 0.10 
0.13  4.580.13  0.13 
0.77 2,008,409 9.330.77  0.77 
0.90 108,000 4.270.90 108,000 0.90 
3,092,909 1,084,500 
During the years ended December 31, 2022 and 2021, stock option expense amounted to $473,159 and $36,538, respectively. Unrecognized stock option expense as of December 31, 2022 amounted to $1,053,547, which will be recognized over a period extending through December 2023.
During the year ended December 31, 2022, the Company issued 2,084,620 options in connection with the Company's 2021 Employee Equity Incentive Plan (the "Plan"). The options have an exercise price of $0.77, vest annually over a three year vesting period and expire on April 29, 2032.
F-33


The fair value of the 2,084,620 options issued in connection with the Plan is $1,534,401, and was determined using the Black-Scholes option pricing model with the following assumptions:
Stock price$0.77 
Risk-free interest rate2.90 %
Expected life of the options6.25 years
Expected volatility158 %
Expected dividend yield0 %
Warrants
The following summarizes the warrant activity for the years ended December 31, 2022, and 2021:
WarrantsWeighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
275,000 $1.01 0.23$723,250 
Granted5,527,778 3.32
Forfeited(275,000)1.01
Exercised  
Outstanding at December 31, 2021
5,527,778 $3.32 4.62$ 
Granted14,492,754 0.69
Forfeited  
Exercised(1,449,276)0.69 
Outstanding at December 31, 2022
18,571,256 $1.47 4.31$ 
Vested and expected to vest at December 31, 2022
18,571,256 $1.47 4.31$ 
Exercisable at December 31, 2022
18,571,256 $1.47 4.31$ 
The following table summarizes information about warrants outstanding and exercisable as of December 31, 2022:
Warrants OutstandingWarrants Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$6.60 416,667 2.13$6.60 416,667 $6.60 
2.52 396,825 1.942.52 396,825 2.52 
3.10 4,285,715 3.93.10 4,285,715 3.1 
3.08 428,571 3.93.08 428,571 3.08 
0.6913,043,478 4.60.6913,043,478 0.69 
18,571,256 18,571,256 
During the year ended December 31, 2021, the Company issued 416,667 warrants to a placement agent in connection with sale of its common stock. The warrants have an exercise price of $6.60, were exercisable as of August 16, 2021 and expire on February 16, 2025. The Company issued another 428,571 warrants to a placement agent in connection with the sale of its common stock. The warrants have an exercise price of $3.08, were
F-34


exercisable as of May 26, 2021 and expire November 22, 2026. The Company issued another 396,825 warrants in connection to the RCA acquisition. The warrants have an exercise price of $2.52, were exercisable as of December 9, 2021 and expire December 9, 2024. During July 2022, the Company issued another 14,492,754 warrants to certain investors in connection with the sale of its common stock. The warrants have an exercise price of 0.69, were exercisable as of as of July 13, 2022, and expire July 13, 2027.
The fair value of the 416,667, 428,571, and the 396,825 warrants issued to the placement agent in connection with a registered direct offering, and to the RCA sellers in connection with the DTI/RCA acquisition (discussed below in Note 7) during the year ended December 31, 2021, are $2,498,637, $902,414, and $668,863 respectively and was determined using the Black-Scholes option pricing model. The fair value of the 14,492,754 warrants issued to the placement agent during the year ended December 31, 2022, are $7,083,038, and was determined using the Black-Scholes option pricing model. All of these warrants were determined using the following assumptions:
Stock price
$0.62 - 7.03
Risk-free interest rate
0.01 - 1.02%
Expected life of the options
1.5-5 years
Expected volatility
157-347%
Expected dividend yield0 %
Note 7 – Business Combinations
or the various acquisitions noted below that occurred during the year ended December 31, 2021, there were minimal amounts of transaction costs incurred by the Company ranging from $0-$40,000 that are deemed immaterial. Any transactions costs associated with each acquisition below was expensed as incurred, and are recorded within General & Administrative expenses on the Consolidated Statements of Operations.
Vayu (US)
Effective February 8, 2021, the Company purchased Vayu Inc to add to its A4 Aerospace services portfolio of companies. The purchase agreement provides for the Company to purchase all the outstanding shares of Vayu and its assets. Under the provision of ASC 805 Business Combinations, the Company determined that the acquisition of Vayu was an asset acquisition as more than 95% was concentrated in a single asset or a group of assets in Intellectual Property. As such, the Company accounted for this acquisition as an asset acquisition in accordance with ASC 805-10-20. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the fair value of the Series D preferred stock issued, including direct acquisition costs. The cost is allocated to the group of assets acquired based on their relative fair values. The assets acquired and liabilities assumed were as follows at the acquisition date:
Purchase Allocation
Cash$81,442 
Property and equipment56,011 
Intellectual property8,406,743 
Non-compete agreement100,819 
Deferred tax liability(1,362,667)
Accrued expenses and other current liabilities(564,039)
SBA loan (PPP funds)(65,000)
$6,653,309 
F-35


The purchase price was paid as follows:
Series D Preferred Stock (1,432,244 shares)
$6,653,309 
$6,653,309 
TDI
On May 5 2021, the Company purchased Thermal Dynamics, Inc, (“TDI”), to add to its A4 Defense services portfolio of companies. Under the provision of ASC 805 Business Combinations, the acquisition is considered an acquisition of a business since the Company is acquiring the outstanding capital of TDI and continuing the business of TDI with defined inputs and substantive processes that contribute to the ability to create outputs. A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Accounts receivable$1,408,682 
Property and equipment111,789 
Customer list3,840,000 
Non-compete agreement120,000 
Goodwill6,426,786 
Other asset91,000 
Accounts payable(786,151)
Accrued expenses and other current liabilities(53,857)
Contract liabilities(3,637,122)
Notes payable(64,733)
$7,456,394 
The purchase price was paid as follows:
Class A Common Stock (281,223 shares)
$1,102,394 
Cash6,354,000 
$7,456,394 
Alt Labs
On May 10, 2021, the Company closed on the acquisition of Alternative Laboratories, LLC (Alt Labs) to add to its A4 Manufacturing services portfolio. Under the provision of ASC 805 Business Combinations, the acquisition is considered an acquisition of a business since the Company is acquiring the outstanding capital of Alt Labs and
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continuing the business of Alt Labs with defined inputs and substantive processes that contribute to the ability to create outputs. A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Accounts receivable$397,441 
Inventory2,621,653 
Property and equipment1,739,441 
Customer list1,250,000 
Proprietary technology3,670,000 
Non-compete agreement20,000 
Goodwill4,410,564 
Other assets390,502 
Accounts payable(397,441)
Accrued expenses and other current liabilities(411,830)
Contract liabilities(1,754,290)
Notes payable(33,363)
$11,902,677 
The purchase price was paid as follows:
Class A Common Stock (361,847 shares)
$1,432,677 
Cash10,470,000 
$11,902,677 
On May 4, 2021, the Company also entered into an agreement to acquire the 100% membership interest in 4740 Cleveland LLC (“Cleveland”), a Florida limited liability company that is the owner of the building currently being leased by Alt Labs, for a total purchase price of $7,000,000. The Company closed on the purchase of the building in August 2021.
Identified Technologies
On October 20, 2021, the Company entered into a Stock Purchase Agreement with Identified Technologies Corporation (IDT) to add to its A4 Aerospace services portfolio of companies. Under the provision of ASC 805 Business Combinations, the acquisition is considered an acquisition of a business since the Company is acquiring the outstanding capital of IDT and continuing the business of IDT with defined inputs and substantive processes that contribute to the ability to create outputs. A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Accounts receivable$90,858 
Other asset27,469 
Proprietary technology1,650,000 
Tradename210,000 
Goodwill1,913,310 
Non-compete agreement90,000 
Accrued expenses and other current liabilities(363,856)
$3,617,781 
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The purchase price was paid as follows:
Cash$35 
Class A Common Stock (888,881 shares)
3,617,746 
$3,617,781 
ElecJet
On November 29, 2021, the Company acquired ElecJet Corp (ElecJet) to add to its A4 Technology portfolio of companies. Under the provision of ASC 805 Business Combinations, the acquisition is considered an acquisition of a business since the Company is acquiring the outstanding capital of Elecjet and continuing the business of ElecJet with defined inputs and substantive processes that contribute to the ability to create outputs. As part of the acquisition there was a contingent royalty agreement based on potential future graphene batteries. More detail of this agreement can be found in Note 11. It was determined that this contingent agreement had a FMV of $0 at the date of acquisition. A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Cash$27,466 
Accounts receivable30,000 
Inventory95,000 
Proprietary technology 5,890,000 
Non-compete agreement200,000 
Goodwill6,496,343 
Deferred tax liability(1,562,074)
Accrued expenses and other current liabilities(113,742)
$11,062,993 
The purchase price was paid as follows:
Cash$6,500,000 
Class A Common Stock (1,803,279)
4,562,993 
$11,062,993 
DTI Services (doing business as RCA Commercial Electronics)
On December 13, 2021, the Company purchased DTI Services (RCA), to add to its technology portfolio of companies. Under the provision of ASC 805 Business Combinations, the acquisition is considered an acquisition of a business since the Company is acquiring the outstanding capital of RCA and continuing the business of RCA with
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defined inputs and substantive processes that contribute to the ability to create outputs. A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Accounts receivable$3,409,230 
Other current assets1,259,556 
Inventory12,477,872 
Property and equipment761,370 
Customer list6,300,000 
Trademark620,000 
Non-compete agreement690,000 
Goodwill1,355,728 
ROU asset1,196,764 
Accounts payable(951,302)
Accrued expenses and other current liabilities(677,720)
Customer deposits(153,201)
Operating lease liability(1,226,128)
Line of credit(4,710,768)
$20,351,401 
The purchase price was paid as follows:
Cash$14,000,000 
Class A Common Stock (1,587,301 shares)
3,682,538 
Warrants (396,825 shares)
668,863 
Seller notes2,000,000 
$20,351,401 
For tax purposes, the Goodwill associated with the business combinations of TDI, Alt Labs, and RCA described above will be deductible under IRC section 197 as the transactions were treated as an asset purchase. The Goodwill associated with the business combinations of Identified Technology and ElecJet described above is not deductible for tax purposes.
The following are the unaudited pro forma results of operations for the years ended December 31, 2022 and 2021, as if Excel, IA, Vayu, TDI, Alt Labs, Identified Technology, ElecJet, and RCA had been acquired on January 1, 2021. 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
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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)
Years Ended December 31,
20222021
Sales$104,563,002 $98,321,144 
Cost of goods sold82,848,600 75,523,745 
Gross profit21,714,402 22,797,399 
Operating expenses32,470,186 38,643,670 
Loss from operations(10,755,784)(15,846,271)
Net loss from continuing operations(12,875,313)(12,144,338)
Loss per share(0.07)(0.06)
Note 8 – Equity Investments
AmplifeiIntl LLC
On September 15, 2021, A4 Manufacturing, Inc. entered into a Membership Interest Purchase Agreement acquiring approximately a 9% membership interest in AmplifeiIntl LLC (also doing business as Happinss) (“Amplifei”). The membership interest is non-voting and the Company does not have the ability to exercise significant influence over operating and financial activities. The equity investment is being valued using cost as there is no market for the membership units, and accordingly, no quoted market price is available. The investment is tested for impairment, at least annually, and more frequently upon the occurrences of certain events. As of December 31, 2021, the Company determined there was an impairment on this investment and recognized a loss on impairment for the entire value of $1,350,000.
The membership interest was paid for as follows:
Accounts receivable owed from Amplifei$1,000,000 
Cash350,000 
Total$1,350,000 
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Note 9 – Income Taxes
The components of the Company's income tax provision are as follows:
Year Ended December 31, 2022Year Ended December 31, 2021
Current expense (benefit)
Federal$ $ 
State139,020  
139,020  
Deferred benefit
Federal$(650,283)$(1,616,916)
State(222,731)(326,825)
(873,014)(1,943,741)
Provision for income tax benefit$(733,994)$(1,943,741)
A reconciliation of the provision for income taxes with the expected provision for income taxes computed by applying the federal statutory income tax rate of 21% to the net loss before provision for income taxes is as follows:
Year Ended December 31, 2022Year Ended December 31, 2021
AmountPercentageAmountPercentage
Pre-tax book loss$(13,609,307)$(21,426,879)
Federal income tax at statutory rate(2,857,954)21.0 %(4,499,644)21.0 %
State income tax benefit(530,084)3.9 %(163,677)0.8 %
Change in valuation allowance2,760,687 (20.3)%3,559,163 (16.6)%
Permanent items21,281 (0.2)%(839,583)3.9 %
Other(127,924)1.4 %  %
Provision for income tax benefit$(733,994)5.4 %$(1,943,741)9.1 %
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Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's net deferred income taxes are as follows:
Year Ended December 31, 2022Year Ended December 31, 2021
Deferred tax asset:
Accrued expenses and other$696,419 $347,645 
Lease Liability8,176,101  
Loss carryforwards14,295,781 13,124,197 
Stock based compensation211,499 90,293 
Research and experimental expenditures202,199  
Inventory625,937  
Interest634,445 615,260 
Total deferred tax asset24,842,381 14,177,395 
Valuation allowance(13,492,773)(9,887,550)
Net deferred tax assets11,349,608 4,289,845 
Deferred tax liabilities:
Fixed assets(3,266,395)(365,922)
Intangible assets and goodwill(4,865,970)(5,785,088)
ROU asset(4,205,393) 
Total deferred tax liabilities(12,337,758)(6,151,010)
Net non-current deferred tax liability$(988,150)$(1,861,165)
Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the lack of sustained profitability in recent years. Such objective evidence limits the ability to consider other subjective evidence, such as the Company's projections for future growth.
On the basis of this evaluation, as of December 31, 2022 and 2021, a valuation allowance of $13.5 million and $9.9 million, respectively, has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted based on changes in objective and subjective evidence in future years. If and when the Company determines the valuation allowance should be released (i.e., reduced), the adjustment would result in a tax benefit reported in that period’s consolidated statement of operations, the effect of which would be an increase in reported net income. The amount of any such tax benefit associated with release of the Company's valuation allowance in a particular reporting period may be material.
The Company has gross federal and state net operating loss carryforwards of $71.0 million and $20.1 million, respectively, at December 31, 2022. At December 31, 2022, the Company has approximately $11.3 million of federal net operating losses available to offset future taxable income for 20 years and will begin to expire in 2036. The remaining $59.7 million of federal net operating losses are carried forward indefinitely to offset future taxable income up to an 80% limitation of taxable income in the year of use. The state net operating losses begin to expire in 2024. The Company has a gross interest limitation carryforward of $2.5 million under Section 163(j) for federal tax purposes at December 31, 2022. The Section 163(j) interest may be carried forward indefinitely.
The future tax benefits from NOLs and built-in losses would be materially reduced or potentially eliminated if we experience an “ownership change” as defined under IRC §382. The Company has identified ownership shifts on
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August 23, 2014, April 29, 2015, February 4, 2016 and July 1, 2019, which immaterially impacted the Company. The Company does not believe an ownership change has occurred in the current year.
With exceptions due to the generation and utilization of net operating losses or credits, as of December 31, 2022, Alpine 4 Holdings and Subsidiaries are no longer subject to federal or state examinations by taxing authorities for tax years before 2019 and 2018, respectively.
Significant judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. Although the Company believes that it has appropriately reserved for its uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different than expectations. The Company will adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, the refinement of an estimate, the closing of a statutory audit period or changes in applicable tax law. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences would impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to the reserves that are considered appropriate, as well as related net interest.
The Company's policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties at December 31, 2022 or 2021, and has not recognized interest or penalties during the years ended December 31, 2022 and 2021 since there was no reduction of income taxes paid due to uncertain tax positions.
The following table summarizes the activity related to the Company's gross unrecognized tax liabilities:
December 31, 2022December 31, 2021
Unrecognized tax liabilities, beginning of the year$1,169,028 $ 
Increase related to current year tax positions480,911 1,169,028 
Unrecognized tax liabilities, end of year$1,649,939 $1,169,028 
Included in the balance of unrecognized tax liabilities as of December 31, 2022 are $0.6 million of tax liabilities that, if recognized, would affect the ETR. Also included in the balance of unrecognized tax liabilities as of December 31, 2022 are $1.0 million of tax liabilities that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes.
Note 10 – Industry Segments
The Company discloses segment information that is consistent with the way in which management operates and views its business. Effective during the quarter ended September 30, 2022, the Company increased its reportable segments to eight segments. All segments and the subsidiaries within each segment are geographically located in North America. The financial results are logical to review in this manner for comparison, trend, deviations, etc. purposes.
Management excludes the following when reviewing the profit/loss by segment.
Intercompany Sales/COGS
Management fees to the parent Company
Income tax benefit/expense
There has not been any change to the measurement method in how management reviews the profit/loss by segment.
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The reporting segments and their business activity are as follows:
A4 Construction Services Morris Sheet Metal (“MSM”) provides commercial construction services primarily as a sheet metal contractor.
A4 Construction Services Excel Construction (“Excel”) provides commercial construction services primarily as a sheet metal contractor.
A4 Manufacturing Quality Circuit Assembly (QCA) is a contract manufacturer within the technology industry.
A4 Manufacturing Alternative Labs (“Alt Labs”) is a contract manufacturer within the dietary & nutraceutical supplements industry.
A4 Defense Thermal Dynamics does contracting for the US Government particularity for the US Defense Department and US Department of State.
A4 Technologies RCA Commercial Electronics (“RCA”) is a B2B commercial electronics manufacturer.
A4 Technologies ElecJet is a battery research & development company.
A4 Aerospace Vayu is a drone aircraft manufacturer.
A4 All Other includes the QCA-Central, Identified Technologies and Corporate operating segments.
The Company’s reportable segments for the years ended December 31, 2022 and 2021:
Years Ended December 31,
20222021
Revenue
A4 Construction Services - MSM$18,290,019 $16,191,284 
A4 Construction Services - Excel1,761,572 1,803,739 
A4 Manufacturing - QCA16,763,989 14,258,084 
A4 Manufacturing - Alt Labs12,889,992 11,674,220 
A4 Defense - TDI10,046,658 4,467,376 
A4 Technologies - RCA40,092,612 1,454,451 
A4 Technologies - ElecJet1,098,534 89,018 
A4 Aerospace - Vayu81,100  
All Other3,538,526 1,702,641 
$104,563,002 $51,640,813 
Gross profit
A4 Construction Services - MSM$1,374,517 $(385,266)
A4 Construction Services - Excel3,681 (92,765)
A4 Manufacturing - QCA3,258,082 2,763,213 
A4 Manufacturing - Alt Labs2,343,368 3,749,878 
A4 Defense - TDI3,082,844 1,073,636 
A4 Technologies - RCA10,687,202 379,740 
A4 Technologies - ElecJet(236,636)76,818 
A4 Aerospace - Vayu13,087  
All Other1,188,257 132,744 
$21,714,402 $7,697,998 
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Income (loss) from operations
A4 Construction Services - MSM$(883,922)$(4,247,240)
A4 Construction Services - Excel(973,934)(1,969,535)
A4 Manufacturing - QCA702,875 1,426,141 
A4 Manufacturing - Alt Labs2,284,308 (3,027,203)
A4 Defense - TDI1,072,306 (282,882)
A4 Technologies - RCA2,525,619 (100,328)
A4 Technologies - ElecJet(1,107,254)(62,163)
A4 Aerospace - Vayu(3,336,279)(4,875,829)
All Other(11,039,503)(8,983,320)
$(10,755,784)$(22,122,359)
Depreciation and amortization
A4 Construction Services - MSM$684,563 $846,808 
A4 Construction Services - Excel267,966 291,556 
A4 Manufacturing - QCA417,172 377,868 
A4 Manufacturing - Alt Labs983,931 611,079 
A4 Defense - TDI288,950 191,740 
A4 Technologies - RCA979,206 49,299 
A4 Technologies - ElecJet414,333 33,833 
A4 Aerospace - Vayu1,025,412 1,093,995 
All Other1,113,005 658,181 
$6,174,538 $4,154,359 
Interest Expenses
A4 Construction Services - MSM$421,287 $706,607 
A4 Construction Services - Excel245,855 291,263 
A4 Manufacturing - QCA262,551 230,044 
A4 Manufacturing - Alt Labs351,503 72,060 
A4 Defense - TDI11,975 825 
A4 Technologies - RCA159,878 15,347 
A4 Technologies - ElecJet  
A4 Aerospace - Vayu10,677 9 
All Other1,660,406 1,973,078 
$3,124,132 $3,289,233 
Net income (loss)
A4 Construction Services - MSM$(1,246,295)$(1,481,382)
A4 Construction Services - Excel(1,219,789)(1,899,512)
A4 Manufacturing - QCA367,760 1,774,139 
A4 Manufacturing - Alt Labs2,054,958 (2,643,752)
A4 Defense - TDI1,060,331 (270,289)
A4 Technologies - RCA2,365,741 (115,675)
A4 Technologies - ElecJet(1,110,727)(62,163)
A4 Aerospace - Vayu(3,346,956)(4,852,182)
All Other(11,800,336)(9,932,322)
$(12,875,313)$(19,483,138)
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As of
December 31, 2022
As of
December 31, 2021
Total Assets
A4 Construction Services - MSM$11,309,049 $10,935,355 
A4 Construction Services - Excel3,359,818 3,050,206 
A4 Manufacturing - QCA20,988,492 11,869,711 
A4 Manufacturing - Alt Labs26,636,905 23,173,298 
A4 Defense - TDI13,497,381 11,982,580 
A4 Technologies - RCA27,191,977 28,174,091 
A4 Technologies - ElecJet12,897,440 12,904,267 
A4 Aerospace - Vayu14,632,530 14,702,838 
All Other$15,118,622 $17,831,504 
$145,632,214 $134,623,850 
Goodwill
A4 Construction Services - MSM$113,592 $113,592 
A4 Construction Services - Excel  
A4 Manufacturing - QCA1,963,761 1,963,761 
A4 Manufacturing - Alt Labs4,410,564 4,410,564 
A4 Defense - TDI6,426,786 6,426,786 
A4 Technologies - RCA1,355,728 1,355,728 
A4 Technologies - ElecJet6,496,343 6,496,343 
A4 Aerospace - Vayu  
All Other1,913,310 1,913,310 
$22,680,084 $22,680,084 
Accounts receivable, net
A4 Construction Services - MSM$5,188,521 $3,906,271 
A4 Construction Services - Excel288,243 286,972 
A4 Manufacturing - QCA3,867,141 2,339,597 
A4 Manufacturing - Alt Labs1,833,502 406,333 
A4 Defense - TDI1,905,314 1,371,184 
A4 Technologies - RCA3,232,559 2,961,201 
A4 Technologies - ElecJet12,888 37,744 
A4 Aerospace - Vayu  
All Other811,776 565,874 
$17,139,944 $11,875,176 
Note 11 - Commitments and Contingencies
Licensing Agreement
DTI has entered into licensing agreements with RCA Trademark Management for the licensing rights to the respective trademarks in the United States of America and Canada.
The RCA licensing agreement was amended with Technicolor, S.A., as licensor, and expires December 31, 2024. DTI agrees to pay a royalty fee of 2.50% on net sales of the licensed products with a minimum annual
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payment of $420,000 for the years ended 2020 and 2021, $440,000 for the year ended 2022, $460,000 for the year ended 2023, and $480,000 for the year ended 2024.
Warranty Service Agreement
DTI entered into a warranty service agreement to provide certain warranty services for a lighting supplier through December 31, 2024, except for one class of customer through 2030. In exchange for these services DTI receives annual payments as follows:
Years Ending December 31,
2023$66,626 
202459,964 
Total$126,590 
Royalty Agreement
On November 28, 2021, the Company entered into a Royalty Agreement with the sellers of ElecJet. Upon closing the Company desires to build its initial factory (“Factory”) to manufacture graphene batteries in the territory of the United States. The Company agrees to pay the sellers 1.5% of net sales for batteries produced by the Factory. Royalty payments shall continue to be paid for a period of ten years from the starting date, or until the total of the royalty payments equals $50 million, whichever occurs first.
Legal Proceedings
From time to time, the Company may become involved in lawsuits and other legal proceedings that arise in the course of business. Litigation is subject to inherent uncertainties, and it is not possible to predict the outcome of litigation with total confidence. As of the date of this Report, the Company was not aware of any legal proceedings or potential claims against it whose outcome would be likely, individually or in the aggregate, to have a material adverse effect on the Company’s business, financial condition, operating results, or cash flows.
In August 2020, in a matter relating to the Company’s subsidiary Horizon Well Testing, LLC (“Horizon”), the Company filed a lawsuit in the United States District Court, District of Arizona (Case No.2:20-cv-01679-DJH), against Alan Martin, the seller of Horizon dba Venture West Energy Services, LLC (“VWES”). The Company brought suit in 2020 seeking to avoid the claimed liability due from the Company to Alan Martin, for the Company’s 2017 purchase of Mr. Martin’s business, Horizon. On summary judgment, the court found that the Company’s claim was barred by a time-limiting clause for indemnification claims. The Company disagrees with the court’s ruling and intends to appeal. Before the Company can file its appeal of the summary judgment order, the court must resolve Mr. Martin’s counterclaim in which Mr. Martin claims that Mr. Martin remains unpaid on the promissory note, as modified, under which the Company purchased the Horizon. The note balance is alleged to have a principal sum due of $3.3 million, plus interest at 8% accruing from 2019 to present, plus late fees accruing at $575 per day (Note 4). The Company continues to dispute the amount claimed due. As well, the Company’s legal position remains that the indebtedness should be discharged due to material misrepresentations by Mr. Martin in the original transaction.
In August 2021, in a matter relating to the Company’s subsidiary Horizon Well Testing, LLC (“Horizon”), Rob Porter filed a lawsuit in the District Court of Oklahoma County, State of Oklahoma (CJ-2021-3421), alleging unjust enrichment and breach of contract with respect to shares of Company that Mr. Porter claims was owed under his employment contract with the Company as President of Horizon. In October 2021, the Company filed its answer denying such claims. In October 2021, the Company also filed counterclaims against Mr. Porter for conversion and breach of fiduciary duties. The Company believes this is a frivolous lawsuit and as such, no accrual has been recorded as of December 31, 2022 and 2021. As of the date of this Report, a pre-trial scheduling conference is scheduled for June 21, 2023, and the Company is participating in discovery.
In October 2021, in a matter relating to the Company’s subsidiary Horizon Well Testing, LLC (“Horizon”), the Company received three complaints in the District Court of Oklahoma Country State of Oklahoma from former VWES employees Bruce Morse (CJ-2021-4316), Brian Hobbs (CJ-2021-4315), Thomas Karraker (CJ-2021-4314)
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for unjust enrichment, and breach of contract with respect to their employment contracts with Horizon. On January 19, 2022, the Company filed answers to all three lawsuits that denied these claims. The Company believes these are frivolous lawsuits. In July 2022, the Company and Mr. Morse settled his claims against the Company. The settlement included the cash payment of $24,375 for Mr. Morse's claimed 37,500 shares of Class A Common stock, and subsequently Mr. Morse’s case has been dismissed. Subsequently, Mr. Hobbs and Mr. Karraker have also expressed interest in settling claims on similar terms, and negotiations are ongoing as of the date of this Report. As no formal settlement offer has been extended, no accrual has been recorded as of December 31, 2022 and 2021.
In November 2022, the Company received a complaint filed by Mr. Mark Bell in the district court of Idaho (CV42-22-4066) with regard to the Company’s February 2020 purchase of Excel Fabrication LLC (“Excel”) from Mr. Bell, over the Company’s refusal to continue paying on a $2,300,000 note comprising part of the purchase consideration (Note 4). In December 2022 the Company counter-sued Mr. Bell for breach of contract, fraud, and misrepresentation in the February 2020 sale of Excel to the Company. The case is set for trial in June of 2024.
In December 2022, the Company’s subsidiary Excel Fabrication LLC (“Excel”) received a demand for binding arbitration (AAA Case No. 01-22-0004-9935) by Starr Corporation of Idaho, a contractor for whom Excel Fabrication LLC was performing as sub-contractor and who stopped its work for Starr Corporation pursuant to its claimed contract right of termination due to failure of Starr Corporation to make payment within the contracted period for payment for work satisfactorily performed. Starr Corporation claims that Excel’s termination was wrongful, and seeks approximately $500,000, reflecting its costs in having to complete work that was called for under the contract. Excel is seeking a determination that its termination was rightful under the terms of the contract between the parties, and in addition seeks payment on its unpaid billing submittals and additional costs. Arbitration hearings are scheduled to commence in April 2024.
Note 12 – Subsequent Events
In January 2023, the Company made a $250,000 investment for a 10% equity interest in a battery materials company, which includes a seat on its board, and participation rights in future funding rounds.
In February 2023, the Company learned that a complaint the State of New York brought against Vayu in 2019 (prior to the Company’s ownership of Vayu) seeking a refund for two returned airframes, a case which had originally been dismissed for lack of jurisdiction, had become revived by virtue of New York’s highest court ruling (State of New York v Vayu, APL-2021-00148) that the State’s long arm statute applied to the 2016 transaction between Vayu and the State University of New York at Stonybrook. Total damages sought by the State of New York are less than $100,000, including interest and costs. The company is currently considering its options for reaching a settlement with the State of New York, and for the possibility of seeking redress from the previous owners of Vayu.
In April 2023, a certain investor converted 1.3 million shares of Class B common stock and 1 share of Class B preferred stock for 1,300,001 shares of Class A common stock.
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ALPINE 4 HOLDINGS, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2023December 31, 2022
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash$475,300 $2,673,541 
Accounts receivable, net 15,540,528 17,139,944 
Inventory25,262,659 25,258,369 
Contract assets1,835,432 1,402,788 
Prepaid expenses and other current assets2,449,395 2,428,223 
Total current assets 45,563,314 48,902,865 
Property and equipment, net20,265,637 19,503,485 
Intangible assets, net35,494,596 36,282,609 
Right of use assets, net15,949,731 16,407,566 
Goodwill 22,680,084 22,680,084 
Other non-current assets 1,991,363 1,855,605 
TOTAL ASSETS
$141,944,725 $145,632,214 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $11,830,582 $8,608,554 
Accrued expenses 6,256,263 6,749,890 
Contract liabilities 5,700,142 5,284,285 
Line of credit8,970,460 7,426,814 
Notes payable, current portion 5,998,347 3,201,136 
Notes payable, related party535,000  
Financing lease obligation, current portion 743,157 725,302 
Operating lease obligation, current portion 1,484,846 1,318,885 
Total current liabilities 41,518,797 33,314,866 
Notes payable, net of current portion2,229,684 4,266,350 
Line of credit, net of current portion3,928,105 7,215,520 
Financing lease obligations, net of current portion14,395,926 14,592,813 
Operating lease obligations, net of current portion14,841,129 15,262,494 
Deferred tax liability625,617 988,150 
TOTAL LIABILITIES
77,539,258 75,640,193 
Commitment & Contingencies (Note 7)
STOCKHOLDERS' EQUITY (1):
Preferred stock, $0.0001 par value, 5,000,000 shares authorized
— — 
Series B preferred stock; $1.00 stated value; 100 shares authorized, 4 and 5 shares issued and outstanding at March 31, 2023, and December 31, 2022
4 5 
Class A Common stock, $0.0001 par value, 200,000,000 shares authorized, 22,304,761 and 22,303,333 shares issued and outstanding at March 31, 2023, and December 31, 2022
2,230 2,230 
Class B Common stock, $0.0001 par value, 10,000,000 shares authorized, 1,068,512 and 1,068,512 shares issued and outstanding at March 31, 2023, and December 31, 2022
107 107 
Class C Common stock, $0.0001 par value, 15,000,000 shares authorized, 1,528,460 and 1,529,888 shares issued and outstanding at March 31, 2023, and December 31, 2022
153 153 
Additional paid-in capital 141,906,511 141,723,921 
Accumulated deficit (77,503,538)(71,734,395)
Total stockholders' equity 64,405,467 69,992,021 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$141,944,725 $145,632,214 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
(1)Current and prior period results have been adjusted to reflect the one-for-eight stock split effected in May 2023. See Note 5, Stockholders' Equity and Note 8, Subsequent Events for details.
F-49


ALPINE 4 HOLDINGS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
20232022
Revenues, net
$24,361,713 $25,592,154 
Cost of revenues
19,145,257 19,954,697 
Gross profit
5,216,456 5,637,457 
Operating expenses:
General and administrative expenses10,243,023 9,201,682 
Research and development113,906 191,930 
Total operating expenses10,356,929 9,393,612 
Loss from operations
(5,140,473)(3,756,155)
Other income (expenses)
Interest expense(998,870)(608,961)
Other income43,200 32,719 
Total other income (expenses)(955,670)(576,242)
Loss before income tax
(6,096,143)(4,332,397)
Income tax
(327,000)(332,837)
Net Loss
$(5,769,143)$(3,999,560)
Weighted average shares outstanding (1):
Basic24,901,733 22,879,056 
Diluted24,901,733 22,879,056 
Basic loss per share
$(0.23)$(0.17)
Diluted loss per share
$(0.23)$(0.17)
The accompanying notes are an integral part of these unaudited consolidated financial statements.
(1)Current and prior period results have been adjusted to reflect the one-for-eight stock split effected in May 2023. See Note 5, Stockholders' Equity and Note 8, Subsequent Events for details.
F-50


ALPINE 4 HOLDINGS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS CHANGES IN STOCKHOLDERS' EQUITY (1)
(Unaudited)
Series B Preferred StockClass A Common
Stock
Class B Common
Stock
Class C Common
Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Total Stockholders’
Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balance, December 31, 2022
5 $5 22,303,333 $2,230 1,068,512 $107 1,529,888 $153 $141,723,921 $(71,734,395)$69,992,021 
Conversion of Class C Common Stock to Class A Common Stock— — 1,428 — — — (1,428)— — — — 
Series B Preferred Share removal(1)(1)— — — — — — 1 —  
Share-based compensation expense— — — — — — — — 182,589 — 182,589 
Net loss— — — — — — — — — (5,769,143)(5,769,143)
Balance, March 31, 2023
4 $4 22,304,761 $2,230 1,068,512 $107 1,528,460 $153 $141,906,511 $(77,503,538)$64,405,467 
Balance, December 31, 2021
5 $5 20,224,938 $2,022 1,068,512 $107 1,562,635 $156 $130,348,267 $(58,859,082)$71,491,476 
Issuance of shares of common stock for compensation— — 4,924 — — — — — 99,248 — 99,248 
Conversion of Series D preferred stock to Class A— — 7,989 1 — — — — 365,463 — 365,464 
Conversion of Series C preferred stock to Class A— — 1,031 — — — — — 34,622 — 34,622 
Share-based compensation expense— — — — — — — — 93,197 — 93,197 
Net loss— — — — — — — — — (3,999,560)(3,999,560)
Balance, March 31, 2022
5 $5 20,238,882 $2,023 1,068,512 $107 1,562,635 $156 $130,940,797 $(62,858,642)$68,084,447 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
(1) Current and prior period results have been adjusted to reflect the one-for-eight stock split effected in May 2023. See Note 5, Stockholders' Equity and Note 8, Subsequent Events for details.
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ALPINE 4 HOLDINGS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
20232022
OPERATING ACTIVITIES:
Net loss$(5,769,143)$(3,999,560)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation739,771 733,459 
Amortization788,013 736,205 
Employee stock compensation182,589 192,449 
Income tax benefit(362,533)(332,837)
Amortization of debt discounts36,820  
Non-cash lease expense457,835 105,281 
Write off of inventory46,054 66,789 
Bad debt expense134,306 113,727 
Changes in current assets and liabilities:
Accounts receivable1,465,110 (1,855,245)
Inventory(50,344)1,760,757 
Contract assets(432,644)(329,702)
Prepaid expenses and other assets(156,930)(881,906)
Accounts payable3,222,028 (397,124)
Accrued expenses(493,627)(29,364)
Contract liabilities415,857 (1,680,316)
Operating lease liability(255,404)(103,375)
Net cash used in operating activities(32,242)(5,900,762)
INVESTING ACTIVITIES:
Capital expenditures(1,501,923)(363,053)
Net cash used in investing activities(1,501,923)(363,053)
FINANCING ACTIVITIES:
Proceeds from issuances of notes payable, non-related party850,145  
Proceeds from issuances of note payable, related party535,000  
Net proceeds/(repayments) from line of credit(1,780,589)3,816,742 
Repayments of notes payable, non-related parties(89,600)(210,194)
Cash paid on financing lease obligations(179,032)(157,585)
Net cash provided by (used) in financing activities(664,076)3,448,963 
NET DECREASE IN CASH
(2,198,241)(2,814,852)
CASH, BEGINNING BALANCE
2,673,541 3,715,666 
CASH, ENDING BALANCE
$475,300 $900,814 
CASH PAID FOR:
Interest$998,870 $579,793 
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
Equipment purchased on note payable$ $182,586 
Series B Preferred Share Removal$1 $ 
Conversion of Series D preferred stock for common stock$ $400,092 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-52


ALPINE 4 HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Organization and Basis of Presentation
The unaudited consolidated financial statements were prepared by Alpine 4 Holdings, Inc. (‘we,” “our,” or 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 consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on May 5, 2023. The results for the three months ended March 31, 2023, are not necessarily indicative of the results to be expected for the year ending December 31, 2023.
The Company was incorporated under the laws of the State of Delaware in April 2014. We are a publicly traded conglomerate that acquires businesses that fit into our disruptive DSF business model of Drivers, Stabilizers, and Facilitators.
As of the date of this Report, the Company was a holding company owning, directly or indirectly, fourteen companies:
A4 Corporate Services, LLC;
ALTIA, LLC;
Quality Circuit Assembly, Inc. ("QCA");
Morris Sheet Metal, Corporation ("MSM");
JTD Spiral, Inc.;
Excel Construction Services, LLC ("Excel");
SPECTRUMebos, Inc.;
Vayu Aerospace Corporation;
Thermal Dynamics International, Inc. ("TDI");
Alternative Laboratories, LLC. ("Alt Labs");
Identified Technologies, Corporation ("IDT");
ElecJet Corporation.;
DTI Services LLC (doing business as RCA Commercial Electronics ("RCA")); and
Global Autonomous Corporation ("GAC").
In February 2023, the Company made a $0.3 million investment for a 10% equity interest in a battery materials company, which includes a seat on its board of directors, and participation rights in future funding rounds. The investment is accounted for as an equity method investment as the board representation allows us to have significant influence over the operating and financial policies of the battery materials company. The investment is presented in other non-current assets on the consolidated balance sheet with the value of the investment being adjusted in arrears on a quarterly basis based on its financial performance.
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Basis of presentation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).
Liquidity
The Company’s financial statements are prepared in accordance with U.S. GAAP applicable to a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued. In accordance with Financial Accounting Standards Board (the “FASB”), Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued (further detail in the Going Concern sub-section below).
As shown in the accompanying consolidated financial statements, the Company has incurred significant recurring losses and negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Although the Company has experienced net losses of $5.8 million and $4.0 million for the three months ended March 31, 2023 and 2022, respectively, net cash flows used in operations has improved to nearly breakeven for the three months ended March 31, 2023, from $5.9 million for the three months ended March 31, 2022.
As of March 31, 2023, the Company had positive working capital of approximately $4.0 million, which was a decrease of $11.5 million compared to December 31, 2022. The Company has bank financing totaling $33.0 million ($33.0 million in lines of credit including $0.1 million in capital expenditures lines of credit availability) of which approximately $3.8 million was available and unused as of March 31, 2023. There are three lines of credit that are set to mature during the next twelve months. These three lines of credits total $11.7 million, of which $9.0 million was used as of March 31, 2023, and are shown as a Current Liability on the Consolidated Balance Sheet.
The Company plans to continue to generate additional revenue, improve cash flows from operations, and improve gross profit performance across all of its subsidiaries. The Company also may raise funds through debt financing, securing additional lines of credit, and the sale of shares in public or private offerings.
Going Concern
The accompanying financial statements have been prepared on a going concern basis. While the working capital deficiency of prior years has improved, and working capital of the Company is currently positive, continued operating losses causes doubt as to the ability of the Company to continue. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's plan of operations, and its ultimate transition to profitable operations are necessary for the Company to continue. The uncertainty that exists with these factors raises substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
In order to mitigate the risk related to the going concern uncertainty, the Company has a three-fold plan to resolve these risks. First, the operating subsidiaries of QCA, QCA-C, IDT, TDI, and RCA plan to expand their revenues and profits yielding increased cash flow in those operating segments. This plan will allow for an increased level of cash flow to the Company. Second, the Company has expanded its credit facilities at the subsidiary level over the past twelve months to allow for greater borrowing accessibility if needed for the expansion of product lines and sales opportunities and plans to extend or refinance any lines of credit coming due over the next twelve months in order to provide additional financing. Finally, operating companies hard hit by the supply-chain related price increases such as MSM, Alt Labs, and Excel Construction have begun to experience an easing in the procurement and cost overruns of limited product supply. This subsequently has added to increased cash flow to those entities and less reliance on the Company to fund those activities. Although this plan is in place to mitigate the risk related to the going concern uncertainty, substantial doubt remains due to uncertainty around the growth projections and lack of control of many of the factors included in the Company’s plan.
F-54


Entity level risks
Our operations and performance may depend on global, regional, economic and geopolitical conditions. Russia’s invasion and military attacks on Ukraine have triggered significant sanctions from North American and European leaders. As of the date of this Report, those events were continuing to escalate and create increasingly volatile global economic conditions. Resulting changes in North American trade policy could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a “trade war.” A trade war could result in increased costs for raw materials that we use in our manufacturing and could otherwise limit our ability to sell our products abroad. These increased costs would have a negative effect on our financial condition and profitability. Furthermore, the military conflict between Russia and Ukraine is increasing supply interruptions and further hindering our ability to find the materials we need to make our products. If the conflict between Russia and Ukraine continues for a long period of time, or if other countries become further involved in the conflict, we could face significant adverse effects to our business and financial condition. The Company is not able to fully quantify the impact that these factors will have on the Company’s financial results during 2023 and beyond.
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 March 31, 2023, and December 31, 2022. Significant intercompany balances and transactions have been eliminated.
Use of estimates
The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable. In many instances, the Company could have reasonably used different accounting estimates and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. This applies in particular to useful lives of long-lived assets, reserves for accounts receivable and inventory, valuation allowance for deferred tax assets, fair values assigned to intangible assets acquired, and impairment of long-lived assets. Actual results could differ significantly from our estimates. To the extent that there are material differences between these estimates and actual results, the Company’s future financial statement presentation, financial condition, results of operations and cash flows will be affected.
Cash
Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. As of March 31, 2023, and December 31, 2022, the Company had no cash equivalents.
The FDIC insures up to $250,000 per account with any excess amount in each account being uninsured. Total bank balances were $0.8 million and $3.2 million as of March 31, 2023, and December 31, 2022, respectively. Of this amount, $0.1 million and $2.0 million were uninsured as of March 31, 2023, and December 31, 2022, respectively. All uninsured amounts are held with J.P. Morgan Chase.
Major Customers & Vendors
The Company had no customers which made up over 10% of total Company accounts receivable as of March 31, 2023, or December 31, 2022.
For the three months ended March 31, 2023, the Company had no customers which made up over 10% of total Company revenues. For the three months ended March 31, 2022, the Company had one customer within the A4 Technology - RCA segment, which made up 13% of total Company revenues.
F-55


For the three months ended March 31, 2023 and 2022, the Company received 12% and 11%, respectively, of total Company revenues from prime contractors.
For the three months ended March 31, 2023, the Company had no vendors, which made up over 10% of total Company purchases. For the three months ended March 31, 2022, the Company had one vendor within the A4 Technology - RCA segment, which made up 17% of total Company purchases.
Inventory
Inventory for all subsidiaries is valued at weighted average cost. 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-process and finished goods. Inventory at March 31, 2023, and December 31, 2022, consists of:
March 31, 2023December 31, 2022
Raw materials$10,083,241 $9,116,824 
Work in process3,236,331 3,165,876 
Finished goods11,943,087 12,975,669 
Inventory25,262,659 25,258,369 
Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of 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 the three months ended March 31, 2023, there were no events or changes in circumstances that indicated a quantitative impairment analysis was necessary.
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 March 31, 2023, and December 31, 2022, the reporting units with goodwill were QCA, MSM, Excel, Alt Labs, TDI, Identified Technology, ElecJet, and RCA. Consistent with our prior year assessment, the ElecJet reporting unit is considered an at-risk reporting unit. Our methods and assumptions were consistent with those discussed below in the Fair Value Measurement subsection. This reporting unit is primarily considered at-risk as it is a start-up subsidiary with minimal to no revenue to offset its research & development expenses. The DCF model includes revenue growth assumptions of us executing large new customer and/or supplier agreements within the next two years and then steadily increasing revenue at a more normalized rate thereafter. Any failure to execute these customer and/or supplier arrangements would negatively impact the key growth assumptions.
Fair value measurements
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
F-56


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.
We apply the provisions of fair value measurement to various nonrecurring measurements for our financial and nonfinancial assets and liabilities. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, notes payable and lines of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches. For the income approach, we use a discounted cash flow models developed in connection with our third-party valuation specialists that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates; and estimated discount rates. For the market approach, we use analyses based primarily on market comparables. We base these assumptions on historical data and experience, industry projections, and general economic conditions.
The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. As of March 31, 2023, and December 31, 2022, the Company had no financial assets or liabilities that were required to be fair valued on a recurring basis, as all of our financial assets and liabilities were Level 1.
Research and Development
The Company focuses on quality control and development of new products and the improvement of existing products. All costs related to research and development activities are expensed as incurred. During the three months ended March 31, 2023 and 2022, research and development costs totaled $0.1 million and $0.2 million, respectively.
Earnings (loss) per share
The Company presents both basic and diluted net income (loss) per share on the face of the consolidated statements of operations. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted per share calculations give effect to all potentially dilutive shares of common stock outstanding during the period, including stock options and warrants, using the treasury-stock method. If antidilutive, the effect of potentially dilutive shares of common stock is ignored. The amount of anti-dilutive shares related to stock options and warrants as of March 31, 2023 and 2022 was 2,700,473 and 837,472. respectively. The following table illustrates the computation of basic and diluted
F-57


earnings per share (“EPS”) inclusive of all classes of common stock as the only difference between the classes of common stock are related to the voting rights for the three months ended March 31, 2023 and 2022:
For the Three Months Ended March 31, 2023
For the Three Months Ended March 31, 2022
Net LossSharesPer Share AmountNet LossSharesPer Share Amount
Basic EPS
Net loss$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Effect of Dilutive Securities
Stock options and warrants  —   — 
Dilute EPS
Total
$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Revenue Recognition
The Company recognizes revenue under ASC Topic 606, Revenue from contract with Customers ("Topic 606"). The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
Revenue is recognized under Topic 606, at a point in time and over a period of time, in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
executed contract with the Company's customers that it believes are legally enforceable;
identification of performance obligations in the respective contract;
determination of the transaction price for each performance obligation in the respective contract;
allocation of the transaction price to each performance obligation; and
recognition of revenue only when the Company satisfies each performance obligation.
The following tables presents our revenues disaggregated by type for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31, 2023
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$ $9,320,821 $ $7,555,918 $ $16,876,739 
Sale of services4,146,004  2,970,087  368,883 7,484,974 
Total revenues
$4,146,004 $9,320,821 $2,970,087 $7,555,918 $368,883 $24,361,713 
Three Months Ended March 31, 2022
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$ $8,648,095 $ $9,793,988 $ $18,442,083 
Sale of services4,056,204  2,687,981  405,886 7,150,071 
Total revenues
$4,056,204 $8,648,095 $2,687,981 $9,793,988 $405,886 $25,592,154 
Recent Accounting Pronouncements
Effective January 1, 2023, we adopted ASU 2016-13, Credit Losses Topic 326 (the new credit losses standard), using the modified retrospective approach. The comparative periods have not been restated and continue to be
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reported under the accounting standard in effect for those periods. The new credit losses standard amends the impairment model to use a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Our adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements for the three months ended March 31, 2023, and we did not recognize a cumulative effect adjustment to retained earnings as of January 1, 2023.
To assist in quantifying the impact on our consolidated financial statements and supplementing our existing disclosures, we identified financial assets measured at an amortized cost basis in our consolidated balance sheet and evaluated the collectability considerations based on an expected credit loss assessment. We perform ongoing credit evaluations of our customers, but generally do not require collateral to support customer receivables. We establish an allowance for doubtful accounts based on various factors including the age of receivables outstanding, historical trends, economic conditions and other information. We also review outstanding balances on an account-specific basis based on the credit risk of the customer. We determined that all of our accounts receivable share similar risk characteristics within our operating segments based on historical data. We monitor our credit exposure on an ongoing basis and assess whether assets in the pool continue to display similar risk characteristics. We actively monitor the credit risk of our specific customers, age of receivables outstanding, recent collection trends and general economic conditions to evaluate the risk of credit loss. The consolidated statement of income for the three months ended March 31, 2023, reflects the measurement of credit losses for newly recognized financial assets as well as any changes to historical financial assets.
Allowance for Doubtful Accounts
Balance as of December 31, 2022$52,531 
Additions charged to expense153,243 
Accounts written-off(18,937)
Balance as of March 31, 2023
$186,837 
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 – 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 discounts lease payments based on an estimate of its incremental borrowing rate.
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As of March 31, 2023, the future minimum finance and operating lease payments were as follows:
Twelve Months Ending March 31,
Finance
Leases
Operating
Leases
2024$1,931,757 $2,398,681 
20251,962,353 2,423,929 
20261,852,006 1,823,638 
20271,880,265 1,814,303 
20281,923,136 1,708,631 
Thereafter14,368,333 12,855,124 
Total payments23,917,850 23,024,306 
Less: imputed interest(8,778,767)(6,698,331)
Total obligation15,139,083 16,325,975 
Less: current portion(743,157)(1,484,846)
Non-current financing leases obligations$14,395,926 $14,841,129 
Finance Leases
As of March 31, 2023, all finance leases in the table above were related to property and equipment. Depreciation expense associated with the finance leases within Property and Equipment was $312,954 and $312,954 for the three months ended March 31, 2023 and 2022, respectively. Of this amount $44,503 and $0 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expenses on the Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. Interest expense on finance leases for the three months ended March 31, 2023, and 2022 was $305,262 and $317,905, respectively, and is recorded in Interest Expense on the Consolidated Statements of Operations. At March 31, 2023, the weighted average remaining lease terms were 11.7 years, and the weighted average discount rate was 8.01%.
Operating Leases
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of March 31, 2023, and December 31, 2022:
March 31,
2023
December 31,
2022
Assets 
Operating lease assetsOperating lease right of use assets$15,949,731 $16,407,566 
Total lease assets$15,949,731 $16,407,566 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,484,846 $1,318,885 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability14,841,129 15,262,494 
Total lease liability$16,325,975 $16,581,379 
The lease expense for the three months ended March 31, 2023 and 2022, was $598,590 and $126,561, respectively. Of this amount $216,754 and $0 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expense on the Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. The cash paid under operating leases during the three months ended March 31, 2023 and 2022, was $540,833 and $124,654, respectively. At March 31, 2023, the weighted average remaining lease terms were 11.7 years, and the weighted average discount rate was 6.01%.
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Note 4 – Debt
The outstanding balances for the loans as of March 31, 2023, and December 31, 2022, were as follows:
March 31,
2023
December 31,
2022
Lines of credit, current portion$8,970,460 $7,426,814 
Equipment loans, current portion82,787 68,410 
Related Party term notes, current portion535,000  
Term notes, current portion5,915,560 3,132,726 
Total current 15,503,807 10,627,950 
Lines of credit, net of current portion3,928,105 7,215,520 
Long-term portion of equipment loans and term notes2,229,684 4,266,350 
Total notes payable and line of Credit$21,661,596 $22,109,820 
Future scheduled maturities of outstanding debt are as follows:
Twelve Months Ending March 31,
2024$15,503,807 
20251,785,069 
2026709,653 
20273,562,900 
202826,035 
Thereafter74,132 
Total$21,661,596 
In August 2020, the Company filed a lawsuit against Alan Martin regarding his note payable. As of March 31, 2023 and 2022, the note had a balance of $2.9 million, and accrued interest of $1.8 million and $1.2 million, respectively, which are reflective in current liabilities. The default rate is 10% and the daily late charge is $575 (See a description of the Company’s ongoing legal proceedings relating to this transaction in Note 7, Commitments and Contingencies, below).
During January and February 2023, the Company issued a total of $1.3 million in six-month note payables ranging in size from $10,000 to $200,000 to executive officers and various investors with an annual interest rate of 30% to be used for general corporate purposes. Of this amount, $0.5 million was issued to related parties.
During 2023, the Company had four revolving lines of credit in the aggregate of $33.0 million, including one capital expenditures line of credit of $0.1 million. The revolving lines of credit used as of March 31, 2023, totaled $12.9 million with interest rates ranging from WSJ prime plus 2.50% - 4.25% and terms ranging from one to five years. Accounts receivables, inventory, and property and equipment are pledged as collateral on the various lines of credit. As of March 31, 2023, the Company had $3.8 million in additional funds available to borrow. The Company is required to maintain covenants including financial ratios as a condition of the line of credit agreements. As of the date of this Report, the Company was not in compliance with these covenants. However, the Company received a forbearance agreement and waivers from the banking institutions regarding these failed covenants. As such, the Company was in compliance with the covenants as of the date of this report.
Note 5 – Stockholders' Equity
On May 12, 2023, a Certificate of Amendment was filed to effect a one-for-eight (1-for-8) reverse split (the “Reverse Split”) of the shares of the Company’s the Class A, Class B, and Class C Common Stock, and to decrease the number of shares of Class A Common Stock from 295,000,000 shares to 200,000,000 shares (the “Class A Common Stock Decrease”). The Reverse Split and the Class A Common Stock Decrease became effective on May 12, 2023. As a result of the Reverse Split, every eight shares of the Company’s issued and outstanding Class A
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Common Stock automatically converted into one share of Class A Common Stock, without any change in the par value per share, and began trading on a post-split basis under the Company’s existing trading symbol, “ALPP,” when the market opened on May 15, 2023. Additionally, every eight shares of the Company’s issued and outstanding Class B Common Stock automatically converted into one share of Class B Common Stock, without any change in the par value per share, and every eight shares of the Company’s issued and outstanding Class C Common Stock automatically converted into one share of Class C Common Stock, without any change in the par value per share. The Reverse Split affected all holders of Class A, Class B, and Class C Common Stock uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares. A total of 180,037,350 shares of Class A Common Stock were issued and outstanding immediately prior to the Reverse Split, and approximately 22,504,669 shares of common stock were issued and outstanding immediately after the Reverse Split. No fractional shares will be outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock will automatically be entitled to receive an additional fraction of a share of common stock to round up to the next whole share. In addition, effective as of the same time as the Reverse Split, proportionate adjustments were made to all then-outstanding options and warrants with respect to the number of shares of Class A Common Stock subject to such options or warrants and the exercise prices thereof. The impact of this change in capital structure has been retrospectively applied to all periods presented herein.
Common Stock
The Company had the following transactions in its common stock during the three months ended March 31, 2023:
In January 2023, certain shareholders converted 1,428 shares of Class C common stock into 1,428 shares of Class A common stock.
Series B Preferred Stock
During February 2023, the Company identified that it had inappropriately awarded a Series B Preferred Share to an executive officer who is not also a board member. As the Series B Preferred Shares can only be held by members of the Board, the share issuance was rescinded.
Stock Options
The following summarizes the stock option activity for the three months ended March 31, 2023:
OptionsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2022
386,751 $4.39 7.94$463,495 
Granted  
Forfeited(7,689)6.16 
Exercised  
Outstanding at March 31, 2023
379,062 $4.35 7.67$444,942 
Vested and expected to vest at March 31, 2023
379,062 $4.35 7.67$444,942 
Exercisable at March 31, 2023
135,567 $1.11 5.12$444,942 
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The following table summarizes information about options outstanding and exercisable as of March 31, 2023:
Options OutstandingOptions Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$0.05 111,438 5.26$0.40 111,438 $0.40 
0.10 10,625 5.030.80 10,625 0.80 
0.77 243,495 9.086.16   
0.90 13,504 4.027.20 13,504 7.20 
379,062 135,567 
During the three months ended March 31, 2023 and 2022, stock option expense amounted to $0.2 million and $0.2 million, respectively. Unrecognized stock option expense as of March 31, 2023, amounted to $0.9 million, which will be recognized over a period extending through April 2025.
Warrants
The following summarizes the warrants activity for the three months ended March 31, 2023:
WarrantsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2022
2,321,411 $11.78 4.31$ 
Granted  0
Forfeited  
Exercised  
Outstanding at March 31, 2023
2,321,411 $11.78 4.02$ 
Vested and expected to vest at March 31, 2023
2,321,411 $11.78 4.02$ 
Exercisable at March 31, 2023
2,321,411 $11.78 4.02$ 
The following table summarizes information about warrants outstanding and exercisable as of March 31, 2023:
Warrants OutstandingWarrants Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$52.80 52,084 1.89$52.80 52,084 $52.80 
20.16 49,604 1.7020.16 49,604 20.16
24.80 535,716 3.6624.80 535,716 24.80
24.64 53,572 3.6524.64 53,572 24.64
5.52 1,630,435 4.29$5.52 1,630,435 5.52
 2,321,411 2,321,411 
Note 6 – Segment Reporting
The Company discloses segment information that is consistent with the way in which management operates and views its business. Effective during the quarter ended September 30, 2022, the Company increased its reportable
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segments to eight segments. All segments and the subsidiaries within each segment are geographically located in North America. The financial results are logical to review in this manner for comparison, trend, deviations, etc. purposes.
Management excludes the following when reviewing the profit/loss by segment.
Intercompany Sales/COGS
Management fees to the parent Company
Income tax benefit/expense
There has not been any change to the measurement method in how management reviews the profit/loss by segment.
The operating segments and their business activity are as follows:
A4 Construction Services - Morris Sheet Metal (“MSM”) provides commercial construction services primarily as a sheet metal contractor.
A4 Construction Services - Excel Construction (“Excel”) provides commercial construction services primarily as a sheet metal contractor.
A4 Manufacturing - Quality Circuit Assembly ("QCA") is a contract manufacturer within the technology industry.
A4 Manufacturing - Alternative Labs (“Alt Labs”) is a contract manufacturer within the dietary & nutraceutical supplements industry.
A4 Defense - Thermal Dynamics does contracting for the US Government particularly for the US Defense Department and US Department of State.
A4 Technologies - RCA Commercial Electronics (“RCA”) is a business-to-business ("B2B") commercial electronics manufacturer.
A4 Technologies - ElecJet is a battery research and development company.
A4 Aerospace - Vayu is a drone aircraft manufacturer.
A4 All Other includes the QCA-Central, Identified Technologies and Corporate.
Three Months Ended March 31,
20232022
Revenue
A4 Construction Services - MSM$3,813,140 $3,767,390 
A4 Construction Services - Excel332,864 288,814 
A4 Manufacturing - QCA4,191,643 4,318,860 
A4 Manufacturing - Alt Labs4,226,914 3,824,138 
A4 Defense - TDI2,970,087 2,687,981 
A4 Technologies - RCA7,453,423 9,237,259 
A4 Technologies - ElecJet102,495 556,729 
A4 Aerospace - Vayu 25,000 
All Other1,271,147 $885,983 
$24,361,713 $25,592,154 
Gross profit
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A4 Construction Services - MSM$231,888 $463,806 
A4 Construction Services - Excel(150,008)(98,974)
A4 Manufacturing - QCA897,715 1,027,184 
A4 Manufacturing - Alt Labs948,752 901,479 
A4 Defense - TDI616,582 843,189 
A4 Technologies - RCA2,374,178 2,184,328 
A4 Technologies - ElecJet(73,809)(62,029)
A4 Aerospace - Vayu(2,410)25,000 
All Other373,568 $353,474 
$5,216,456 $5,637,457 
Income (loss) from operations
A4 Construction Services - MSM$(404,413)$(315,698)
A4 Construction Services - Excel(432,081)(319,990)
A4 Manufacturing - QCA19,097 414,448 
A4 Manufacturing - Alt Labs(559,125)(987,483)
A4 Defense - TDI181,534 423,140 
A4 Technologies - RCA475,864 566,290 
A4 Technologies - ElecJet(245,421)(304,346)
A4 Aerospace - Vayu(820,967)(806,897)
All Other(3,354,961)(2,425,619)
$(5,140,473)$(3,756,155)
Depreciation and amortization
A4 Construction Services - MSM$174,298 $166,404 
A4 Construction Services - Excel67,525  
A4 Manufacturing - QCA116,879 100,479 
A4 Manufacturing - Alt Labs208,554 307,035 
A4 Defense - TDI72,433 72,090 
A4 Technologies - RCA244,804 170,046 
A4 Technologies - ElecJet105,666 101,500 
A4 Aerospace - Vayu258,911 274,669 
All Other278,713 277,441 
$1,527,783 $1,469,664 
Interest expense
A4 Construction Services - MSM$113,710 $103,025 
A4 Construction Services - Excel60,570 61,985 
A4 Manufacturing - QCA163,645 36,289 
A4 Manufacturing - Alt Labs64,680 57,116 
A4 Defense - TDI17,347  
A4 Technologies - RCA85,956 54,817 
A4 Technologies - ElecJet  
A4 Aerospace - Vayu5,958  
All Other487,004 295,729 
$998,870 $608,961 
Net income (loss)
A4 Construction Services - MSM$(480,600)$(362,367)
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A4 Construction Services - Excel(492,651)(381,975)
A4 Manufacturing - QCA(144,187)373,867 
A4 Manufacturing - Alt Labs(658,756)(1,111,462)
A4 Defense - TDI164,187 423,140 
A4 Technologies - RCA389,908 511,473 
A4 Technologies - ElecJet(245,421)(304,346)
A4 Aerospace - Vayu(826,925)(806,897)
All Other(3,474,698)(2,340,993)
$(5,769,143)$(3,999,560)
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The Company’s reportable segments as of March 31, 2023, and December 31, 2022, were as follows:
As of
March 31, 2023
As of
December 31, 2022
Total assets
A4 Construction Services - MSM$10,699,259 $11,309,049 
A4 Construction Services - Excel3,390,848 3,359,818 
A4 Manufacturing - QCA21,046,251 20,988,492 
A4 Manufacturing - Alt Labs27,083,918 26,636,905 
A4 Defense - TDI13,748,110 13,497,381 
A4 Technologies - RCA23,339,534 27,191,977 
A4 Technologies - ElecJet12,972,480 12,897,440 
A4 Aerospace - Vayu13,594,000 14,632,530 
All Other16,070,325 15,118,622 
$141,944,725 $145,632,214 
Goodwill
A4 Construction Services - MSM$113,592 $113,592 
A4 Construction Services - Excel  
A4 Manufacturing - QCA1,963,761 1,963,761 
A4 Manufacturing - Alt Labs4,410,564 4,410,564 
A4 Defense - TDI6,426,786 6,426,786 
A4 Technologies - RCA1,355,728 1,355,728 
A4 Technologies - ElecJet6,496,343 6,496,343 
A4 Aerospace - Vayu  
All Other1,913,310 1,913,310 
$22,680,084 $22,680,084 
Accounts receivable, net
A4 Construction Services - MSM$3,790,520 $5,188,521 
A4 Construction Services - Excel222,895 288,243 
A4 Manufacturing - QCA3,397,802 3,867,141 
A4 Manufacturing - Alt Labs1,994,703 1,833,502 
A4 Defense - TDI2,367,869 1,905,314 
A4 Technologies - RCA2,845,356 3,232,559 
A4 Technologies - ElecJet22,959 12,888 
A4 Aerospace - Vayu(491) 
All Other898,915 811,776 
$15,540,528 $17,139,944 
Note 7 – Commitments and Contingencies
Licensing Agreement
DTI has entered into licensing agreements with RCA Trademark Management for the licensing rights to the respective trademarks in the United States of America and Canada. The RCA licensing agreement was amended with Technicolor, S.A., as licensor, and expires December 31, 2024. DTI agrees to pay a royalty fee of 2.50% on net sales of the licensed products with a minimum annual payment of $440,000 for the year ended 2022, $460,000 for the year ended 2023, and $480,000 for the year ended 2024. These amounts were amended as part of the agreement signed in May 2023. The amended agreement extended our licensing agreement under December 31, 2027, and
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provides us the ability to sell additional products under the trademark in exchange for higher royalty payments (See Note 8).
Warranty Service Agreement
DTI entered into a warranty service agreement to provide certain warranty services for a lighting supplier through December 31, 2024, except for one class of customer, for whom services will be provided through 2030. In exchange for these services, DTI expects to receive $66,626 and $59,964 during the year ended 2023 and 2024, respectively.
Royalty Agreement
On November 28, 2021, the Company entered into a Royalty Agreement with the sellers of ElecJet. Upon closing the Company desires to build its initial factory (“Factory”) to manufacture graphene batteries in the territory of the United States. The Company agrees to pay the sellers 1.5% of net sales for batteries produced by the Factory. Royalty payments shall continue to be paid for a period of ten years from the starting date, or until the total of the royalty payments equals $50 million, whichever occurs first.
Legal Proceedings
From time to time, the Company may become involved in lawsuits and other legal proceedings that arise in the course of business. Litigation is subject to inherent uncertainties, and it is not possible to predict the outcome of litigation with total confidence. As of the date of this Report, the Company was not aware of any legal proceedings or potential claims against it whose outcome would be likely, individually or in the aggregate, to have a material adverse effect on the Company’s business, financial condition, operating results, or cash flows.
In August 2020, in a matter relating to the Company’s subsidiary Horizon Well Testing, LLC (“Horizon”), the Company filed a lawsuit in the United States District Court, District of Arizona (Case No.2:20-cv-01679-DJH), against Alan Martin, the seller of Horizon dba Venture West Energy Services, LLC (“VWES”). The Company brought suit in 2020 seeking to avoid the claimed liability due from the Company to Alan Martin, for the Company’s 2017 purchase of Mr. Martin’s business, Horizon. On summary judgment, the court found that the Company’s claim was barred by a time-limiting clause for indemnification claims. The Company disagrees with the court’s ruling and intends to appeal. Before the Company can file its appeal of the summary judgment order, the court must resolve Mr. Martin’s counterclaim in which Mr. Martin claims that Mr. Martin remains unpaid on the promissory note, as modified, under which the Company purchased the Horizon. The note balance is alleged to have a principal sum due of $3.3 million, plus interest at 8% accruing from 2019 to present, plus late fees accruing at $575 per day (see Note 4). The Company continues to dispute the amount claimed due. As well, the Company’s legal position remains that the indebtedness should be discharged due to material misrepresentations by Mr. Martin in the original transaction.
In August 2021, in a matter relating to Horizon, Rob Porter filed a lawsuit in the District Court of Oklahoma County, State of Oklahoma (CJ-2021-3421), alleging unjust enrichment and breach of contract with respect to shares of Company that Mr. Porter claims was owed under his employment contract with the Company as President of Horizon. In October 2021, the Company filed its answer denying such claims. In October 2021, the Company also filed counterclaims against Mr. Porter for conversion and breach of fiduciary duties. The Company believes this is a frivolous lawsuit and as such, no accrual has been recorded as of March 31, 2023, and December 31, 2022. As of the date of this Report, a pre-trial scheduling conference was scheduled for June 21, 2023, and the Company was participating in discovery.
In October 2021, in a matter relating to Horizon, the Company received three complaints in the District Court of Oklahoma Country State of Oklahoma from former VWES employees Bruce Morse (CJ-2021-4316), Brian Hobbs (CJ-2021-4315), Thomas Karraker (CJ-2021-4314) for unjust enrichment, and breach of contract with respect to their employment contracts with Horizon. On January 19, 2022, the Company filed answers to all three lawsuits that denied these claims. The Company believes these are frivolous lawsuits. In July 2022, the Company and Mr. Morse settled his claims against the Company. The settlement included the cash payment of $24,375 for Mr. Morse's claimed 37,500 shares of Class A Common stock, and subsequently Mr. Morse’s case has been dismissed. Subsequently, Mr. Hobbs and Mr. Karraker have also expressed interest in settling claims on similar terms, and
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negotiations were ongoing as of the date of this Report. As no formal settlement offer has been extended, no accrual has been recorded as of March 31, 2023, and December 31, 2022.
In June 2022, in a matter relating to the Company’s subsidiaries, DTI Services Limited Liability Company and Direct Tech Sales, LLC (doing business as RCA Commercial Electronics) (“RCA”), the Company received a complaint filed in the Superior Court of Marion County State of Indiana (CAUSE NO. 49D01-2203-PL-006662) by Gatehouse, LLC (“Gatehouse”), a supplier of PPP gloves for resale by RCA, seeking payment of $213,000 for supplied goods that RCA has good reason to believe are counterfeit, and thus unsalable. RCA has answered the complaint and asserted counterclaims of fraud and breach of contract. After a long delay in prosecution of the case by the plaintiff Gatehouse, motion practice has begun in this matter, however no scheduling, hearings, or trial date has yet been set in this matter.
In November 2022, the Company received a complaint filed by Mr. Mark Bell in the district court of Idaho (CV42-22-4066) with regard to the Company’s February 2020 purchase of Excel Fabrication LLC (“Excel”) from Mr. Bell, over the Company’s refusal to continue paying on a $2.3 million note comprising part of the purchase consideration (Note 4). In December 2022 the Company counter-sued Mr. Bell for breach of contract, fraud, and misrepresentation in the February 2020 sale of Excel to the Company. The case is set for trial in June of 2024.
In December 2022, the Company’s subsidiary Excel Fabrication LLC (“Excel”) received a demand for binding arbitration (AAA Case No. 01-22-0004-9935) by Starr Corporation of Idaho, a contractor for whom Excel Fabrication LLC was performing as sub-contractor and who stopped its work for Starr Corporation pursuant to its claimed contract right of termination due to failure of Starr Corporation to make payment within the contracted period for payment for work satisfactorily performed. Starr Corporation claims that Excel’s termination was wrongful, and seeks approximately $0.5 million, reflecting its costs in having to complete work that was called for under the contract. Excel is seeking a determination that its termination was rightful under the terms of the contract between the parties, and in addition seeks payment on its unpaid billing submittals and additional costs. Arbitration hearings are scheduled to commence in April 2024. As no formal settlement offer has been extended, no accrual has been recorded as of March 31, 2023, and December 31, 2022.
In February 2023, the Company learned that a complaint the State of New York brought against Vayu in 2019 (prior to the Company’s ownership of Vayu) seeking a refund for two returned airframes, a case which had originally been dismissed for lack of jurisdiction, had become revived by virtue of New York’s highest court ruling (State of New York v Vayu, APL-2021-00148) that the State’s long arm statute applied to the 2016 transaction between Vayu and the State University of New York at Stonybrook. Total damages sought by the State of New York are less than $100,000, including interest and costs. In light of the decision by the Court of Appeals to return the case to the trial courts for adjudication, the Company has expressed its wish to settle the matter and is currently awaiting the State of New York's response to the Company's response including the possibility of the State providing information useful to the Company should it wish to subsequently seek redress from the previous owners of Vayu.
Note 8 – Subsequent Events
In April 2023, a shareholder converted 1,300,000 shares of Class B common stock and 1 share of Series B preferred stock into 1,300,001 shares of Class A common stock.
On May 12, 2023, a Certificate of Amendment was filed to effect a one-for-eight (1-for-8) reverse split (the “Reverse Split”) of the shares of the Company’s the Class A, Class B, and Class C Common Stock, and to decrease the number of shares of Class A Common Stock from 295,000,000 shares to 200,000,000 shares (the “Class A Common Stock Decrease”). The Reverse Split and the Class A Common Stock Decrease became effective on May 12, 2023. As a result of the Reverse Split, every eight shares of the Company’s issued and outstanding Class A Common Stock automatically converted into one share of Class A Common Stock, without any change in the par value per share, and began trading on a post-split basis under the Company’s existing trading symbol, “ALPP,” when the market opened on May 15, 2023. Additionally, every eight shares of the Company’s issued and outstanding Class B Common Stock automatically converted into one share of Class B Common Stock, without any change in the par value per share, and every eight shares of the Company’s issued and outstanding Class C Common Stock automatically converted into one share of Class C Common Stock, without any change in the par value per
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share. The Reverse Split affected all holders of Class A, Class B, and Class C Common Stock uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares. A total of 180,037,350 shares of Class A Common Stock were issued and outstanding immediately prior to the Reverse Split, and approximately 22,504,669 shares of common stock were issued and outstanding immediately after the Reverse Split. No fractional shares will be outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock will automatically be entitled to receive an additional fraction of a share of common stock to round up to the next whole share. In addition, effective as of the same time as the Reverse Split, proportionate adjustments were made to all then-outstanding options and warrants with respect to the number of shares of Class A Common Stock subject to such options or warrants and the exercise prices thereof.
In May 2023, Mr. Kevin Thomas, who sold Alternative Laboratories, LLC to the Company in May of 2021, sued the Company in the State circuit court for Collier County Florida (Case Number 23-CA-1981), alleging that the Company failed to deliver shares in the Company as promised by the terms of the purchase agreement, and additionally claims that with respect to an amount of $610,000 in Employee Retention Credits received by the Company, that portion representing the credit attributed to the 1st quarterly period of 2021 and the part of the 2nd quarterly period of 2021 prior to the May 4th, 2021 date of sale, should be remitted to him rather than retained by the Company. The Company believes that Mr. Thomas’ complaint is wholly without merit, and the Company is in the process of answering the complaint and considering possible motions and counterclaims.
In May 2023, the RCA licensing agreement was amended and extended with a new expiration date of December 31, 2027 except for the agreement relating to Computer Monitors & Outdoor Televisions which expires on December 31, 2025. DTI Services LLC agreed to pay the following royalty fees ranging from 2.50% - 3.50% of net sales based on product type with a total minimum annual payment of $550,000 for the year ended 2023, and $600,000 for the year ended 2024, $620,000 for the year ended 2025, $660,000 for the year ended 2026, and $700,000 for the year ended 2027.
In May 2023, the Company issued a nine-month $0.2 million note payable to an outside investor with an annual interest rate of 15%, with the proceeds to be used for general corporate purposes.
In May 2023, the Company issued a one-year $0.4 million convertible note payable to an outside investor with an annual interest rate of 12% with the proceeds to be used for general corporate purposes. In connection with this convertible note payable, the Company issued 13,750 restricted shares of Class A Common Stock to the investor as additional consideration for the purchase of the note and 196,250 restricted shares of Class A Common Stock, which shall be returned to the Company if timely repayments are made against the note.
Morris had a revolving line of credit totaling $2.5 million that was scheduled to expire on May 31, 2023. In June 2023, Morris entered into a Forbearance agreement with its banking partner that extended the maturity of the line of credit to July 21, 2023.
In June 2023, Quality Circuit Assembly entered into the third amendment on its loan and security agreement that increased the maximum limit to $7 million from $5 million.
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Up to _______________ shares of Class A common stock
Up to _______________ Common Warrants to purchase shares of Class A common stock
Up to _______________ shares of Class A common stock underlying such Warrants
Up to ____________ Pre-Funded Warrants to purchase shares of Class A common stock
And
Up to _______________ shares of Class A common Stock underlying Warrants to Be Offered by the Selling Stockholders
Company logo.jpg
PROSPECTUS
August ___ 2023



PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth an itemization of all estimated expenses, all of which we will pay, in connection with the issuance and distribution of the securities being registered:
Nature of Expense:Amount
SEC Registration Fee$*
Accounting fees and expenses$*
Legal fees and expenses $*
Miscellaneous$*
Total$*
_________________
*Estimated
In addition to these expenditures, Alpine 4 will pay the expenses associated with the distribution of the common stock, including the fees of our transfer agent. Those expenses are estimated to be approximately $10,000.
Item 14. Indemnification of Directors and Officers; Disclosure of Commission Position on Indemnification for Securities Act Liabilities
Subsection (a) of Section 145 of the General Corporation Law of the State of Delaware empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification may be made in respect to any claim issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
Section 145 further provides that to the extent a director or officer of a corporation has been successful on the merits or otherwise in the defense of any such action, suit or proceeding referred to in subsections (a) and (b) of Section 145 or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith; that the indemnification provided for by Section 145 shall not be deemed exclusive of any other rights which the indemnified party may be entitled; that indemnification provided by Section 145 shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of such person’s heirs, executors and administrators; and empowers the corporation to purchase and maintain insurance
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on behalf of a director or officer of the corporation against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liabilities under Section 145.
Section 102(b)(7) of the General Corporation Law or the State of Delaware provides that a certificate of incorporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of the director (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.
Article Tenth of Alpine 4’s Charter provides that, “to the fullest extent permitted by the Delaware General Corporation Law, a director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.”
Article XI, Section 1(a) of Alpine 4’s Bylaws further provides that “Each person who was or is made a party or is threatened to be made a party or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer, of the Corporation…shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended.”
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, or persons controlling the Company pursuant to the foregoing provisions, Alpine 4 has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item 15. Recent Sales of Unregistered Securities.
Issuances in 2023
In January 2023, a certain shareholder converted 11,417 shares of Class C common stock for 11,417 shares of Class A common stock.
The shares of Class A common stock referenced above that were issued in January 2023 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.
In April 2023, a certain shareholder converted 1.3 million shares of Class B common stock and 1 share of Class B preferred stock for 1,300,001 shares of Class A common stock.
The shares of Class A common stock referenced above that were issued in April 2023 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.
In May 2023, the Company issued 13,750 restricted shares of Class A common stock to an investor as additional consideration for the purchase of a convertible note and 196,250 restricted shares of Class A common stock, which shall be returned to the Company if timely repayments are made against the convertible note.
The shares of Class A common stock referenced above that were issued in May 2023 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.
In June 2023, the Company issued a senior convertible promissory note, a warrant to purchase up to 200,000 shares of Class A common stock, and 1,267,400 shares of Class A common stock. The Company also issued a Finder warrant to purchase up to 3,579 shares of Class A common stock.
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The securities referenced above that were issued in June 2023 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.
Issuance in 2022
In January 2022, the Company issued 72,152 shares of Class A common stock for no additional consideration upon conversion of 10,149 shares of Series C Preferred Stock and 78,674 shares of Series D Preferred Stock.
The shares of Class A common stock issued upon conversion of the Series C and Series D Preferred Stock into Class A 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.
In March 2022, the Company issued 39,386 shares of Class A common stock to management in connection with the acquisition of DTI Services Limited Liability Company.
The shares of Class A common stock referenced above that were issued in 2022, 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.
On April 29, 2022, the Company issued 171,850 shares of Class A common stock at a value of $132,325 as employee compensation.
The shares of Class A common stock referenced above that were issued in 2022, 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.
During May and June 2022, the Company issued 76,119 shares of Class A common stock for cash of $55,144 in connection with a registered at-the-market offering (the "ATM Offering").
The shares of Class A common stock referenced above that were issued in 2022, 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.
In July 2022, the Company issued 60,600 shares of Class A common stock for cash of $42,318 in connection with its ATM offering.
The shares of Class A common stock referenced above that were issued in 2022, 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.
In August 2022, certain investors exercised 1,449,276 warrants at an exercise price of $0.69, for net proceeds of $1,000,000.
The shares of Class A common stock referenced above that were issued in 2022, 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.
In September 2022, certain shareholders converted 37,500 shares of Class C common stock for 37,500 shares of Class A common stock.
The shares of Class A common stock referenced above that were issued in 2022, 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.
In October 2022, certain shareholders converted 201,806 shares of Class C common stock for 201,806 shares of Class A common stock.
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The shares of Class A common stock referenced above that were issued in 2022, 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.
In November 2022, certain shareholders converted 22,662 shares of Class C common stock for 22,662 shares of Class A common stock.
The shares of Class A common stock referenced above that were issued in 2022, 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.
Issuances in 2021
In January 2021, the Company issued 1,432,244 shares of Series D Preferred Stock in connection with the Vayu (US) merger transaction.
The shares of Series D Preferred Stock issued in connection with the Vayu (US) merger transaction 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.
For the year ended December 31, 2021, the Company issued an aggregate of 7,384,018 shares of its restricted Class A common stock for convertible debt of $1,886,896.
The shares of Class A common stock referenced above that were issued in 2021, 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.
In May 2021, the Company issued 281,223 shares of Class A common stock in connection with the TDI acquisition.
The shares of Class A common stock issued in connection with the TDI acquisition 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.
In May 2021, the Company issued 361,787 shares of Class A common stock in connection with the Alt Labs acquisition.
The shares of Class A common stock issued in connection with the Alt Labs acquisition 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.
On April 30, 2021, the Company issued 1,617,067 shares of Class A common stock upon conversion of shares of Class C common stock by the holder of the Class C common stock.
The shares of Class A common stock issued upon conversion of the Class C common stock into Class A 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.
On May 17, 2021, the Company issued 350,000 shares of Class A common stock upon conversion of shares of Class B common stock by the holder of the Class B common stock.
On November 15, 2021, the Company issued 125,000 shares of Class A common stock upon conversion of shares of Class B common stock by the holder of the Class B common stock.
The shares of Class A common stock issued upon conversion of the Class B 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.
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On October 20, 2021, in connection with the purchase of the outstanding securities of Identified Technologies Corporation, the Company issued 888,881 shares of its Class A common stock.
The shares of Class A common stock issued in connection with the Identified Technologies Corporation acquisition 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.
On November 1, 2021, the Company issued 2,409,258 shares of Class A common stock for no additional consideration upon conversion of 1,704,137 shares of Series C Preferred Stock and 1,353,570 shares of Series D Preferred Stock.
The shares of Class A common stock issued upon conversion of the Series C and Series D Preferred Stock into Class A 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.
On November 29, 2021, the Company issued 1,803,279 shares of Class A common stock in connection with the Elecjet acquisition.
The shares of Class A common stock issued in connection with the Elecjet acquisition 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.
On December 9, 2021, in connection with the acquisition of DTI Services Limited Liability Company, the Company issued 1,587,301 shares of its Class A common stock and 396,825 warrant shares.
The shares of Class A common stock issued in connection with the DTI Services Limited Liability Company acquisition 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.
On December 20, 2021, the Company issued 100,000 shares of Class A common stock in connection with the Horizon legal proceedings.
The shares of Class A common stock issued in connection with the Horizon legal proceedings 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.
On December 29, 2021, the Company issued 99,018 shares of Class A common stock to management in connection with the acquisition of DTI Services Limited Liability Company.
The additional shares of Class A common stock issued in connection with the DTI Services Limited Liability Company acquisition 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 16. Exhibits and Financial Statement Schedules.
The Exhibits to this registration statement are listed on the exhibit index, which appears elsewhere herein and is incorporated herein by reference.
Exhibit
Number
Description
3.1
Certificate of Incorporation of Alpine 4 Automotive Technologies Ltd. (incorporated by reference to Exhibit 3.1 to Alpine 4’s Registration Statement on Form 10, filed May 8, 2014).
3.2
Certificate of Amendment to Certificate of Incorporation, dated June 27, 2014 (incorporated by reference to Exhibit 3.3 to Alpine 4’s Current Report on Form 8-K filed July 18, 2014).
3.3
Certificate of Amendment to Certificate of Incorporation, dated June 30, 2014 (incorporated by reference to Exhibit 3.4 to Alpine 4’s Current Report on Form 8-K filed July 18, 2014).
3.4
Second Amended and Restated Certificate of Incorporation, dated August 24, 2015 (incorporated by reference to Exhibit 3.1 to Alpine 4’s Current Report on Form 8-K filed August 27, 2015)
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3.5
3.6
By-Laws of Alpine 4 (incorporated by reference to Exhibit 3.2 to Alpine 4’s Registration Statement on Form 10, filed May 8, 2014).
3.7
Series C Preferred Stock Certificate of Designation (incorporated by reference to Exhibit 3.4 to Alpine 4’s Current Report on Form 8-K filed November 17, 2020).
3.8
Series D Preferred Stock Certificate of Designation (incorporated by reference to Exhibit 3.4 to Alpine 4’s Current Report on Form 8-K filed January 4, 2021).
3.9
Certificate of Amendment to Certificate of Incorporation (Name Change) filed February 5, 2021 (incorporated by reference to Exhibit 3.4 to Alpine 4’s Current Report on Form 8-K filed February 8, 2021).
3.10
Certificate of Amendment to Certificate of Incorporation filed May 12, 2023 (incorporated by reference to Exhibit 3.1 to Alpine 4’s Current Report on Form 8-K filed May 12, 2023).
4.1
Form of Placement Agent Warrant (incorporated by reference to Exhibit 3.4 to Alpine 4’s Current Report on Form 8-K filed February 12, 2021).
4.2
Form of Investor Warrant (incorporated by reference to Exhibit 4.1 to Alpine 4’s Current Report on Form 8-K filed November 24, 2021).
4.3
Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 to Alpine 4’s Current Report on Form 8-K filed November 24, 2021).
4.4
4.5
4.6
Armistice Capital Master Fund, Ltd. Warrant - July 2022 (incorporated by reference to Exhibit 4.1 to Alpine 4’s Current Report on Form 8-K filed on July 13, 2022).
4.7
Armistice Capital Master Fund, Ltd. Warrant - November 2021 (incorporated by reference to Exhibit 4.2 to Alpine 4’s Current Report on Form 8-K filed on November 24, 2021).
4.8*Form of Common Stock Purchase Warrant
4.9*Form of Pre-Funded Warrant
5.1*Opinion of Kirton McConkie, P.C. regarding validity of the shares of Alpine 4 Holdings, Inc., Class A Common Stock being registered hereunder.
10.1
Purchase Agreement, dated effective January 16, 2020, by and between Alpine 4 Technologies Ltd. and Lincoln Park Capital Fund, LLC (incorporated by reference to the Company’s Current Report filed with the SEC on January 23, 2020)
10.2
Registration Rights Agreement, dated effective January 16, 2020, by and between Alpine 4 Technologies Ltd. and Lincoln Park Capital Fund, LLC (incorporated by reference to the Company’s Current Report filed with the SEC on January 23, 2020)
10.3
FPCD Note - $350,000 (incorporated by reference to the Company’s Current Report filed with the SEC on November 25, 2019)
10.4
FPCD Note - $600,000 (incorporated by reference to the Company’s Current Report filed with the SEC on November 25, 2019)
10.5
Note Amendment – #1 (incorporated by reference to the Company’s Current Report filed with the SEC on November 25, 2019)
10.6
Note Amendment - # 2 (incorporated by reference to the Company’s Current Report filed with the SEC on November 25, 2019)
10.7
FPCD Note - $137,870.48 (incorporated by reference to the Company’s Current Report filed with the SEC on November 25, 2019)
10.8
Note Amendment - $180,000 (incorporated by reference to the Company’s Current Report filed with the SEC on November 25, 2019)
10.9
APF Securities Agreement (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 9, 2018)
10.10
Secured Promissory Notes (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 9, 2018)
10.11
Secured Convertible Notes (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 9, 2018)
10.12
Security Agreement (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 9, 2018)
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10.13
Consulting Services Agreement (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 9, 2018)
10.14
Purchase Agreement (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on February 24, 2020)
10.15
Secured Promissory Note - $2,300,000 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on February 24, 2020)
10.16
Security Agreement (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on February 24, 2020)
10.17
Amendment to Purchase Agreement (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on February 24, 2020)
10.18
Impossible Aerospace Consultant Agreement dated November 13, 2020 (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed November 17, 2020).
10.19
RSU Agreement dated November 13, 2020 (incorporated by reference to Exhibit 10.2 to Alpine 4’s Current Report on Form 8-K filed November 17, 2020).
10.20
Vayu (US) Employment Agreement dated December 29, 2020 (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed January 4, 2021).
10.21
RSU Agreement dated December 29, 2020 (incorporated by reference to Exhibit 10.2 to Alpine 4’s Current Report on Form 8-K filed January 4, 2021).
10.22
Form of Securities Purchase Agreement (AGP Transaction) (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed February 12, 2021).
10.23
Form of Placement Agent Agreement (incorporated by reference to Exhibit 10.2 to Alpine 4’s Current Report on Form 8-K filed February 12, 2021).
10.24
Class A Common Stock Sales Agreement, dated March 8, 2022, between the Company and A.G.P. (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed March 9, 2022
10.25
Membership Interest Purchase Agreement for DTI Transaction, dated December 9, 2021 (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed December 15, 2021)
10.26
Placement Agent Agreement between the Company and A.G.P., dated November 22, 2021 (incorporated by reference to Exhibit 10.2 to Alpine 4’s Current Report on Form 8-K filed November 24, 2021)
10.27
Securities Purchase Agreement between the Company and the Purchasers named therein, dated as of November 22, 2021 (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed November 24, 2021)
10.28
Membership Interest Purchase Agreement for Alt Labs Transaction, dated May 4, 2021 (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed May 10, 2021)
10.29
Membership Interest Purchase Agreement for RCA Transaction (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed December 15, 2021)
10.30
Class A Common Stock Sales Agreement (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed March 9, 2022)
10.31
Unmanned Aerial Vehicles Supply Agreement (incorporated by reference to Exhibit 10.1 to Alpine 4’s Current Report on Form 8-K filed October 28, 2022)
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
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10.45
10.46
10.47
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55
10.56*Form of Placement Agent Agreement
10.57*Form of Securities Purchase Agreement
10.58*Form of Lock-Up Agreement
21
23.1
23.2
23.3*
Consent of Kirton McConkie, P.C. (to be included in the opinion to be filed as Exhibit 5.1 to this registration statement).
24.1
Power of Attorney (included in the signature page to the original filing of this Registration Statement).
107
_______________
*To be filed by amendment
Item 17. Undertakings
(a)  The undersigned registrant hereby undertakes:
(1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)To include any prospectus required by section 10(a)(3)of the Securities Act of 1933;
(ii)To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b)if, in the aggregate, the changes in volume and price represent No more than 20% change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement.
(iii)To include material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(i), (1)(ii)and (1)(iii)above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the Registrant pursuant to Section 13 or Section 15(d)of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement; provided, however, that paragraphs (i), (ii)and (iii)do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the
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Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d)of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement;
(2)That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4)That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i)Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii)Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that No statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(5)That, for the purpose of determining liability of the undersigned Registrant under the Securities Act to any purchaser in the initial distribution of the securities, that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
(ii)Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;
(iii)The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and
(iv)Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(b)The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrants annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plans annual report
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pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c)Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
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SIGNATURES
SIGNATURES AND POWER OF ATTORNEY FOR ALPINE 4 HOLDINGS, INC.
Pursuant to the requirements of the Securities Act of 1933, Alpine 4 Holdings, Inc., has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Phoenix, Arizona.
ALPINE 4 HOLDINGS, INC.
Date: August 4, 2023
By:/s/ Kent B. Wilson
Name:Kent B. Wilson
Title:Chief Executive Officer (Principal Executive Officer), President, and Director
Date: August 4, 2023
By:/s/ Christopher Meinerz
Name:Christopher Meinerz
Title:Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer)
Each person whose signature appears below constitutes and appoints Kent Wilson his true and lawful attorney-in-fact and agent, each with full power of substitution and re-substitution, severally, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement on Form S-1, any subsequent registration statements pursuant to Rule 462 of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. This power of attorney may be executed in counterparts.
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ Kent B. WilsonChief Executive Officer, President, Director
August 4, 2023
Kent B. Wilson
/s/ Christopher MeinerzChief Financial Officer
August 4, 2023
Christopher Meinerz
/s/ Andy CallDirector
August 4, 2023
Andy Call
/s/ Ian KantrowitzDirector
August 4, 2023
Ian Kantrowitz
/s/ Gerry GarciaChairwoman of the Board
August 4, 2023
Gerry Garcia
/s/ Edmond LewDirector
August 4, 2023
Edmond Lew
/s/ Christophe JeunotDirector
August 4, 2023
Christophe Jeunot
/s/ Jonathan WithemDirector
August 4, 2023
Jonathan Withem
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Exhibit 107
Calculation of Filing Fee Tables
Form S-1
(Form Type)
ALPINE 4 HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
Table 1: Newly Registered and Carry Forward Securities
Security Type
Security Class
Title
Fee Calculation Rule
Amount Registered
Proposed Maximum Offering Price Per Unit
Proposed Maximum Aggregate Offering Price (1)(2)
Fee Rate
Amount of Registration Fee
Newly Registered Securities
Fees to be paidEquityUnits consisting of:Rule 457(o)15,000,0000.00011020$1,653
Fees to be paidEquity
(i) Shares of Class A Common Stock, $0.0001 par value per share (3)
Fees to be paidEquity(ii) Warrants to purchase shares of Class A Common Stock (3)
Fees to be paidEquity
Shares of Class A Common Stock issuable upon exercise of warrants (4)
Rules 457(g) and 457(o)15,000,0000.00011020$1,653
Fees to be paidEquity
Shares of common stock, $0.0001 par value per share (5)
Rule 457(a)_________________0.00011020$______
Fees Previously Paid – N/A
Carry Forward Securities – N/A
Total Offering Amounts$30,000,000$3,306
Total Fees Previously Paid$0
Total Fee Offset$0
Net Fee Due$3,306
(1)    Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the Securities Act).
(2)    Pursuant to Rule 416(a) under the Securities Act of 1933, this registration statement shall also cover an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions.
(3)    No separate fee is required pursuant to Rule 457(g) under the Securities Act.
(4)    No additional registration fee is payable pursuant to Rule 457(g) of the Securities Act.
(5)    Represents shares of common stock registered for resale on this registration statement by the selling stockholders named in this registration statement or their permitted transferees. The proposed maximum aggregate offering price of such shares is based on the high end of the price range of the Units offered in the registrants initial public offering and being registered on this registration statement, less a value attributable to the warrants.

Exhibit 4.4
NEITHER THIS SECURITY NOR THE SECURITIES AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
ALPINE 4 HOLDINGS, INC.
Warrant Shares: 200,000
Date of Issuance: June 29, 2023 (“Issuance Date”)
This COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received (in connection with the issuance of the senior promissory note in the principal amount of $1,670,000.00 to the Holder (as defined below) of even date) (the “Note”), Mast Hill Fund, L.P., a Delaware limited partnership (including any permitted and registered assigns, the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from ALPINE 4 HOLDINGS, INC., a Delaware corporation (the “Company”), 200,000 shares of Common Stock (the “Warrant Shares”) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the Exercise Price per share then in effect. This Warrant is issued by the Company as of the date hereof in connection with that certain securities purchase agreement dated June 29, 2023, by and among the Company and the Holder (the “Purchase Agreement”).
Capitalized terms used in this Warrant shall have the meanings set forth in the Purchase Agreement unless otherwise defined in the body of this Warrant or in Section 16 below. For purposes of this Warrant, the term “Exercise Price” shall mean $3.50, subject to adjustment as provided herein (including but not limited to cashless exercise), and the term “Exercise Period” shall mean the period commencing on the Issuance Date and ending on 5:00 p.m. eastern standard time on the five-year anniversary thereof. This Warrant will terminate automatically and immediately upon the expiration of the Exercise Period.
1.    EXERCISE OF WARRANT.
(a)    Mechanics of Exercise. Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in whole or in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the
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outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. On or before the second Trading Day (the “Warrant Share Delivery Date”) following the date on which the Holder sent the Exercise Notice to the Company or the Company’s transfer agent, and upon receipt by the Company of payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which all or a portion of this Warrant is being exercised (the “Aggregate Exercise Price” and together with the Exercise Notice, the “Exercise Delivery Documents”) in cash or by wire transfer of immediately available funds (or by cashless exercise, in which case there shall be no Aggregate Exercise Price provided), the Company shall (or direct its transfer agent to) issue and deliver by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise (or deliver such shares of Common Stock in electronic format if requested by the Holder). Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 7) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.
If the Company fails to cause its transfer agent to issue to the Holder the respective shares of Common Stock by the respective Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise in Holder’s sole discretion in addition to all other rights and remedies at law, under this Warrant, or otherwise, and such failure shall also be deemed an Event of Default under the Note (as defined in the Purchase Agreement) (the “Note”) (any Event of Default (as defined in the Note) under the Note, including but not limited to the share delivery failure described in this sentence, shall be referred to in this Warrant as an “Event of Default”), a material breach under this Warrant, and a material breach under the Purchase Agreement.
If the Market Price of one share of Common Stock is greater than the Exercise Price, then, unless there is an effective non-stale registration statement of the Company which contains a prospectus that complies with Section 5(b) and Section 10 of the Securities Act of 1933 at the time of exercise and covers the Holder’s immediate resale of all of the Warrant Shares at prevailing market prices (and not fixed prices) without any limitation, the Holder may elect to receive Warrant Shares pursuant to a cashless exercise, in lieu of a cash exercise, equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant and an Exercise
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Notice, in which event the Company shall issue to Holder a number of Common Stock computed using the following formula:
X = Y (A-B)
A
Where X =    the number of Shares to be issued to Holder.
Y =    the number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such calculation).
A =    the Market Price (at the date of such calculation).
B =     Exercise Price (as adjusted to the date of such calculation).
(b)    No Fractional Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then-current fair market value of a Warrant Share by such fraction.
(c)    Holder’s Exercise Limitations; Exchange Cap. Notwithstanding anything to the contrary contained herein, the Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 1 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Exercise Notice, the Holder (together with the Holder’s Affiliates), and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 1(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Holder is solely responsible for any schedules required to be filed in accordance therewith. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 1(c), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Company’s
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transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding at the time of the respective calculation hereunder. In addition to the beneficial ownership limitations provided in this Warrant, the sum of the number of shares of Common Stock that may be issued under this Warrant shall be limited to the amount described in Section 4(r) of the Purchase Agreement, unless the Shareholder Approval (as defined in the Purchase Agreement) (“Shareholder Approval”) is obtained by the Company. In the event that the Company is prohibited from issuing any shares of Common Stock pursuant to this Warrant due to the Company’s failure to obtain the Shareholder Approval (such number of shares that are prohibited from being issued are referred to herein as the “Exchange Cap Shares”), in lieu of issuing and delivering such Exchange Cap Shares to the Holder, the Company shall pay cash to the Holder in exchange for the cancellation of such portion of this Warrant exercisable into such Exchange Cap Shares (the “Exchange Cap Payment Amount”) at a price equal to the sum of (x) the product of (A) such number of Exchange Cap Shares and (B) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Exercise Notice with respect to such Exchange Cap Shares to the Company and ending on the date of the aforementioned payment under this Section 1(c) and (y) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Exchange Cap Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
(d)    Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Company’s transfer agent to transmit to the Holder the Warrant Shares in accordance with the provisions of this Warrant (including but not limited to Section 1(a) above pursuant to an exercise on or before the respective Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder, within one (1) Business Day of Holder’s request, the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the product of (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder within one (1) Business Day of Holder’s request the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases, or effectuates a cashless exercise hereunder for, Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount
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of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
2.    ADJUSTMENTS. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a)    Stock Dividends and Splits. Without limiting any provision of Section 2(b), Section 3 or Section 4, if the Company, at any time on or after the Issuance Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one or more classes of its then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price and the Floor Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.
(b)    Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or after the Issuance Date, the Company grants, issues or sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 2 is deemed to have granted, issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company) for a consideration per share (the “New Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale (such Exercise Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then upon a Triggering Event (as defined in this Warrant), the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price (for the avoidance of doubt, if a Triggering Event occurs, the Holder shall be entitled to the rights hereunder for each Dilutive Issuance that occurred on or after the Issuance Date (including but not limited to each Dilutive Issuance that occurred prior to the Triggering Event), provided, however, that in no event shall the Exercise Price adjust to a price lower than the Floor Price as a result of this Section 2(b) of this Warrant. For all purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under this Section 2(b)), the following shall be applicable:
(i)    Issuance of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any Options and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting, issuance or sale (or the time of
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execution of such agreement to grant, issue or sell, as applicable) of such Option for such price per share. For purposes of this Section 2(b)(i), the “lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting, issuance or sale (or pursuant to the agreement to grant, issue or sell, as applicable) of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting, issuance or sale (or the agreement to grant, issue or sell, as applicable) of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms of or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.
(ii)    Issuance of Convertible Securities. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale (or the time of execution of such agreement to issue or sell, as applicable) of such Convertible Securities for such price per share. For the purposes of this Section 2(b)(ii), the “lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale (or pursuant to the agreement to issue or sell, as applicable) of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale (or the agreement to issue or sell, as applicable) of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issuance or sale
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of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(b), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.
(iii)    Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 2(a)), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 2(b)(iii), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that was outstanding as of the Issuance Date) are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(b) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.
(iv)    Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined jointly by the Holder and the Company), the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”), together comprising one integrated transaction, (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing) the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i) or 2(b)(ii) above, as applicable) in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value (as reasonably determined jointly by the Holder and the Company in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right, if any, and (III) the fair market value (as reasonably determined jointly by the Holder and the Company) of such Convertible Security, if any, in each case, as determined on a per share basis in accordance with this Section 2(b)(iv). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but
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not for the purpose of the calculation of the Black Scholes Consideration Value) will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be reasonably determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(v)    Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
(c)    Holder’s Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In addition to and not in limitation of the other provisions of this Section 2, if the Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, “Variable Price Securities”) after the Issuance Date that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price which varies or may vary with the market price of the shares of Common Stock, including by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends and similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable Price”), the Company shall provide written notice thereof via electronic mail and overnight courier to the Holder on the date of such agreement and the issuance of such Common Stock, Convertible Securities or Options. From and after the date the Company enters into such agreement or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price, as calculated pursuant to the agreements governing such Variable Price Securities, for the Exercise Price upon exercise of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that solely for purposes of such exercise the Holder is relying on the Variable Price rather than the Exercise Price then in effect, provided, however, that in no event shall the Exercise Price adjust to a price lower than the Floor Price as a result of this Section 2(c) of this Warrant. The Holder’s election to rely on a Variable Price for a particular exercise of
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this Warrant shall not obligate the Holder to rely on a Variable Price for any future exercises of this Warrant.
(d)    [Intentionally Omitted].
(e)    Other Events. In the event that the Company (or any Subsidiary (as defined in the Purchase Agreement)) shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from actual dilution or if any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s board of directors shall in good faith determine and implement an appropriate adjustment in the Exercise Price and the number of Warrant Shares (if applicable) so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 2(e) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2, provided further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and expenses shall be borne by the Company.
(f)    Calculations. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issuance or sale of Common Stock
(g)    Voluntary Adjustment By Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during the term of this Warrant, with the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
(h)    Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 2, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein). For the avoidance of doubt, the aggregate Exercise Price payable prior to such adjustment is calculated as follows: the total number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment (without regard to the Beneficial Ownership Limitation) multiplied by the Exercise Price in effect immediately prior to such adjustment. By way of example, if E is the total number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment (without regard to the Beneficial Ownership Limitation), F is the Exercise Price in effect immediately prior to such adjustment, and G is the Exercise Price in effect immediately after such adjustment, the adjustment to the number of Warrant Shares can be expressed in the following formula: Total number of Warrant Shares after such adjustment = the number obtained from dividing [E x F] by G.
(i)    Notice. In addition to all other notice(s) required under this Section 2, the Company shall also notify the Holder in writing, no later than the third Trading Day following any
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adjustment to the Warrant under this Section 2, indicating therein the occurrence of such applicable exercise price and warrant share adjustment (such notice the “Adjustment Notice”). For purposes of clarification, regardless of whether (i) the Company provides an Adjustment Notice pursuant to this Section 2 or (ii) the Holder accurately refers to the number of Warrant Shares or Exercise Price in the Exercise Notice, the Holder is entitled to receive the adjustments to the number of Warrant Shares and Exercise Price at all times on and after the date of such adjustment event.
3.    RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above or Section 4(a) below, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to the extent of the Beneficial Ownership Limitation (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
4.    PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a)    Purchase Rights. In addition to any adjustments pursuant to Sections 2 or 3 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to the extent of the Beneficial Ownership Limitation (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase Right to such extent shall be held in abeyance for the benefit of the
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Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).
(b)    Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the Company under this Warrant and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including, without limitation, which is exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such adjustments to the number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of the applicable Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of publicly traded common stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant. Notwithstanding the foregoing, and without limiting Section 1(c) hereof, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit the Fundamental Transaction without the assumption of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction but prior to the expiration of the Exercise Period, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder
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would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant) (the “Corporate Event Consideration”). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.
(c)    Black Scholes Value.
(i)    Change of Control Redemption. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the Holder delivered at any time commencing on the earliest to occur of (A) the public disclosure of any Change of Control, (B) the consummation of any Change of Control and (C) the Holder first becoming aware of any Change of Control through the date that is ninety (90) days after the public disclosure of the consummation of such Change of Control by the Company pursuant to a Report on Form 8-K or Report of Foreign Issuer on Form 6-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall exchange this Warrant for consideration equal to the Black Scholes Value of such portion of this Warrant subject to exchange (collectively, the “Aggregate Black Scholes Value”) in the form of, at the Holder’s election (such election to pay in cash or by delivery of the Rights (as defined below), a “Consideration Election”), either (I) rights (with a beneficial ownership limitation in the form of Section 1(c) hereof, mutatis mutandis) (collectively, the “Rights”), convertible in whole, or in part, at any time, without the requirement to pay any additional consideration, at the option of the Holder, into such Corporate Event Consideration applicable to such Change of Control equal in value to the Aggregate Black Scholes Value (as determined in accordance with Section 2(b)(iv) above, but with the aggregate number of Successor Shares (as defined below) issuable upon conversion of the Rights to be determined in increments of 10% (or such greater percentage as the Holder may notify the Company from time to time) of the portion of the Aggregate Black Scholes Value attributable to such Successor Shares (the “Successor Share Value Increment”), with the aggregate number of Successor Shares issuable upon exercise of the Rights with respect to the first Successor Share Value Increment determined based on 70% of the Closing Bid Price of the Successor Shares on the date the Rights are issued and on each of the nine (9) subsequent Trading Days, in each case, the aggregate number of additional Successor Shares issuable upon exercise of the Rights shall be determined based upon a Successor Share Value Increment at 70% of the Closing Bid Price of the Successor Shares in effect for such corresponding Trading Day (such ten (10) Trading Day period commencing on, and including, the date the Rights are issued, the “Rights Measuring Period”)), or (II) in cash; provided, that the Company shall not consummate a Change of Control if the Corporate Event Consideration includes share capital or other equity interest (the “Successor Shares”) either in an entity that is not listed on an Eligible Market or an entity in which the daily share volume for the applicable Successor Shares for each of the twenty (20) Trading Days prior to the date of consummation of such Change of Control is less than the aggregate number of Successor Shares issuable to the Holder upon conversion in full of the applicable Rights (without regard to any limitations on conversion therein, assuming the exercise in full of the Rights on the date of issuance of the Rights and assuming the Closing Bid Price of the Successor Shares for each Trading Day in the Rights Measuring Period is the Closing Bid Price on the Trading Day ended immediately prior to the time of consummation of the Change of Control). The Company shall give the Holder written notice of each Consideration Election at least twenty (20) Trading Days prior to the time of consummation of such Change of Control. Payment of such amounts or delivery of the Rights, as applicable, shall be made by the Company (or at the Company’s direction) to the Holder on or prior to the later of (x) the second (2nd) Trading Day after the date of such request and (y) the date of consummation of such Change of Control (or, with respect to
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any Right, if applicable, such later time that holders of Common Stock are initially entitled to receive Corporate Event Consideration with respect to the Common Stock of such holder). Any Corporate Event Consideration included in the Right, if any, pursuant to this Section 4(c)(i) is pari passu with the Corporate Event Consideration to be paid to holders of Common Stock and the Company shall not permit a payment of any Corporate Event Consideration to the holders of Common Stock without on or prior to such time delivering the Right to the Holder hereunder.
(ii)    Event of Default Redemption. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the Holder delivered at any time after the occurrence of an Event of Default (as defined in the Note) under the Note, the Company or the Successor Entity (as the case may be) shall purchase this Warrant from the Holder on the date of such request by paying to the Holder cash in an amount equal to the Event of Default Black Scholes Value.
(d)    Application. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Beneficial Ownership Limitation, applied however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of this Warrant (or any such other warrant)).
5.    NON-CIRCUMVENTION. The Company covenants and agrees that it will not, by amendment of its articles of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, for so long as this Warrant is outstanding, have authorized and reserved, free from preemptive rights, one and a half (1.5) times the number of shares of Common Stock into which the Warrants are then exercisable into to provide for the exercise of the rights represented by this Warrant (without regard to any limitations on exercise).
6.    WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.
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7.    REISSUANCE.
(a)    Lost, Stolen or Mutilated Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
(b)    Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date.
8.    TRANSFER. This Warrant shall be binding upon the Company and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Notwithstanding anything to the contrary herein, the rights, interests or obligations of the Company hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior signed written consent of the Holder, which consent may be withheld at the sole discretion of the Holder (any such assignment or transfer shall be null and void if the Company does not obtain the prior signed written consent of the Holder). This Warrant or any of the severable rights and obligations inuring to the benefit of or to be performed by Holder hereunder may be assigned by Holder to a third party, in whole or in part, without the need to obtain the Company’s consent thereto.
9.    NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with the notice provisions contained in the Purchase Agreement. The Company shall provide the Holder with prompt written notice (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, the calculation of such adjustment and (ii) at least 20 days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any stock or other securities directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock or other property, pro rata to the holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.
10.    DISCLOSURE. Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms of this Warrant, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city time on the Business Day immediately following such notice delivery date, publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this Section 10 shall limit any obligations of the Company, or any rights of the Holder, under the Purchase Agreement.
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11.    ABSENCE OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure agreement signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed, written non-disclosure agreement and subject to compliance with any applicable securities laws, the Company acknowledges that the Holder may freely trade in any securities issued by the Company, may possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information to any third party.
12.    AMENDMENT AND WAIVER. The terms of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) only with the signed written consent of the Company and the Holder.
13.    GOVERNING LAW AND VENUE. This Warrant shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Except as otherwise required by Section 15 of this Warrant, any action brought by the Company concerning the transactions contemplated by this Warrant or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in a state or federal court located in the State of Delaware. Any action brought by the Holder concerning the transactions contemplated by this Warrant or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in either (a) a state or federal court located in the State of Delaware, or (b) a state or federal court located in the Commonwealth of Massachusetts. Notwithstanding anything in the foregoing to the contrary, nothing herein (i) shall limit, or shall be deemed or construed to limit, the ability of the Holder to realize on any collateral or any other security, or to enforce a judgment or other court ruling in favor of the Holder, including through a legal action in any court of competent jurisdiction, or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 15 of this Warrant. The Company hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any objection to jurisdiction and venue of any action instituted hereunder, any claim that it is not personally subject to the jurisdiction of any such court, and any claim that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper (including but not limited to based upon forum non conveniens). THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTIONS CONTEMPLATED HEREBY. The Company irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Warrant or any other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to Company at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. The prevailing party in any action or dispute brought in connection with this Warrant or any other agreement, certificate, instrument or document contemplated hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s fees and costs. If any provision of this Warrant shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect
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the validity or enforceability of the remainder of this Warrant in that jurisdiction or the validity or enforceability of any provision of this Warrant in any other jurisdiction.
14.    ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.
15.    DISPUTE RESOLUTION.
(a)    Submission to Dispute Resolution.
(i)    In the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Closing Bid Price, Black Scholes Consideration Value, Event of Default Black Scholes Value, Black Scholes Value or fair market value or the arithmetic calculation of the number of Warrant Shares (as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other party via electronic mail (A) if by the Company, within two (2) Trading Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to agree upon such determination or calculation within two (2) Trading Days following such initial notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option, submit the dispute to an independent, reputable investment bank or independent, outside accountant selected by the Holder (the “Independent Third Party”), and the Company shall pay all expenses of such Independent Third Party.
(ii)    The Holder and the Company shall each deliver to such Independent Third Party (A) a copy of the initial dispute submission so delivered in accordance with the first sentence of this Section 15(a) and (B) written documentation supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by second (2nd) Business Day immediately following the date on which the Holder selected such Independent Third Party (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such Independent Third Party with respect to such dispute and such Independent Third Party shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such Independent Third Party prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such Independent Third Party, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such Independent Third Party in connection with such dispute, other than the Required Dispute Documentation.
(iii)    The Company and the Holder shall cause such Independent Third Party to determine the resolution of such dispute and notify the Company and the Holder of such resolution no later than five (5) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of such Independent Third Party shall be borne solely by the
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Company, and such Independent Third Party’s resolution of such dispute shall be final and binding upon all parties absent manifest error.
(b)    Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 15 constitutes an agreement to arbitrate between the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under the Delaware Rules of Civil Procedure (“DRCP”) and that the Holder is authorized to apply for an order to compel arbitration pursuant to the DRCP in order to compel compliance with this Section 15, (ii) a dispute relating to the Exercise Price includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 2, (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Warrant and each other applicable Transaction Document shall serve as the basis for the selected Independent Third Party’s resolution of the applicable dispute, such Independent Third Party shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such Independent Third Party determines are required to be made by such Independent Third Party in connection with its resolution of such dispute (including, without limitation, determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 2, (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E) whether a Dilutive Issuance occurred) and in resolving such dispute such Independent Third Party shall apply such findings, determinations and the like to the terms of this Warrant and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in its sole discretion, shall have the right to submit any dispute described in this Section 15 to any other jurisdiction provided for in Section 13 of this Warrant in lieu of utilizing the procedures set forth in this Section 15 and (v) nothing in this Section 15 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described in this Section 15).
16.    CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:
(a)    “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(b)    “Black Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option or Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv)
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an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).
(c)    “Black Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request pursuant to Section 4(c)(i), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of the applicable Change of Control (or the consummation of the applicable Change of Control, if earlier) and ending on the Trading Day of the Holder’s request pursuant to Section 4(c)(i) and (2) the sum of the price per share being offered in cash in the applicable Change of Control (if any) plus the value of the non-cash consideration being offered in the applicable Change of Control (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to Section 4(c)(i), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c)(i) and (2) the remaining term of this Warrant as of the date of consummation of the applicable Change of Control or as of the date of the Holder’s request pursuant to Section 4(c)(i) if such request is prior to the date of the consummation of the applicable Change of Control, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the earliest to occur of (A) the public disclosure of the applicable Change of Control and (B) the date of the Holder’s request pursuant to Section 4(c)(i).
(d)    “Bloomberg” means Bloomberg, L.P.
(e)    “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the State of Delaware are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in the State of Delaware generally are open for use by customers on such day.
(f)    “Change of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification, (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries or (iv) bone fide arm’s length acquisitions by the Company with one or more third parties as long as holders of the Company’s voting power as of the Issuance Date continue after such acquisition to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of at least 51% of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such acquisition.
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(g)    “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, (i) the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Quotestream or other similar quotation service provider designated by the Holder, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder, or (ii) if the foregoing does not apply, the last trade price of such security in the over-the-counter market for such security as reported by Quotestream or other similar quotation service provider designated by the Holder, or (iii) if no last trade price is reported for such security by Quotestream or other similar quotation service provider designated by the Holder, the average of the bid and ask prices of any market makers for such security as reported by Quotestream or other similar quotation service provider designated by the Holder. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 15. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
(h)    “Common Stock” means the Company’s Class A common stock, par value $0.0001, and any other class of securities into which such securities may hereafter be reclassified or changed.
(i)    “Common Stock Equivalents” means any securities of the Company that would entitle the holder thereof to acquire at any time Common Stock, including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
(j)    “Convertible Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.
(k)    “Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, Nasdaq Capital Market, or equivalent exchange.
(l)    [Intentionally Omitted].
(m)    “Event of Default Black Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request pursuant to Section 4(c)(ii), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the highest Closing Sale Price of the Common Stock during the period beginning on the date of the occurrence of the Event of Default through the date that the Note is extinguished in the entirety or, if earlier, the Trading Day of the Holder’s request pursuant to Section 4(c)(ii), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to Section 4(c)(ii), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c)(ii) and (2) the remaining term of this Warrant as of the date of the occurrence of such Event of Default, (iv) a zero cost of borrow and (v) an expected volatility equal
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to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following later of (x) the date of the occurrence of such Event of Default and (y) the date of the public announcement of such Event of Default.
(n)    “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(o)    “Floor Price” means the greater of (i) $2.00 (subject to appropriate adjustments for any stock dividend, stock split, stock combination, recapitalization or other similar transaction) or (ii) the Closing Bid Price of the Common Stock on the date of any Event of Default under the Note.
(p)    “Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other
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shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
(q)    “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(r)    “Person” and “Persons” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or any department or agency thereof.
(s)    “Principal Market” means the principal securities exchange or trading market where such Common Stock is listed or quoted, including but not limited to any tier of the OTC Markets, any tier of the NASDAQ Stock Market (including NASDAQ Capital Market), or the NYSE American, or any successor to such markets.
(t)    “Market Price” means the highest traded price of the Common Stock during the thirty Trading Days prior to the date of the respective Exercise Notice.
(u)    “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.
(v)    “Trading Day” means any day on which the Common Stock is listed or quoted on its Principal Market, provided, however, that if the Common Stock is not then listed or quoted on any Principal Market, then any calendar day.
(w)    “Triggering Event” means the occurrence of the earlier of (i) the Company’s failure to pay any Amortization Payment (as defined in the Note) or (ii) an Event of Default under Section 3.1, 3.7, 3.8, 3.10, or 3.18 of the Note.
(x)    “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder through its “VAP” function (set to 09:30 start time and 16:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder, or, if no dollar volume-weighted average price is reported for
21


such security by Quotestream or other similar quotation service provider designated by the Holder for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 15. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
* * * * * * *
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the Issuance Date set forth above.
ALPINE 4 HOLDINGS, INC.
/s/ Kent Wilson
Name: Kent Wilson
Title: Chief Executive Officer



EXHIBIT A
EXERCISE NOTICE
(To be executed by the registered holder to exercise this Common Stock Purchase Warrant)
THE UNDERSIGNED holder hereby exercises the right to purchase________________of the shares of Common Stock (“Warrant Shares”) of ALPINE 4 HOLDINGS, INC., a Delaware corporation (the “Company”), evidenced by the attached copy of the Common Stock Purchase Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1.    Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as (check one):
o    a cash exercise with respect to_______________Warrant Shares; or
o    by cashless exercise pursuant to the Warrant.
2.    Payment of Exercise Price. If cash exercise is selected above, the holder shall pay the applicable Aggregate Exercise Price in the sum of $_________________to the Company in accordance with the terms of the Warrant.
3.    Delivery of Warrant Shares. The Company shall deliver to the holder________________Warrant Shares in accordance with the terms of the Warrant.
Date:
(Print Name of Registered Holder)
By:
Name:
Title:



EXHIBIT B
ASSIGNMENT OF WARRANT
(To be signed only upon authorized transfer of the Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto _________________the right to purchase__________________shares of common stock of ALPINE 4 HOLDINGS, INC., to which the within Common Stock Purchase Warrant relates and appoints_____, as attorney-in-fact, to transfer said right on the books of ALPINE 4 HOLDINGS, INC. with full power of substitution and re-substitution in the premises. By accepting such transfer, the transferee has agreed to be bound in all respects by the terms and conditions of the within Warrant.
Dated:
(Signature) *
(Name)
(Address)
(Social Security or Tax Identification No.)
* The signature on this Assignment of Warrant must correspond to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

Exhibit 4.5
NEITHER THIS SECURITY NOR THE SECURITIES AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
ALPINE 4 HOLDINGS, INC.
Warrant Shares: 3,579
Date of Issuance: June 29, 2023 (“Issuance Date”)
This COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received (in connection with the services provided by Holder (as defined below) in accordance with the fee agreement by and between the Company (as defined below) and Holder dated on or around June 15, 2023 (the “Fee Agreement”)), J.H. Darbie & Co., Inc., a New York corporation (including any permitted and registered assigns, the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from ALPINE 4 HOLDINGS, INC., a Delaware corporation (the “Company”), 3,579 shares of Common Stock (the “Warrant Shares”) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the Exercise Price per share then in effect. This Warrant is issued by the Company as of the date hereof in connection with the Fee Agreement as a result of the consummation of the transactions contemplated by that certain securities purchase agreement dated June 29, 2023, by and among the Company and Mast Hill Fund, L.P., a Delaware limited partnership (the “Investor”) (the “Purchase Agreement”), and the Company’s issuance of that certain senior promissory note in the original principal amount of $1,670,000 to the Investor (the “Note”).
Capitalized terms used in this Warrant shall have the meanings set forth in the Purchase Agreement unless otherwise defined in the body of this Warrant or in Section 16 below. For purposes of this Warrant, the term “Exercise Price” shall mean $4.20, subject to adjustment as provided herein (including but not limited to cashless exercise), and the term “Exercise Period” shall mean the period commencing on the Issuance Date and ending on 5:00 p.m. eastern standard time on the five-year anniversary thereof. This Warrant will terminate automatically and immediately upon the expiration of the Exercise Period.
1.EXERCISE OF WARRANT.
(a)Mechanics of Exercise. Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in whole or in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of
1


the Holder’s election to exercise this Warrant. The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. On or before the second Trading Day (the “Warrant Share Delivery Date”) following the date on which the Holder sent the Exercise Notice to the Company or the Company’s transfer agent, and upon receipt by the Company of payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which all or a portion of this Warrant is being exercised (the “Aggregate Exercise Price” and together with the Exercise Notice, the “Exercise Delivery Documents”) in cash or by wire transfer of immediately available funds (or by cashless exercise, in which case there shall be no Aggregate Exercise Price provided), the Company shall (or direct its transfer agent to) issue and deliver by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise (or deliver such shares of Common Stock in electronic format if requested by the Holder). Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 7) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.
If the Company fails to cause its transfer agent to issue to the Holder the respective shares of Common Stock by the respective Warrant Share Delivery Date (such failure shall be referred to herein as a “Warrant Event of Default”), then the Holder will have the right to rescind such exercise in Holder’s sole discretion in addition to all other rights and remedies at law, under this Warrant, or otherwise, and such failure shall also be deemed a material breach of the Fee Agreement.
If the Market Price of one share of Common Stock is greater than the Exercise Price, then, unless there is an effective non-stale registration statement of the Company which contains a prospectus that complies with Section 5(b) and Section 10 of the Securities Act of 1933 at the time of exercise and covers the Holder’s immediate resale of all of the Warrant Shares at prevailing market prices (and not fixed prices) without any limitation, the Holder may elect to receive Warrant Shares pursuant to a cashless exercise, in lieu of a cash exercise, equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant and an Exercise Notice, in which event the Company shall issue to Holder a number of Common Stock computed using the following formula:
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X = Y (A-B)
A
Where X =the number of Shares to be issued to Holder.
Y =the number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such calculation).
A =the Market Price (at the date of such calculation).
B =Exercise Price (as adjusted to the date of such calculation).
(b)No Fractional Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then-current fair market value of a Warrant Share by such fraction.
(c)Holder’s Exercise Limitations; Exchange Cap. Notwithstanding anything to the contrary contained herein, the Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 1 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Exercise Notice, the Holder (together with the Holder’s Affiliates), and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 1(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Holder is solely responsible for any schedules required to be filed in accordance therewith. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 1(c), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
3


shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding at the time of the respective calculation hereunder. In the event that the Company is prohibited from issuing any shares of Common Stock pursuant to this Warrant due to the Company’s failure to obtain the Shareholder Approval (such number of shares that are prohibited from being issued are referred to herein as the “Exchange Cap Shares”), in lieu of issuing and delivering such Exchange Cap Shares to the Holder, the Company shall pay cash to the Holder in exchange for the cancellation of such portion of this Warrant exercisable into such Exchange Cap Shares (the “Exchange Cap Payment Amount”) at a price equal to the sum of (x) the product of (A) such number of Exchange Cap Shares and (B) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Exercise Notice with respect to such Exchange Cap Shares to the Company and ending on the date of the aforementioned payment under this Section 1(c) and (y) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Exchange Cap Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
(d)Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Company’s transfer agent to transmit to the Holder the Warrant Shares in accordance with the provisions of this Warrant (including but not limited to Section 1(a) above pursuant to an exercise on or before the respective Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder, within one (1) Business Day of Holder’s request, the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the product of (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder within one (1) Business Day of Holder’s request the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases, or effectuates a cashless exercise hereunder for, Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
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2.ADJUSTMENTS. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a)Stock Dividends and Splits. Without limiting any provision of Section 2(b), Section 3 or Section 4, if the Company, at any time on or after the Issuance Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one or more classes of its then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price and the Floor Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.
(b)Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or after the Issuance Date, the Company grants, issues or sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 2 is deemed to have granted, issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company) for a consideration per share (the “New Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale (such Exercise Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then upon a Triggering Event (as defined in this Warrant), the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price (for the avoidance of doubt, if a Triggering Event occurs, the Holder shall be entitled to the rights hereunder for each Dilutive Issuance that occurred on or after the Issuance Date (including but not limited to each Dilutive Issuance that occurred prior to the Triggering Event), provided, however, that in no event shall the Exercise Price adjust to a price lower than the Floor Price as a result of this Section 2(b) of this Warrant. For all purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under this Section 2(b)), the following shall be applicable:
(i)Issuance of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any Options and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting, issuance or sale (or the time of execution of such agreement to grant, issue or sell, as applicable) of such Option for such price per share. For purposes of this Section 2(b)(i), the “lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the
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lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting, issuance or sale (or pursuant to the agreement to grant, issue or sell, as applicable) of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting, issuance or sale (or the agreement to grant, issue or sell, as applicable) of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms of or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.
(ii)Issuance of Convertible Securities. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale (or the time of execution of such agreement to issue or sell, as applicable) of such Convertible Securities for such price per share. For the purposes of this Section 2(b)(ii), the “lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale (or pursuant to the agreement to issue or sell, as applicable) of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale (or the agreement to issue or sell, as applicable) of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(b), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.
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(iii)Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 2(a)), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 2(b)(iii), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that was outstanding as of the Issuance Date) are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(b) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.
(iv)Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined jointly by the Holder and the Company), the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”), together comprising one integrated transaction, (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing) the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i) or 2(b)(ii) above, as applicable) in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value (as reasonably determined jointly by the Holder and the Company in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right, if any, and (III) the fair market value (as reasonably determined jointly by the Holder and the Company) of such Convertible Security, if any, in each case, as determined on a per share basis in accordance with this Section 2(b)(iv). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or
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Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be reasonably determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(v)Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
(c)Holder’s Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In addition to and not in limitation of the other provisions of this Section 2, if the Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, “Variable Price Securities”) after the Issuance Date that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price which varies or may vary with the market price of the shares of Common Stock, including by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends and similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable Price”), the Company shall provide written notice thereof via electronic mail and overnight courier to the Holder on the date of such agreement and the issuance of such Common Stock, Convertible Securities or Options. From and after the date the Company enters into such agreement or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price, as calculated pursuant to the agreements governing such Variable Price Securities, for the Exercise Price upon exercise of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that solely for purposes of such exercise the Holder is relying on the Variable Price rather than the Exercise Price then in effect, provided, however, that in no event shall the Exercise Price adjust to a price lower than the Floor Price as a result of this Section 2(c) of this Warrant. The Holder’s election to rely on a Variable Price for a particular exercise of this Warrant shall not obligate the Holder to rely on a Variable Price for any future exercises of this Warrant.
(d)[Intentionally Omitted].
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(e)Other Events. In the event that the Company (or any Subsidiary (as defined in the Purchase Agreement)) shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from actual dilution or if any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s board of directors shall in good faith determine and implement an appropriate adjustment in the Exercise Price and the number of Warrant Shares (if applicable) so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 2(e) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2, provided further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and expenses shall be borne by the Company.
(f)Calculations. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issuance or sale of Common Stock
(g)Voluntary Adjustment By Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during the term of this Warrant, with the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
(h)Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 2, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein). For the avoidance of doubt, the aggregate Exercise Price payable prior to such adjustment is calculated as follows: the total number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment (without regard to the Beneficial Ownership Limitation) multiplied by the Exercise Price in effect immediately prior to such adjustment. By way of example, if E is the total number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment (without regard to the Beneficial Ownership Limitation), F is the Exercise Price in effect immediately prior to such adjustment, and G is the Exercise Price in effect immediately after such adjustment, the adjustment to the number of Warrant Shares can be expressed in the following formula: Total number of Warrant Shares after such adjustment = the number obtained from dividing [E x F] by G.
(i)Notice. In addition to all other notice(s) required under this Section 2, the Company shall also notify the Holder in writing, no later than the third Trading Day following any adjustment to the Warrant under this Section 2, indicating therein the occurrence of such applicable exercise price and warrant share adjustment (such notice the “Adjustment Notice”). For purposes of clarification, regardless of whether (i) the Company provides an Adjustment Notice pursuant to this Section 2 or (ii) the Holder accurately refers to the number of Warrant Shares or Exercise Price in the
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Exercise Notice, the Holder is entitled to receive the adjustments to the number of Warrant Shares and Exercise Price at all times on and after the date of such adjustment event.
3.RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above or Section 4(a) below, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to the extent of the Beneficial Ownership Limitation (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
4.PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a)Purchase Rights. In addition to any adjustments pursuant to Sections 2 or 3 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to the extent of the Beneficial Ownership Limitation (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase Right to such extent shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right
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or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).
(b)Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the Company under this Warrant and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including, without limitation, which is exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such adjustments to the number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of the applicable Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of publicly traded common stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant. Notwithstanding the foregoing, and without limiting Section 1(c) hereof, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit the Fundamental Transaction without the assumption of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction but prior to the expiration of the Exercise Period, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant) (the “Corporate Event Consideration”). Provision
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made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.
(c)Black Scholes Value.
(i)Change of Control Redemption. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the Holder delivered at any time commencing on the earliest to occur of (A) the public disclosure of any Change of Control, (B) the consummation of any Change of Control and (C) the Holder first becoming aware of any Change of Control through the date that is ninety (90) days after the public disclosure of the consummation of such Change of Control by the Company pursuant to a Report on Form 8-K or Report of Foreign Issuer on Form 6-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall exchange this Warrant for consideration equal to the Black Scholes Value of such portion of this Warrant subject to exchange (collectively, the “Aggregate Black Scholes Value”) in the form of, at the Holder’s election (such election to pay in cash or by delivery of the Rights (as defined below), a “Consideration Election”), either (I) rights (with a beneficial ownership limitation in the form of Section 1(c) hereof, mutatis mutandis) (collectively, the “Rights”), convertible in whole, or in part, at any time, without the requirement to pay any additional consideration, at the option of the Holder, into such Corporate Event Consideration applicable to such Change of Control equal in value to the Aggregate Black Scholes Value (as determined in accordance with Section 2(b)(iv) above, but with the aggregate number of Successor Shares (as defined below) issuable upon conversion of the Rights to be determined in increments of 10% (or such greater percentage as the Holder may notify the Company from time to time) of the portion of the Aggregate Black Scholes Value attributable to such Successor Shares (the “Successor Share Value Increment”), with the aggregate number of Successor Shares issuable upon exercise of the Rights with respect to the first Successor Share Value Increment determined based on 70% of the Closing Bid Price of the Successor Shares on the date the Rights are issued and on each of the nine (9) subsequent Trading Days, in each case, the aggregate number of additional Successor Shares issuable upon exercise of the Rights shall be determined based upon a Successor Share Value Increment at 70% of the Closing Bid Price of the Successor Shares in effect for such corresponding Trading Day (such ten (10) Trading Day period commencing on, and including, the date the Rights are issued, the “Rights Measuring Period”)), or (II) in cash; provided, that the Company shall not consummate a Change of Control if the Corporate Event Consideration includes share capital or other equity interest (the “Successor Shares”) either in an entity that is not listed on an Eligible Market or an entity in which the daily share volume for the applicable Successor Shares for each of the twenty (20) Trading Days prior to the date of consummation of such Change of Control is less than the aggregate number of Successor Shares issuable to the Holder upon conversion in full of the applicable Rights (without regard to any limitations on conversion therein, assuming the exercise in full of the Rights on the date of issuance of the Rights and assuming the Closing Bid Price of the Successor Shares for each Trading Day in the Rights Measuring Period is the Closing Bid Price on the Trading Day ended immediately prior to the time of consummation of the Change of Control). The Company shall give the Holder written notice of each Consideration Election at least twenty (20) Trading Days prior to the time of consummation of such Change of Control. Payment of such amounts or delivery of the Rights, as applicable, shall be made by the Company (or at the Company’s direction) to the Holder on or prior to the later of (x) the second (2nd) Trading Day after the date of such request and (y) the date of consummation of such Change of Control (or, with respect to any Right, if applicable, such later time that holders of Common Stock are initially entitled to receive Corporate Event Consideration with respect to the Common Stock of such holder). Any
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Corporate Event Consideration included in the Right, if any, pursuant to this Section 4(c)(i) is pari passu with the Corporate Event Consideration to be paid to holders of Common Stock and the Company shall not permit a payment of any Corporate Event Consideration to the holders of Common Stock without on or prior to such time delivering the Right to the Holder hereunder.
(ii)Warrant Event of Default Redemption. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the Holder delivered at any time after the occurrence of a Warrant Event of Default, the Company or the Successor Entity (as the case may be) shall purchase this Warrant from the Holder on the date of such request by paying to the Holder cash in an amount equal to the Event of Default Black Scholes Value.
(d)Application. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Beneficial Ownership Limitation, applied however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of this Warrant (or any such other warrant)).
5.NON-CIRCUMVENTION. The Company covenants and agrees that it will not, by amendment of its articles of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, for so long as this Warrant is outstanding, have authorized and reserved, free from preemptive rights, one and a half (1.5) times the number of shares of Common Stock into which the Warrants are then exercisable into to provide for the exercise of the rights represented by this Warrant (without regard to any limitations on exercise).
6.WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.
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7.REISSUANCE.
(a)Lost, Stolen or Mutilated Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
(b)Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date.
8.TRANSFER. This Warrant shall be binding upon the Company and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Notwithstanding anything to the contrary herein, the rights, interests or obligations of the Company hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior signed written consent of the Holder, which consent may be withheld at the sole discretion of the Holder (any such assignment or transfer shall be null and void if the Company does not obtain the prior signed written consent of the Holder). This Warrant or any of the severable rights and obligations inuring to the benefit of or to be performed by Holder hereunder may be assigned by Holder to a third party, in whole or in part, without the need to obtain the Company’s consent thereto.
9.NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with the notice provisions contained in the Purchase Agreement. The Company shall provide the Holder with prompt written notice (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, the calculation of such adjustment and (ii) at least 20 days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any stock or other securities directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock or other property, pro rata to the holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.
10.DISCLOSURE. Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms of this Warrant, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city time on the Business Day immediately following such notice delivery date, publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this Section 10 shall limit any obligations of the Company, or any rights of the Holder, under the Purchase Agreement.
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11.ABSENCE OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure agreement signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed, written non-disclosure agreement and subject to compliance with any applicable securities laws, the Company acknowledges that the Holder may freely trade in any securities issued by the Company, may possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information to any third party.
12.AMENDMENT AND WAIVER. The terms of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) only with the signed written consent of the Company and the Holder.
13.GOVERNING LAW AND VENUE. This Warrant shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Except as otherwise required by Section 15 of this Warrant, any action brought by the Company concerning the transactions contemplated by this Warrant or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in a state or federal court located in the State of Delaware. Any action brought by the Holder concerning the transactions contemplated by this Warrant or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in either (a) a state or federal court located in the State of Delaware, or (b) a state or federal court located in the Commonwealth of Massachusetts. Notwithstanding anything in the foregoing to the contrary, nothing herein (i) shall limit, or shall be deemed or construed to limit, the ability of the Holder to realize on any collateral or any other security, or to enforce a judgment or other court ruling in favor of the Holder, including through a legal action in any court of competent jurisdiction, or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 15 of this Warrant. The Company hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any objection to jurisdiction and venue of any action instituted hereunder, any claim that it is not personally subject to the jurisdiction of any such court, and any claim that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper (including but not limited to based upon forum non conveniens). THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTIONS CONTEMPLATED HEREBY. The Company irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Warrant or any other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to Company at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. The prevailing party in any action or dispute brought in connection with this Warrant or any other agreement, certificate, instrument or document contemplated hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s fees and costs. If any provision of this Warrant shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not
15


affect the validity or enforceability of the remainder of this Warrant in that jurisdiction or the validity or enforceability of any provision of this Warrant in any other jurisdiction.
14.ACCEPTANCE.    Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.
15.DISPUTE RESOLUTION.
(a)Submission to Dispute Resolution.
(i)In the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Closing Bid Price, Black Scholes Consideration Value, Event of Default Black Scholes Value, Black Scholes Value or fair market value or the arithmetic calculation of the number of Warrant Shares (as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other party via electronic mail (A) if by the Company, within two (2) Trading Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to agree upon such determination or calculation within two (2) Trading Days following such initial notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option, submit the dispute to an independent, reputable investment bank or independent, outside accountant selected by the Holder (the “Independent Third Party”), and the Company shall pay all expenses of such Independent Third Party.
(ii)The Holder and the Company shall each deliver to such Independent Third Party (A) a copy of the initial dispute submission so delivered in accordance with the first sentence of this Section 15(a) and (B) written documentation supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by second (2nd) Business Day immediately following the date on which the Holder selected such Independent Third Party (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such Independent Third Party with respect to such dispute and such Independent Third Party shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such Independent Third Party prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such Independent Third Party, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such Independent Third Party in connection with such dispute, other than the Required Dispute Documentation.
(iii)The Company and the Holder shall cause such Independent Third Party to determine the resolution of such dispute and notify the Company and the Holder of such resolution no later than five (5) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of such Independent Third Party shall be borne solely by the
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Company, and such Independent Third Party’s resolution of such dispute shall be final and binding upon all parties absent manifest error.
(b)Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 15 constitutes an agreement to arbitrate between the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under the Delaware Rules of Civil Procedure (“DRCP”) and that the Holder is authorized to apply for an order to compel arbitration pursuant to the DRCP in order to compel compliance with this Section 15, (ii) a dispute relating to the Exercise Price includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 2, (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Warrant and each other applicable Transaction Document shall serve as the basis for the selected Independent Third Party’s resolution of the applicable dispute, such Independent Third Party shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such Independent Third Party determines are required to be made by such Independent Third Party in connection with its resolution of such dispute (including, without limitation, determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 2, (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E) whether a Dilutive Issuance occurred) and in resolving such dispute such Independent Third Party shall apply such findings, determinations and the like to the terms of this Warrant and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in its sole discretion, shall have the right to submit any dispute described in this Section 15 to any other jurisdiction provided for in Section 13 of this Warrant in lieu of utilizing the procedures set forth in this Section 15 and (v) nothing in this Section 15 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described in this Section 15).
16.CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:
(a)Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(b)Black Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option or Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such
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Option, Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).
(c)Black Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request pursuant to Section 4(c)(i), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of the applicable Change of Control (or the consummation of the applicable Change of Control, if earlier) and ending on the Trading Day of the Holder’s request pursuant to Section 4(c)(i) and (2) the sum of the price per share being offered in cash in the applicable Change of Control (if any) plus the value of the non-cash consideration being offered in the applicable Change of Control (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to Section 4(c)(i), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c)(i) and (2) the remaining term of this Warrant as of the date of consummation of the applicable Change of Control or as of the date of the Holder’s request pursuant to Section 4(c)(i) if such request is prior to the date of the consummation of the applicable Change of Control, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the earliest to occur of (A) the public disclosure of the applicable Change of Control and (B) the date of the Holder’s request pursuant to Section 4(c)(i).
(d)Bloomberg” means Bloomberg, L.P.
(e)Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the State of Delaware are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”  or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in the State of Delaware generally are open for use by customers on such day.
(f)Change of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification, (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries or (iv) bone fide arm’s length acquisitions by the Company with one or more third parties as long as holders of the Company’s voting power as of the Issuance Date continue after such acquisition to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of at
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least 51% of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such acquisition.
(g)Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, (i) the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Quotestream or other similar quotation service provider designated by the Holder, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder, or (ii) if the foregoing does not apply, the last trade price of such security in the over-the-counter market for such security as reported by Quotestream or other similar quotation service provider designated by the Holder, or (iii) if no last trade price is reported for such security by Quotestream or other similar quotation service provider designated by the Holder, the average of the bid and ask prices of any market makers for such security as reported by Quotestream or other similar quotation service provider designated by the Holder. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 15. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
(h)Common Stock” means the Company’s Class A common stock, par value $0.0001, and any other class of securities into which such securities may hereafter be reclassified or changed.
(i)Common Stock Equivalents” means any securities of the Company that would entitle the holder thereof to acquire at any time Common Stock, including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
(j)Convertible Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.
(k)Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, Nasdaq Capital Market, or equivalent exchange.
(l)[Intentionally Omitted].
(m)Event of Default Black Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request pursuant to Section 4(c)(ii), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the highest Closing Sale Price of the Common Stock during the period beginning on the date of the occurrence of the Warrant Event of Default through the date that the Note is extinguished in the entirety or, if earlier, the Trading Day of the Holder’s request pursuant to Section 4(c)(ii), (ii) a strike price equal to the Exercise Price in effect on the date of
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the Holder’s request pursuant to Section 4(c)(ii), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c)(ii) and (2) the remaining term of this Warrant as of the date of the occurrence of such Warrant Event of Default, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following later of (x) the date of the occurrence of such Warrant Event of Default and (y) the date of the public announcement of such Warrant Event of Default.
(n)Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(o)Floor Price” means the greater of (i) $2.00 (subject to appropriate adjustments for any stock dividend, stock split, stock combination, recapitalization or other similar transaction) or (ii) the Closing Bid Price of the Common Stock on the date of any Event of Default (as defined in the Note) under the Note.
(p)Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting
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power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
(q)Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(r)Person” and “Persons” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or any department or agency thereof.
(s)Principal Market” means the principal securities exchange or trading market where such Common Stock is listed or quoted, including but not limited to any tier of the OTC Markets, any tier of the NASDAQ Stock Market (including NASDAQ Capital Market), or the NYSE American, or any successor to such markets.
(t)Market Price” means the highest traded price of the Common Stock during the thirty Trading Days prior to the date of the respective Exercise Notice.
(u)Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.
(v)Trading Day” means any day on which the Common Stock is listed or quoted on its Principal Market, provided, however, that if the Common Stock is not then listed or quoted on any Principal Market, then any calendar day.
(w)Triggering Event” means the occurrence of the earlier of (i) the Company’s failure to pay any Amortization Payment (as defined in the Note) or (ii) an Event of Default (as defined in the Note) under Section 3.1, 3.7, 3.8, 3.10, or 3.18 of the Note.
(x)VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated
21


by the Holder through its “VAP” function (set to 09:30 start time and 16:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder, or, if no dollar volume-weighted average price is reported for such security by Quotestream or other similar quotation service provider designated by the Holder for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 15. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
*  *  *  *  *  *  *
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the Issuance Date set forth above.
ALPINE 4 HOLDINGS, INC.
/s/ Kent Wilson
Name: Kent Wilson
Title: Chief Executive Officer



EXHIBIT A
EXERCISE NOTICE
(To be executed by the registered holder to exercise this Common Stock Purchase Warrant)
THE UNDERSIGNED holder hereby exercises the right to purchase     of the shares of Common Stock (“Warrant Shares”) of ALPINE 4 HOLDINGS, INC., a Delaware corporation (the “Company”), evidenced by the attached copy of the Common Stock Purchase Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1.Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as (check one):
a cash exercise with respect to_______________Warrant Shares; or
by cashless exercise pursuant to the Warrant.
2.Payment of Exercise Price. If cash exercise is selected above, the holder shall pay the applicable Aggregate Exercise Price in the sum of $_______________to the Company in accordance with the terms of the Warrant.
3.Delivery of Warrant Shares. The Company shall deliver to the holder_______________Warrant Shares in accordance with the terms of the Warrant.
Date:
(Print Name of Registered Holder)
By:
Name:
Title:



EXHIBIT B
ASSIGNMENT OF WARRANT
(To be signed only upon authorized transfer of the Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto ____________________ the right to purchase_______________shares of common stock of ALPINE 4 HOLDINGS, INC., to which the within Common Stock Purchase Warrant relates and appoints_____, as attorney-in-fact, to transfer said right on the books of ALPINE 4 HOLDINGS, INC. with full power of substitution and re-substitution in the premises. By accepting such transfer, the transferee has agreed to be bound in all respects by the terms and conditions of the within Warrant.
Dated:
(Signature) *
(Name)
(Address)
(Social Security or Tax Identification No.)
* The signature on this Assignment of Warrant must correspond to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

Exhibit 10.32
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of June 29, 2023, by and between ALPINE 4 HOLDINGS, INC., a Delaware corporation, with headquarters located at 2525 E Arizona Biltmore Circle, Suite 237, Phoenix, AZ 85016 (the “Company”), and MAST HILL FUND, L.P., a Delaware limited partnership, with its address at 48 Parker Road, Wellesley, MA 02482 (the “Buyer”).
WHEREAS:
A.    The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”) and Rule 506(b) promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act;
B.    Buyer desires to purchase from the Company, and the Company desires to issue and sell to the Buyer, upon the terms and conditions set forth in this Agreement, a promissory note of the Company, in the aggregate principal amount of $1,670,000.00 (as the principal amount thereof may be increased pursuant to the terms thereof, and together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, in the form attached hereto as Exhibit A, the “Note”), convertible into shares of Class A common stock, $0.0001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note; and
C.    The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of the Note as is set forth immediately below its name on the signature pages hereto; and
D.    The Company wishes to issue a common stock purchase warrant to purchase 200,000 shares of Common Stock (the “Warrant”), 67,400 shares of Common Stock (the “First Commitment Shares”), and 1,200,000 shares of Common Stock (the “Second Commitment Shares”, and together with the First Commitment Shares, the “Commitment Shares”) to the Buyer as additional consideration for the purchase of the Note, which all shall be earned in full as of the Closing Date, as further provided herein and subject to the terms of this Agreement (including but not limited to Section 1A of this Agreement); and
E.    In connection with this Agreement, the Company and the Buyer have entered into a registration rights agreement (the “Registration Rights Agreement”), a form of which is attached hereto as Exhibit C, in each case on the date of this Agreement.
NOW THEREFORE, in consideration of the foregoing and of the agreements and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Buyer hereby agree as follows:
1.    Purchase and Sale of Note.
a.    Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer, and the Buyer agrees to purchase from the Company, the Note, as further provided herein. As used in this Agreement, the term “business day” shall mean any day other than a Saturday, Sunday, or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed.
b.    Form of Payment. On the Closing Date: (i) the Buyer shall pay the purchase price of $1,503,000.00 (the “Purchase Price”) for the Note, to be issued and sold to it at the Closing (as defined below), by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note, and (ii) the Company shall deliver such duly executed Note and Warrant on behalf of the Company, to the Buyer, against delivery of such Purchase Price. On the Closing Date, the Buyer shall withhold a non-accountable sum of $15,000.00 from the Purchase Price to cover the Buyer’s legal fees in connection with the transactions contemplated by this Agreement. On the Closing, the Buyer shall also withhold a
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sum of $60,120.00 from the Purchase Price to cover the Company’s fees owed to J. H. Darbie & Co., a registered broker-dealer (CRD#: 43520), in connection with the transactions contemplated by this Agreement.
c.    Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be on the date that the Purchase Price for the Note is paid by Buyer pursuant to terms of this Agreement.
d.    Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties (including via exchange of electronic signatures).
1A.    Warrant; Commitment Shares. On or before the Closing Date, the Company shall issue the Warrant to the Buyer pursuant to the terms contained therein as well as the Commitment Shares to the Buyer. If (i) the Note is repaid in the entirety on or before the Maturity Date (as defined in the Note), (ii) an Event of Default (as defined in the Note) has not occurred under Section 3.1, 3.7, 3.10, or 3.18 of the Note, (iii) the Company timely pays each Amortization Payment (as defined in the Note) as required under the Note, and (iv) a Delinquency Event (as defined below) has not occurred, then the Second Commitment Shares shall be cancelled and returned to the Company’s treasury. Accordingly, if (i) the Note is not repaid in the entirety on or before the Maturity Date (as defined in the Note), (ii) an Event of Default (as defined in the Note) occurs under Section 3.1, 3.7, 3.10, or 3.18 of the Note, (iii) Company fails to timely pay any Amortization Payment (as defined in the Note) as required under the Note (in each such case, a “Trigger Event”), or (iv) a Delinquency Event occurs, then the Second Commitment Shares shall not be cancelled or returned to the Company’s treasury under any circumstances. “Delinquency Event” means that the Company fails to comply with the reporting requirements of the 1934 Act and/or ceases to be subject to the reporting requirements of the 1934 Act, and in each such case is not cured within ninety (90) calendar days after the occurrence of the respective event.
2.    Buyer’s Representations and Warranties. The Buyer represents and warrants to the Company as of the Closing Date that:
a.    Investment Purpose. As of the Closing Date, the Buyer is purchasing the Note, Commitment Shares, and Warrant (the Note, Commitment Shares, Warrant, shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (the “Conversion Shares”), and shares of Common Stock issuable upon exercise of or otherwise pursuant to the Warrant (the “Exercise Shares”) shall collectively be referred to herein as the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.
b.    Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).
c.    Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.
d.    Information. The Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will continue to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will continue to be, afforded the opportunity to ask questions of the Company regarding its business and affairs. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information regarding the Company or otherwise and will not disclose such information unless such information is disclosed to
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the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below.
e.    Governmental Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities.
f.    Transfer or Re-sale. The Buyer understands that (i) the sale or resale of the Securities has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company, at the cost of the Company, an opinion of counsel (which may be the Legal Counsel Opinion (as defined below)) that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”)) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144 or other applicable exemption, or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company, at the cost of the Company, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged in connection with a bona fide margin account or other lending arrangement secured by the Securities, and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and the Buyer in effecting such pledge of Securities shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or otherwise. Notwithstanding the foregoing or anything else contained herein to the contrary, Buyer agrees that at any time prior to the occurrence of a Trigger Event, it shall not transfer the Second Commitment Shares pursuant to any provision of this Section 2f, and shall not act pursuant to the provisions of Section 2g with respect to the Second Commitment Shares, or submit to the Company or the Company’s transfer agent an opinion of counsel to remove any restrictive legend from the Second Commitment Shares.
g.    Legends. The Buyer understands that until such time as the Note, Warrant, Commitment Shares, Conversion Shares, and/or Exercise Shares, have been registered under the 1933 Act or may be sold pursuant to Rule 144, Rule 144A under the 1933 Act, Regulation S, or other applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Securities may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such Securities):
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE/EXERCISABLE] HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM,
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THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A, REGULATION S, OR OTHER APPLICABLE EXEMPTION UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
The legend set forth above shall be removed and the Company shall issue a certificate or book entry statement for the applicable shares of Common Stock without such legend to the holder of any Security upon which it is stamped or (as requested by such holder) issue the applicable shares of Common Stock to such holder by electronic delivery by crediting the account of such holder’s broker with The Depository Trust Company (“DTC”), if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) the Company or the Buyer provides the Legal Counsel Opinion (as contemplated by and in accordance with Section 4(l) hereof) to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected. The Company shall be responsible for the fees of its transfer agent and all DTC fees associated with any such issuance. The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144, Rule 144A, Regulation S, or other applicable exemption at the Deadline (as defined in the Note), it will be considered an Event of Default pursuant to Section 3.2 of the Note.
h.    Authorization; Enforcement. This Agreement has been duly and validly authorized by the Buyer and has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and except as may be limited by the exercise of judicial discretion in applying principles of equity.
3.    Representations and Warranties of the Company. The Company represents and warrants to the Buyer as of the Closing Date that:
a.    Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or formed, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. The SEC Documents set forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each is incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest.
b.    Authorization; Enforcement. The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note, and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Warrant, the Note, Commitment Shares, Conversion Shares, and the Exercise Shares by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note, Warrant, as well as the issuance and reservation for issuance of the Conversion Shares and Exercise Shares issuable upon conversion of the Note and/or exercise of the Warrant) have
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been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, its shareholders, or its debt holders is required, (iii) this Agreement and the Note (together with any other instruments executed in connection herewith or therewith) have been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement, the Note and the other instruments documents executed in connection herewith or therewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their terms.
c.    Capitalization; Governing Documents. As of June 29, 2023, the authorized capital stock of the Company consists of: 200,000,000 authorized shares of Common Stock, of which 22,744,757 shares were issued and outstanding, 10,000,000 authorized shares of Class B common stock, of which 1,068,512 shares were issued and outstanding, 15,000,0000 authorized shares of Class C common stock, of which 1,528,460 shares were issued and outstanding, and 5,000,000 authorized shares of preferred stock, of which 0 shares of preferred stock were issued and outstanding. All of such outstanding shares of capital stock of the Company, the Conversion Shares, the Exercise Shares, and Commitment Shares are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. As of the effective date of this Agreement, other than as publicly announced prior to such date and reflected in the SEC Documents of the Company (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of any of the Securities. The Company has furnished to the Buyer true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.
d.    Issuance of Conversion Shares and Exercise Shares. The Conversion Shares and Exercise Shares are duly authorized and reserved for issuance and, upon conversion of the Note and/or exercise of the Warrant in accordance with its terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.
e.    Issuance of Warrant and Commitment Shares. The issuance of the Warrant and Commitment Shares are duly authorized and will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.
f.    Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect of the Conversion Shares and Exercise Shares to the Common Stock upon the conversion of the Note and/or exercise of the Warrant. The Company further acknowledges that its obligation to issue, upon conversion of the Note and/or exercise of the Warrant, the Conversion Shares and/or Exercise Shares, are absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
g.    No Conflicts. The execution, delivery and performance of this Agreement and the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares and Exercise Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-
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laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, note, evidence of indebtedness, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities is subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect), or (iv) trigger any anti-dilution and/or ratchet provision contained in any other contract in which the Company is a party thereto or any security issued by the Company. Neither the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity, except for possible violations as would not, individually or in the aggregate, have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self-regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement and the Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and, upon conversion of the Note and/or exercise of the Warrant, issue Conversion Shares and/or Exercise Shares as applicable. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is not in violation of the listing requirements of the Principal Market (as defined herein) and does not reasonably anticipate that the Common Stock will be delisted by the Principal Market in the foreseeable future. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The “Principal Market” shall mean the principal securities exchange or trading market where such Common Stock is listed or traded, including but not limited to any tier of the OTC Markets, any tier of the NASDAQ Stock Market (including NASDAQ Capital Market), or the NYSE American, or any successor to such markets.
h.    SEC Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, in their most recently filed (and if applicable, restated) form, being hereinafter referred to herein as the “SEC Documents”). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations
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and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to March 31, 2023, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act.
i.    Absence of Certain Changes. Since March 31, 2023, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.
j.    Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have a Material Adverse Effect. Other than a non-scienter fine anticipated to be levied by the SEC for what the SEC deemed an underspecified narrative in the Company’s November 14, 2022 Form NT filing, the SEC Documents contain a complete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.
k.    Intellectual Property. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); there is no claim or action by any person pertaining to, or proceeding pending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual Property.
l.    No Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse Effect.
m.    Tax Status. Except with respect to the 2022 tax year, the Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, state or local tax. None of the Company’s tax returns is presently being audited by any taxing authority.
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n.    Transactions with Affiliates. Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third parties and other than the grant of stock options described in the SEC Documents, none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.
o.    Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s reports filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act).
p.    Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely incidental to the Buyer’s purchase of the Securities. The Company further represents to the Buyer that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives.
q.    No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer will not be integrated with any other future issuance of the Company’s securities for purposes of any shareholder approval provisions applicable to the Company or its securities.
r.    No Brokers; No Solicitation. Except with respect to J. H. Darbie & Co., a registered broker-dealer (CRD#: 43520), the Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby. The Company represents and warrants that neither the Buyer nor its employee(s), member(s), beneficial owner(s), or partner(s) solicited the Company to enter into this Agreement and consummate the transactions described in this Agreement. The Company represents and warrants that neither the Buyer nor its employee(s), member(s), beneficial owner(s), or partner(s) is required to be registered as a broker-dealer under the Securities Exchange Act of 1934 in order to (i) enter into or consummate the transactions encompassed by this Agreement, Registration Rights Agreement, the Note, Warrant, and the related transaction documents entered into in connection herewith (the “Transaction Documents”), (ii) fulfill the Investor’s obligations under the Transaction Documents, or (iii) exercise any of the Buyer’s rights under the Transaction Documents (including but not limited to the sale of the Securities).
s.    Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being
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conducted (collectively, the “Company Permits”), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Since March 31, 2023, neither the Company nor any of its Subsidiaries has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.
t.    Environmental Matters.
(i)    There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing. The term ”Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
(ii)    Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s or any of its Subsidiaries’ business.
(iii)    There are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries that are not in compliance with applicable law.
u.    Title to Property. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as would not have a Material Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect.
v.    Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written request the Company will provide to the Buyer true and correct copies of all policies relating to directors’ and officers’ liability coverage, errors and omissions coverage, and commercial general liability coverage.
w.    Internal Accounting Controls. Except as qualified by the last 5 sentences of this Section w, the Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient, in
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the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Notwithstanding the above declarations, the Company has noted in its most recently filed annual and quarterly reports material weaknesses around inadequate segregation of duties from a lack of accounting personnel and inherent system limitations of the current ERP system. Further, Management identified seven material weaknesses in the areas of business combinations, income taxes, preferred stock, equity, acquired intangible assets, impairment of goodwill and intangibles, and financial reporting. Other deficiencies aggregated to two material weaknesses in accounting for non-routine transactions and accounting for routine transactions. All the material weaknesses above related to not having appropriate accounting expertise to evaluate and account for transactions in the above areas without having to employ expert outside consultants to perform financial oversight. These material weaknesses had not been remediated as of March 31, 2023. The Company is committed to remediating its material weakness as promptly as possible.
x.    Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.
y.    Solvency. The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature. The Company’s financial statements for its most recent fiscal year end and interim financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
z.    No Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”). The Company is not controlled by an Investment Company.
aa.    No Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.
bb.    No Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.
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cc.    Manipulation of Price. The Company has not, and to its knowledge no one acting on its behalf has: (i) taken, directly or indirectly, any action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company.
dd.    Bank Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
ee.    Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the Company’s knowledge, any of the officers, directors, employees, agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct or indirect use of funds of the Company or any of its Subsidiaries.
ff.    Breach of Representations and Warranties by the Company. The Company agrees that if the Company breaches any of the representations or warranties set forth in this Section 3 and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of Default under Section 3.4 of the Note.
4.    ADDITIONAL COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS.
a.    Best Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of this Agreement.
b.    Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities if required under Regulation D and to provide a copy thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior to the Closing Date.
c.    Use of Proceeds. The Company shall use the Purchase Price for business development, payment of trade payables incurred in the ordinary course of business, and working capital, and not for any other purpose, including but not limited to (i) the repayment of any indebtedness owed to officers, directors or employees of the Company or their affiliates, (ii) the repayment of any debt issued in corporate finance transactions (including but not limited to promissory notes that have the ability to be converted into Common Stock), (iii) any loan to or investment in any other corporation, partnership, enterprise or other person (except in connection with the Company’s currently existing operations) (for the avoidance of doubt, this shall not include transactions between the Company and the Company’s Subsidiaries in the ordinary course of business), (iv) any loan, credit, or advance to any officers, directors, employees, or affiliates of the Company, or (v) in violation or contravention of any applicable law, rule or regulation.
d.    Legal Opinion. The Company shall, on or before July 10, 2023, deliver to the Buyer a legal opinion from the Company’s counsel covering the consummation and effectuation of the transactions contemplated by the Transaction Documents in a form reasonably acceptable to the Buyer.
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e.    Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any action or proceeding that may be brought by the Buyer in order to enforce any right or remedy under this Agreement, the Note and any document, agreement or instrument contemplated thereby. Notwithstanding any provision to the contrary contained in this Agreement, the Note and any document, agreement or instrument contemplated thereby, it is expressly agreed and provided that the total liability of the Company under this Agreement, the Note or any document, agreement or instrument contemplated thereby for payments which under applicable law are in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums which under applicable law in the nature of interest that the Company may be obligated to pay under this Agreement, the Note and any document, agreement or instrument contemplated thereby exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law applicable to this Agreement, the Note and any document, agreement or instrument contemplated thereby is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to this Agreement, the Note and any document, agreement or instrument contemplated thereby from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Buyer with respect to indebtedness evidenced by this Agreement, the Note and any document, agreement or instrument contemplated thereby, such excess shall be applied by the Buyer to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at the Buyer’s election.
f.    Restriction on Activities. Commencing as of the date first above written, and until the earlier of payment of the Note in full or full conversion of the Note, the Company shall not, directly or indirectly, without the Buyer’s prior written consent, which consent shall not be unreasonably withheld, sell, divest, or change the structure of any material assets other than in the ordinary course of business (with the understanding that the Company is a holding company and engages in the acquisition and sale of subsidiaries as part of the ordinary course of its business). Notwithstanding anything in this Section 4(f) to the contrary, this Section 4(f) shall not apply to the Company’s sale of its equity interests in ElecJet Inc. or Global Autonomous Corporation, so long as in each case the Company owns at least 40% of the total equity interests of the respective entity after the consummation of the respective sale.
g.    Listing. The Company will, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the Principal Market or any equivalent replacement exchange or electronic quotation system (including but not limited to the Pink Sheets electronic quotation system) and will use commercially reasonable best efforts to comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as applicable. The Company shall promptly file with the SEC an 8-K current report with respect to any notices it receives from the Principal Market and any other exchanges or electronic quotation systems on which the Common Stock is then traded regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.
h.    Corporate Existence. The Company will, so long as the Buyer beneficially owns any of the Securities, maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or substantially all of the Company’s assets with the written consent of the Buyer, where the surviving or successor entity in such transaction (i) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading or quotation on the Principal Market, any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE American.
i.    No Integration. The Company shall not make any future offers or sales of any security (other than the Securities) under circumstances that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the Securities to be integrated with any other offering of
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securities by the Company for the purpose of any stockholder approval provision applicable to the Company or its securities.
j.    Compliance with 1934 Act; Public Information Failures. For so long as the Buyer beneficially owns the Note, Commitment Shares, Warrant, Conversion Shares, or any Exercise Shares, the Company shall comply with the reporting requirements of the 1934 Act; and the Company shall continue to be subject to the reporting requirements of the 1934 Act. During the period beginning on the date that is six (6) calendar months after the date of this Agreement and continuing for so long as the Buyer beneficially owns the Note, if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure to satisfy the current public information requirements under Rule 144(c) or (ii) if the Company has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (each, a “Public Information Failure”) then, as partial relief for the damages to the Buyer by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not be exclusive of any other remedies available pursuant to this Agreement, the Note, or at law or in equity), the Company shall pay to the Buyer an amount in cash equal to three percent (3%) of the Purchase Price on each of the day of a Public Information Failure and on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the date such Public Information Failure is cured. The payments to which a holder shall be entitled pursuant to this Section 4(j) are referred to herein as “Public Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (iii) the third business day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 5% per month (prorated for partial months) until paid in full.
k.    Acknowledgement Regarding Buyer’s Trading Activity. Until the Note is fully repaid or fully converted, the Buyer shall not effect any “short sale” (as such term is defined in Rule 200 of Regulation SHO of the 1934 Act) of the Common Stock which establishes a net short position with respect to the Common Stock.
l.    Legal Counsel Opinions. Upon the request of the Buyer from to time to time, the Company shall be responsible (at its cost) for promptly supplying to the Company’s transfer agent and the Buyer a customary legal opinion letter of its counsel (the “Legal Counsel Opinion”) to the effect that the resale of the Conversion Shares and/or Exercise Shares by the Buyer or its affiliates, successors and assigns is exempt from the registration requirements of the 1933 Act pursuant to Rule 144 (provided the requirements of Rule 144 are satisfied and provided the Conversion Shares and/or Exercise Shares are not then registered under the 1933 Act for resale pursuant to an effective registration statement) or other applicable exemption (provided the requirements of such other applicable exemption are satisfied). In addition, the Buyer may (at the Company’s cost) at any time secure its own legal counsel to issue the Legal Counsel Opinion, and the Company will instruct its transfer agent to accept such opinion. The Company hereby agrees that it may never take the position that it is a “shell company” in connection with its obligations under this Agreement or otherwise.
m.    Piggy-Back Registration Rights. The Company hereby grants to the Buyer the piggy-back registration rights set forth in Exhibit B hereto.
n.    Most Favored Nation. While the Note or any principal amount, interest or fees or expenses due thereunder remain outstanding and unpaid, the Company shall not enter into any public or private offering of its securities (including securities convertible into shares of Common Stock) with any individual or entity (an “Other Investor”) that has the effect of establishing rights or otherwise benefiting such Other Investor in a manner more favorable in any material respect to such Other Investor (even if the Other Investor does not receive the benefit of such more favorable term until a default occurs under such other security) than the rights and benefits established in favor of the Buyer by this Agreement or the Note unless, in any such case, the Buyer has been provided with such rights and benefits pursuant to a definitive written agreement or agreements between the Company and the Buyer. Notwithstanding the foregoing, this Section 4(n) shall not apply to a Buyout Transaction (as defined in this Agreement). “Buyout Transaction” shall mean any transaction if the Note is fully repaid and
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extinguished within two (2) business days after the Company’s closing and receipt of funds of the respective transaction.
o.    Subsequent Variable Rate Transactions. From the date hereof until such time as the Note is fully converted or fully repaid, the Company shall be prohibited from effecting or entering into an agreement involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities. The Buyer shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
p.    Non-Public Information. The Company covenants and agrees that neither it, nor any other person acting on its behalf will provide the Buyer or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto the Buyer shall have consented to the receipt of such information and agreed with the Company to keep such information confidential. The Company understands and confirms that the Buyer shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company delivers any material, non-public information to the Buyer without such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or affiliates, not to trade on the basis of, such material, non- public information, provided that the Buyer shall remain subject to applicable law. To the extent that any notice provided, information provided, or any other communications made by the Company, to the Buyer, constitutes or contains material non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice or other material information with the SEC pursuant to a Current Report on Form 8-K. =
q.    D&O Insurance. Within 60 calendar days of the Closing, the Company shall purchase director and officer insurance on behalf of the Company's (including its subsidiary) officers and directors for a period of 18 months after the Closing with respect to any losses, claims, damages, liabilities, costs and expense in connection with any actual or threatened claim or proceeding that is based on, or arises out of their status as a director or officer of the Company. The insurance policy shall provide for two years of tail coverage.
r.    Shareholder Approval; Prohibition on Issuance. “Shareholder Approval” means the approval of the holders of a majority of the Company’s outstanding voting Common Stock, to effectuate the transactions contemplated by the Agreement, including the issuance of all of the Common Stock underlying the Note, Common Stock underlying the Warrant, and Commitment Shares, in excess of 19.99% of the issued and outstanding Common Stock on the Closing Date (the “Exchange Cap”). The Exchange Cap is equal to 4,546,676 shares of Common Stock (subject to appropriate adjustment for any stock dividend, stock split, stock combination, rights offerings, reclassification or similar transaction that proportionately decreases or increases the Common Stock). The Company shall hold a special meeting of shareholders on or before the date that is ninety (90) calendar days after the first date (after the date of this Agreement) that the Common Stock has traded on the Principal Market at a price per share of less than $1.00 (subject to appropriate adjustment for any stock dividend, stock split, stock combination, rights offerings, reclassification or similar transaction that proportionately decreases or increases the Common Stock) (the “Threshold Price”), for the purpose of obtaining Shareholder Approval, with the recommendation of the Company’s Board of Directors that such proposal be approved, and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. In addition, all members of the Company’s Board of Directors and all of the Company’s executive officers shall vote in favor of such proposal, for purposes of obtaining the Shareholder Approval, with respect to all securities of the Company then held by such persons. The Company shall use its commercially reasonable efforts to obtain such Shareholder Approval. If the Company does not obtain Shareholder Approval at the first meeting, the Company shall call a meeting as often as possible thereafter to seek Shareholder Approval until the Shareholder Approval is obtained. Until such approval is obtained, the Buyer shall not be issued in the aggregate, pursuant to the Agreement or upon conversion or exercise, as applicable, of the Note or Warrant, shares of Common Stock in an
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amount greater than the Exchange Cap. In the event that the Buyer shall sell or otherwise transfer any of such Buyer's Notes, Warrant, or Commitment Shares, the transferee shall be allocated a pro rata portion of such Exchange Cap, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap allocated to such transferee. Except with respect to the Securities, during the period beginning on the date of this Agreement and continuing through the date that the Shareholder Approval is obtained, the Company shall not issue any (i) Common Stock at a price per share or cost basis of less than the Threshold Price or (ii) Common Stock Equivalents (as defined in the Note) (“Common Stock Equivalents”) that are exercisable or convertible into Common Stock at a price per share or cost basis of less than the Threshold Price, provided however, that the above restrictions on such issuances shall not apply if such an issuance is pursuant to a Buyout Transaction.
s.    No Broker-Dealer Acknowledgement. Absent a final adjudication from a court of competent jurisdiction stating otherwise, the Company shall not to any person, institution, governmental or other entity, state, claim, allege, or in any way assert, that Buyer is currently, or ever has been, a broker-dealer under the Securities Exchange Act of 1934.
t.    Subsequent Securities Sales. In addition to all other restrictions on the issuance of securities by the Company as provided in this Agreement, from the date of this Agreement through the date that is one hundred eighty (180) calendar days after the date of this Agreement, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents, provided however, that the above restrictions on such issuances shall not apply if such an issuance is pursuant to a Buyout Transaction.
u.    Amendment of Prior Transactions. The Company shall not amend or alter the provisions or terms of any debt or Common Stock Equivalents (including but not limited to any warrants exercisable into Common Stock and promissory notes convertible into Common Stock) of the Company issued on or prior to the date of this Agreement without the express written consent of the Buyer.
v.    Breach of Covenants. The Company acknowledges and agrees that if the Company breaches any of the covenants set forth in this Section 4, in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of Default under Section 3.3 of the Note.
5.    Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Company’s transfer agent to issue certificates and/or issue shares electronically at the Buyer’s option, registered in the name of the Buyer or its nominee, upon conversion of the Note and/or exercise of the Warrant, the Conversion Shares and Exercise Shares, in such amounts as specified from time to time by the Buyer to the Company in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event that the Company proposes to replace its transfer agent, the Company shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to this Agreement (including but not limited to the provision to irrevocably reserved shares of Common Stock in the Reserved Amount (as defined in the Note)) signed by the successor transfer agent to the Company and the Company. Prior to registration of the Conversion Shares and/or Exercise Shares under the 1933 Act or the date on which the Conversion Shares and/or Exercise Shares may be sold pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates or book entry shares shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5 will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Securities to be issued to the Buyer upon conversion of or otherwise pursuant to the Note and/or upon exercise of or otherwise pursuant to the Warrant as and when required by the Note and this Agreement; (iii) it will not fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Securities issued to the Buyer upon conversion of or otherwise pursuant to the Note and/or upon exercise of or otherwise pursuant to the Warrant as and when required by the Note, Warrant, and/or this Agreement and (iv) it will
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provide any required corporate resolutions and issuance approvals to its transfer agent within 6 hours of each conversion of the Note and/or exercise of the Warrant. Nothing in this Section shall affect in any way the Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities. If the Buyer provides the Company, at the cost of the Company, with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to 144, Rule 144A, Regulation S, or other applicable exemption, the Company shall permit the transfer, and, in the case of the Securities, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.
6.    Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:
a.    The Buyer shall have executed this Agreement and the Registration Rights Agreement, and delivered the same to the Company.
b.    The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.
c.    The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date, as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.
d.    No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
7.    Conditions to The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Note, on the Closing Date, is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:
a.    The Company shall have executed this Agreement and the Registration Rights Agreement, and delivered the same to the Buyer.
b.    The Company shall have delivered to the Buyer the duly executed Note in such denominations as the Buyer shall request and in accordance with Section 1(b) above.
c.    The Company shall have delivered to the Buyer the Warrant and Commitment Shares.
d.    The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the Buyer, shall have been delivered to and acknowledged in writing by the Company’s Transfer Agent.
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e.    The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of Closing Date, as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.
f.    No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
g.    No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations.
h.    Trading in the Common Stock on the Principal Market shall not have been suspended by the SEC, FINRA or the Principal Market.
i.    The Company shall have delivered to the Buyer (i) a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date within ten (10) days of the Closing Date and (ii) resolutions adopted by the Company’s Board of Directors at a duly called meeting or by unanimous written consent authorizing this Agreement and all other documents, instruments and transactions contemplated hereby.
8.    Governing Law; Miscellaneous.
a.    Governing Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Any action brought by the Company concerning the transactions contemplated by this Agreement or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in a state or federal court located in the State of Delaware. Any action brought by the Buyer concerning the transactions contemplated by this Agreement or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in either (a) a state or federal court located in the State of Delaware, or (b) a state or federal court located in the Commonwealth of Massachusetts. Notwithstanding anything in the foregoing to the contrary, nothing herein shall limit, or shall be deemed or construed to limit, the ability of the Buyer to realize on any collateral or any other security, or to enforce a judgment or other court ruling in favor of the Buyer, including through a legal action in any court of competent jurisdiction. The Company hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any objection to jurisdiction and venue of any action instituted hereunder, any claim that it is not personally subject to the jurisdiction of any such court, and any claim that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper (including but not limited to based upon forum non conveniens). THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY. The Company irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to Company at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. The prevailing party in any action or dispute brought in connection with this Agreement or any other agreement, certificate, instrument or document contemplated hereby or thereby shall be entitled to recover
17


from the other party its reasonable attorney’s fees and costs. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
b.    Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. A facsimile or .pdf signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or .pdf signature. Delivery of a counterpart signature hereto by facsimile or email/.pdf transmission shall be deemed validly delivery thereof.
c.    Construction; Headings. This Agreement shall be deemed to be jointly drafted by the Company and the Buyer and shall not be construed against any person as the drafter hereof. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.
d.    Severability. In the event that any provision of this Agreement, the Note, or any other agreement or instrument delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Agreement, the Note, or any other agreement, certificate, instrument or document contemplated hereby or thereby.
e.    Entire Agreement; Amendments. This Agreement, the Note, and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement or any agreement or instrument contemplated hereby may be waived or amended other than by an instrument in writing signed by the Buyer.
f.    Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery, or delivery by e-mail whose receipt of which is acknowledged by the intended recipient by means of email reply or other written notice described under this subsection, or facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
18


fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
If to the Company, to:
ALPINE 4 HOLDINGS, INC.
2525 E Arizona Biltmore Circle, Suite 237
Phoenix, AZ 85016
Attention: Kent Wilson
e-mail: kwilson@alpine4.com
If to the Buyer:
MAST HILL FUND, L.P.
48 Parker Road
Wellesley, MA 02482
e-mail: admin@masthillfund.com
g.    Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyer. The Buyer may assign its rights hereunder to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transaction from the Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.
h.    Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
i.    Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.
j.    Publicity. The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC, Principal Market or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of the Buyer, to make any press release or SEC, Principal Market (or other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations (although the Buyer shall be consulted by the Company in connection with any such press release prior to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon).
k.    Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
l.    No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
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m.    Indemnification. In consideration of the Buyer’s execution and delivery of this Agreement and acquiring the Securities hereunder, and in addition to all of the Company’s other obligations under this Agreement or the Note, the Company shall defend, protect, indemnify and hold harmless the Buyer and its stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement, the Note or any other agreement, certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in this Agreement, the Note or any other agreement, certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of this Agreement, the Note or any other agreement, certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of the Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by this Agreement. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law.
n.    Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement, the Note, the Warrant, or any other agreement, certificate, instrument or document contemplated hereby or thereby will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, the Note, the Warrant, or any other agreement, certificate, instrument or document contemplated hereby or thereby, that the Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement, the Note, the Warrant, or any other agreement, certificate, instrument or document contemplated hereby or thereby, and to enforce specifically the terms and provisions hereof and thereof, without the necessity of showing economic loss and without any bond or other security being required.
o.    Payment Set Aside. To the extent that the (i) Company makes a payment or payments to the Buyer hereunder, pursuant to the Note, pursuant to the Warrant, or pursuant to any other agreement, certificate, instrument or document contemplated hereby or thereby, or (ii) the Buyer enforces or exercises its rights hereunder, pursuant to the Note, pursuant to the Warrant, or pursuant to any other agreement, certificate, instrument or document contemplated hereby or thereby, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof (including but not limited to the sale of the Securities) are for any reason (i) subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, or disgorged by the Buyer, or (ii) are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver, government entity, or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then (i) to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred and (ii) the Company shall immediately pay to the Buyer a dollar amount equal to the amount that was for any reason (i) subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, or disgorged by the Buyer, or (ii) required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver, government entity, or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action).
20


p.    Failure or Indulgence Not Waiver. No failure or delay on the part of the Buyer in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies of the Buyer existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
q.    Electronic Signature. This Agreement may be executed and delivered in one or more counterparts (including by facsimile or electronic mail or in .pdf or any other form of electronic delivery (including any electronic signature complying with U.S. federal ESIGN Act of 2000)) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
ALPINE 4 HOLDINGS, INC.
By:/s/ Kent Wilson
Name: KENT WILSON
Title: CHIEF EXECUTIVE OFFICER
MAST HILL FUND, L.P.
By:/s/ Patrick Hassani
Name: PATRICK HASSANI
Title: CHIEF INVESTMENT OFFICER
SUBSCRIPTION AMOUNT:
Principal Amount of Note: $1,670,000.00
Actual Amount of Purchase Price of Note: $1,503,000.00
22


EXHIBIT A
FORM OF NOTE
[attached hereto]
23


EXHIBIT B
PIGGY-BACK REGISTRATION RIGHTS
All of the Conversion Shares, Exercise Shares, Returnable Shares and Commitment Shares shall be deemed “Registrable Securities” subject to the provisions of this Exhibit B. All capitalized terms used but not defined in this Exhibit B shall have the meanings ascribed to such terms in the Securities Purchase Agreement to which this Exhibit is attached.
1.    Piggy-Back Registration.
1.1    Piggy-Back Rights. If at any time on or after the date of the Closing the Company proposes to file any Registration Statement under the 1933 Act (a “Registration Statement”) with respect to any offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders of the Company for their account (or by the Company and by shareholders of the Company), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan on Form S-8, (ii) for a dividend reinvestment plan or (iii) in connection with a merger or acquisition, then the Company shall (x) give written notice of such proposed filing to the holders of Registrable Securities appearing on the books and records of the Company as such a holder as soon as practicable but in no event less than ten (10) days before the anticipated filing date of the Registration Statement, which notice shall describe the amount and type of securities to be included in such Registration Statement, the intended method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any, of the offering, and (y) offer to the holders of Registrable Securities in such notice the opportunity to register the sale of such number of Registrable Securities as such holders may request in writing within three (3) days following receipt of such notice (a “Piggy-Back Registration”). The Company shall cause such Registrable Securities to be included in such registration and shall cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof (with the understanding that the Company shall file the initial prospectus covering the Buyer’s sale of the Registrable Securities at prevailing market prices on the same date that the Registration Statement is declared effective by the SEC).
1.2    Withdrawal. Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness of such Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 1.5 below.
1.3    The Company shall notify the holders of Registrable Securities at any time when a prospectus relating to such holder’s Registrable Securities is required to be delivered under the 1933 Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. At the request of such holder, the Company shall also prepare, file and furnish to such holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of the Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. The holders of Registrable Securities shall not to offer or sell any Registrable Securities covered by the Registration Statement after receipt of such notification until the receipt of such supplement or amendment.
1.4    The Company may request a holder of Registrable Securities to furnish the Company such information with respect to such holder and such holder’s proposed distribution of the Registrable Securities
24


pursuant to the Registration Statement as the Company may from time to time reasonably request in writing or as shall be required by law or by the SEC in connection therewith, and such holders shall furnish the Company with such information.
1.5    All fees and expenses incident to the performance of or compliance with this Exhibit B by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the SEC, (B) with respect to filings required to be made with any trading market on which the Common Stock is then listed for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (D) with respect to any filing that may be required to be made by any broker through which a holder of Registrable Securities intends to make sales of Registrable Securities with the FINRA, (ii) printing expenses, (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) 1933 Act liability insurance, if the Company so desires such insurance, (vi) fees and expenses of all other persons or entities retained by the Company in connection with the consummation of the transactions contemplated by this Exhibit B and (vii) reasonable fees and disbursements of a single special counsel for the holders of Registrable Securities (selected by holders of the majority of the Registrable Securities requesting such registration). In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions of any holder of Registrable Securities.
1.6    The Company and its successors and assigns shall indemnify and hold harmless the Buyer, each holder of Registrable Securities, the officers, directors, members, partners, agents and employees (and any other individuals or entities with a functionally equivalent role of a person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each individual or entity who controls the Buyer or any such holder of Registrable Securities (within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other individuals or entities with a functionally equivalent role of a person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling individual or entity (each, an “Indemnified Party”), to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any related prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any such prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Exhibit B, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based upon information regarding the Buyer or such holder of Registrable Securities furnished to the Company by such party for use therein. The Company shall notify the Buyer and each holder of Registrable Securities promptly of the institution, threat or assertion of any proceeding arising from or in connection with the transactions contemplated by this Exhibit B of which the Company is aware.
1.7    If the indemnification under Section 1.6 is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then the Company shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Company and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the Company and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged
25


untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, the Company or the Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be deemed to include any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in Section 1.6 was available to such party in accordance with its terms. It is agreed that it would not be just and equitable if contribution pursuant to this Section 1.7 were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding sentence. Notwithstanding the provisions of this Section 1.7, neither the Buyer nor any holder of Registrable Securities shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such party from the sale of all of their Registrable Securities pursuant to such Registration Statement or related prospectus exceeds the amount of any damages that such party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
[End of Exhibit B]
26


EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
[attached hereto]
27

Exhibit 10.33
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 29, 2023, by and between ALPINE 4 HOLDINGS, INC., a Delaware corporation (the "Company"), and MAST HILL FUND, L.P., a Delaware limited partnership (together with it permitted assigns, the “Investor”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the securities purchase agreement by and between the parties hereto, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the "Purchase Agreement").
WHEREAS:
The Company has agreed, upon the terms and subject to the conditions of the Purchase Agreement, to sell to the Investor the Securities (as defined in the Purchase Agreement) and to induce the Investor to enter into the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "Securities Act"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:
1.    DEFINITIONS.
As used in this Agreement, the following terms shall have the following meanings:
a.    "Investor" shall have the meaning set forth above.
b.    "Person" means any individual or entity including but not limited to any corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.
c.    "Register," "registered," and "registration" refer to a registration effected by preparing and filing one or more registration statements of the Company in compliance with the Securities Act and/or pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such registration statement(s) by the United States Securities and Exchange Commission (the "SEC").
d.    "Registrable Securities" means all of the Commitment Shares (as defined in the Purchase Agreement) (the “Commitment Shares”), Conversion Shares (as defined in the Purchase Agreement) (the “Conversion Shares”), Exercise Shares (as defined in the Purchase Agreement) (the “Exercise Shares”), and shares of Common Stock issued to the Investor as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitation on purchases under the Purchase Agreement, Note (as defined in the Purchase Agreement) (the “Note”), or Warrant (as defined in the Purchase Agreement) (the “Warrant”).
e.    "Registration Statement" means one or more registration statements of the Company covering only the sale of the Registrable Securities.
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2.    REGISTRATION.
a.    Mandatory Registration. The Company shall, within sixty (60) calendar days from the date of this Agreement, use commercially reasonable best efforts to file with the SEC an initial Registration Statement covering the maximum number of Registrable Securities as shall be permitted to be included thereon in accordance with applicable SEC rules, regulations and interpretations so as to permit the resale of such Registrable Securities by the Investor, including but not limited to under Rule 415 under the Securities Act at then prevailing market prices (and not fixed prices), subject to the aggregate number of authorized shares of the Company’s Common Stock then available for issuance in its Certificate of Incorporation. The Investor and its counsel shall have a reasonable opportunity to review and comment upon such Registration Statement and any amendment or supplement to such Registration Statement and any related prospectus prior to its filing with the SEC (assuming the Company has received written consent by the Investor to provide copies of the respective filing), and the Company shall give due consideration to all reasonable comments. The Investor shall furnish all information reasonably requested by the Company for inclusion therein. The Company shall use commercially reasonable best efforts to have the Registration Statement and any amendment declared effective by the SEC within ninety (90) calendar days from the date hereof (or at the earliest possible date if prior to ninety (90) calendar days from the date hereof). The Company shall keep the Registration Statement effective, including but not limited to pursuant to Rule 415 promulgated under the Securities Act and available for the resale by the Investor of all of the Registrable Securities covered thereby at all times until the the date on which the Investor shall have sold all the Registrable Securities covered thereby (the "Registration Period"). The Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. In the event that the Registration Statement becomes stale, the Company shall immediately file one or more post-effective amendments to obtain an effective Registration Statement.
b.    Rule 424 Prospectus. The Company shall, as required by applicable securities regulations, from time to time file (in each case, at the earliest possible date) with the SEC, pursuant to Rule 424 promulgated under the Securities Act, the prospectus and prospectus supplements, if any, to be used in connection with sales of the Registrable Securities under the Registration Statement. The Company shall file such initial prospectus covering the Investor’s sale of the Registrable Securities on the same date that the Registration Statement is declared effective by the SEC. The Investor and its counsel shall have a reasonable opportunity to review and comment upon such prospectus prior to its filing with the SEC, and the Company shall give due consideration to all such comments. The Investor shall use its reasonable best efforts to comment upon such prospectus within one (1) Business Day from the date the Investor receives the final pre-filing version of such prospectus.
c.    Sufficient Number of Shares Registered. In the event the number of shares available under the Registration Statement is insufficient to cover all of the Registrable Securities, the Company shall amend the Registration Statement or file a new Registration Statement (a “New Registration Statement”), so as to cover all of such Registrable Securities (subject to the limitations set forth in Section 2(a)) as soon as practicable, but in any event not later than ten (10) Business Days after the necessity therefor arises, subject to any limits that may be imposed by the SEC pursuant to Rule 415 under the Securities Act. The Company shall use it reasonable best efforts to cause such amendment and/or New Registration Statement to become effective as soon as practicable following the filing thereof. In the event that any of the Registrable Securities are not included in the Registration Statement, or have not been included in any New Registration Statement and the Company files any other registration statement under the Securities Act (other than on Form S-4, Form S-8, or with respect to other employee related
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plans or rights offerings) (“Other Registration Statement”) then the Company shall include such remaining Registrable Securities in such Other Registration Statement. The Company agrees that it shall not file any such Other Registration Statement unless all of the Registrable Securities have been included in such Other Registration Statement or otherwise have been registered for resale as described above.
d.    Offering. If the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities that does not permit such Registration Statement to become effective and be used for resales by the Investor under Rule 415 at then prevailing market prices (and not fixed prices), or if after the filing of the initial Registration Statement with the SEC pursuant to Section 2(a), the Company is otherwise required by the Staff or the SEC to reduce the number of Registrable Securities included in such initial Registration Statement, then the Company shall reduce the number of Registrable Securities to be included in such initial Registration Statement (with the prior consent, which shall not be unreasonably withheld, of the Investor and its legal counsel as to the specific Registrable Securities to be removed therefrom) until such time as the Staff and the SEC shall so permit such Registration Statement to become effective and be used as aforesaid. In the event of any reduction in Registrable Securities pursuant to this paragraph, the Company shall file one or more New Registration Statements in accordance with Section 2(c) until such time as all Registrable Securities have been included in Registration Statements that have been declared effective and the prospectus contained therein is available for use by the Investor. Notwithstanding any provision herein or in the Purchase Agreement to the contrary, the Company’s obligations to register Registrable Securities (and any related conditions to the Investor’s obligations) shall be qualified as necessary to comport with any requirement of the SEC or the Staff as addressed in this Section 2(d).
3.    RELATED OBLIGATIONS.
With respect to the Registration Statement and whenever any Registrable Securities are to be registered pursuant to Section 2 including on any New Registration Statement, the Company shall use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:
a.    The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to any registration statement and the prospectus used in connection with such registration statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep the Registration Statement or any New Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement or any New Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such registration statement.
b.    The Company shall, upon receipt of written consent by the Investor, permit the Investor to review and comment upon the Registration Statement or any New Registration Statement and all amendments and supplements thereto at least two (2) Business Days prior to their filing with the SEC, and not file any document in a form to which Investor reasonably objects. However, in no event will Company’s failure to comply with the immediately preceding sentence be an Event of Default under the Note. The Investor shall use its reasonable best efforts to comment upon the Registration Statement or any New Registration Statement and any amendments or supplements thereto within two (2) Business
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Days from the date the Investor receives the final version thereof. The Company shall furnish to the Investor, without charge any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to the Registration Statement or any New Registration Statement.
c.    Upon request of the Investor, the Company shall furnish to the Investor, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such registration statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits, (ii) upon the effectiveness of any registration statement, a copy of the prospectus included in such registration statement and all amendments and supplements thereto (or such other number of copies as the Investor may reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as the Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Investor. For the avoidance of doubt, any filing available to the Investor via the SEC’s live EDGAR system shall be deemed “furnished to the Investor” hereunder.
d.    The Company shall use reasonable best efforts to (i) register and qualify the Registrable Securities covered by a registration statement under such other securities or "blue sky" laws of such jurisdictions in the United States as the Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify the Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
e.    As promptly as practicable after becoming aware of such event or facts, the Company shall notify the Investor in writing of the happening of any event or existence of such facts as a result of which the prospectus included in any registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or amendment to such registration statement to correct such untrue statement or omission, and deliver a copy of such supplement or amendment to the Investor (or such other number of copies as the Investor may reasonably request). The Company shall also promptly notify the Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a registration statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to the Investor by email on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to any registration statement or related prospectus or related information, and (iii) of the Company's reasonable determination that a post-effective amendment to a registration statement would be appropriate. However in no event will Company’s failure to act pursuant to this Subsection e be an Event of Default under the Note.
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f.    The Company shall use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of any registration statement, or the suspension of the qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
g.    The Company shall (i) cause all the Registrable Securities to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) secure designation and quotation of all the Registrable Securities on the Principal Market (as defined in the Purchase Agreement). The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section.
h.    The Company shall cooperate with the Investor to facilitate the timely preparation and delivery of the Registrable Securities (not bearing any restrictive legend) either by DWAC, DRS, or in certificated form if DWAC or DRS is unavailable, to be offered pursuant to any registration statement and enable such Registrable Securities to be in such denominations or amounts as the Investor may reasonably request and registered in such names as the Investor may request.
i.    The Company shall at all times provide a transfer agent and registrar with respect to its Common Stock.
j.    If reasonably requested by the Investor, the Company shall (i) immediately incorporate in a prospectus supplement or post-effective amendment such information as the Investor believes should be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities; (ii) make all required filings of such prospectus supplement or post-effective amendment as soon as practicable upon notification of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any registration statement.
k.    The Company shall use its reasonable best efforts to cause the Registrable Securities covered by any registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.
l.    Within one (1) Business Day after any registration statement which includes the Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investor) confirmation that such registration statement has been declared effective by the SEC in the form attached hereto as Exhibit A. Thereafter, if requested by the Investor at any time, the Company shall require its counsel to deliver to the Investor a written confirmation whether or not the effectiveness of such registration statement has lapsed at any time for any reason (including, without limitation, the issuance of a stop order) and whether or not the registration statement is current and available to the Investor for sale of all of the Registrable Securities. However in no event will Company’s failure to provide notice within one (1) Business Day pursuant to the terms of this Subsection l be an Event of Default under the Note.
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m.    The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities pursuant to any registration statement.
4.    OBLIGATIONS OF THE INVESTOR.
a.    The Company shall notify the Investor in writing of the information the Company reasonably requires from the Investor in connection with any registration statement hereunder. The Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.
b.    The Investor agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any registration statement hereunder.
c.    The Investor agrees that, upon receipt of any notice from the Company of the happening of any event or existence of facts of the kind described in Section 3(f) or the first sentence of 3(e), the Investor will immediately discontinue disposition of Registrable Securities pursuant to any registration statement(s) covering such Registrable Securities until the Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f) or the first sentence of 3(e). Notwithstanding anything to the contrary, the Company shall cause its transfer agent to promptly deliver shares of Common Stock without any restrictive legend in accordance with the terms of the Purchase Agreement, Note, and Warrant as applicable in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale prior to the Investor's receipt of a notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of Section 3(e) and for which the Investor has not yet settled.
5.    EXPENSES OF REGISTRATION.
All reasonable expenses, other than sales or brokerage commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company, shall be paid by the Company.
6.    INDEMNIFICATION.
a.    To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, each Person, if any, who controls the Investor, the members, the directors, officers, partners, employees, agents, representatives of the Investor and each Person, if any, who controls the Investor within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act") (each, an "Indemnified Person"), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint or several, (collectively, "Claims") incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("Indemnified Damages"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement, any New Registration Statement or any post-effective amendment thereto or in any filing made in connection with
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the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered ("Blue Sky Filing"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the Registration Statement or any New Registration Statement or (iv) any material violation by the Company of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, "Violations"). The Company shall reimburse each Indemnified Person promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information about the Investor furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement, any New Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e); (ii) with respect to any superseded prospectus, shall not inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the superseded prospectus was corrected in the revised prospectus, as then amended or supplemented, if such revised prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice, used it; (iii) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e); and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investor pursuant to Section 9.
b.    Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party
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represented by such counsel in such proceeding. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.
c.    The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.
d.    The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
7.    CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.
8.    REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS.
With a view to making available to the Investor the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees, at the Company’s sole expense, to use commercially reasonable best efforts to:
a.    make and keep public information available, as those terms are understood and defined in Rule 144;
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b.    file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144;
c.    furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting and or disclosure provisions of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration; and
d.    take such additional action as is requested by the Investor to enable the Investor to sell the Registrable Securities pursuant to Rule 144, including, without limitation, delivering all such legal opinions, consents, certificates, resolutions and instructions to the Company’s transfer agent as may be requested from time to time by the Investor and otherwise fully cooperate with Investor and Investor’s broker to effect such sale of securities pursuant to Rule 144.
The Company agrees that damages may be an inadequate remedy for any breach of the terms and provisions of this Section 8 and that Investor shall, whether or not it is pursuing any remedies at law, be entitled to equitable relief in the form of a preliminary or permanent injunctions, without having to post any bond or other security, upon any breach or threatened breach of any such terms or provisions.
9.    ASSIGNMENT OF REGISTRATION RIGHTS.
The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor.
10.    AMENDMENT OF REGISTRATION RIGHTS.
No provision of this Agreement may be amended or waived by the parties from and after the date that is one Business Day immediately preceding the initial filing of the Registration Statement with the SEC. Subject to the immediately preceding sentence, no provision of this Agreement may be (i) amended other than by a written instrument signed by both parties hereto or (ii) waived other than in a written instrument signed by the party against whom enforcement of such waiver is sought. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
11.    MISCELLANEOUS.
a.    A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.
4.1 b.    All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier
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service with charges prepaid, or (iv) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery. or delivery by e-mail whose receipt of which is acknowledged by the intended recipient by means of email reply or other written notice described under this subsection, or facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
If to the Company, to:
ALPINE 4 HOLDINGS, INC.
2525 E. Arizona Biltmore Circle, Suite 237
Phoenix, AZ 85016
Email: kwilson@alpine4.com
Attention: Kent Wilson
If to the Investor:
MAST HILL FUND, L.P.
48 Parker Road
Wellesley, MA 02482
e-mail: admin@masthillfund.com
or at such other address, email address, and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.
c.    This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Any action brought by the Company concerning the transactions contemplated by this Agreement or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in a state or federal court located in the State of Delaware. Any action brought by the Investor concerning the transactions contemplated by this Agreement or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in either (a) a state or federal court located in the State of Delaware, or (b) a state or federal court located in the Commonwealth of Massachusetts. Notwithstanding anything in the foregoing to the contrary, nothing herein shall limit, or shall be deemed or construed to limit, the ability of the Investor to realize on any collateral or any other security, or to enforce a judgment or other court ruling in favor of the Investor, including through a legal action in any court of competent
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jurisdiction. The Company hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any objection to jurisdiction and venue of any action instituted hereunder, any claim that it is not personally subject to the jurisdiction of any such court, and any claim that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper (including but not limited to based upon forum non conveniens). THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY. The Company irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to Company at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. The prevailing party in any action or dispute brought in connection with this Agreement or any other agreement, certificate, instrument or document contemplated hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s fees and costs. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
d.    The Agreement, Purchase Agreement, Note, Warrant, and ancillary documentation entered into between the Company and Investor therewith constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. The Agreement, Purchase Agreement, Note, Warrant, and ancillary documentation entered into between the Company and Investor therewith supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.
e.    Subject to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties hereto.
f.    The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
g.    This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by e-mail in a “.pdf” format data file of a copy of this Agreement bearing the signature of the party so delivering this Agreement.
h.    Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
i.    The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.
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j.    This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
* * * * * *
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of day and year first above written.
THE COMPANY:
ALPINE 4 HOLDINGS, INC.
By:/s/ Kent Wilson
Name: KENT WILSON
Title: CHIEF EXECUTIVE OFFICER
INVESTOR:
MAST HILL FUND, L.P.
By:/s/ Patrick Hassani
Name: PATRICK HASSANI
Title: CHIEF INVESTMENT OFFICER
[Signature Page to registration rights agreement]
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EXHIBIT A
TO REGISTRATION RIGHTS AGREEMENT
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
______, 2023
________________
________________
________________
Re: Effectiveness of Registration Statement
Ladies and Gentlemen:
We are counsel to ALPINE 4 HOLDINGS, INC., a Delaware corporation (the “Company”), and have represented the Company in connection with that certain Purchase Agreement, dated as of June 29, 2023 (the “Purchase Agreement”), entered into by and between the Company and MAST HILL FUND, L.P., a Delaware limied partnership (the “Investor”) pursuant to which the Company has agreed to issue to the Investor shares of Class A common stock of the Company, par value $0.0001 per share, consisting of the Conversion Shares (as defined in the Purchase Agreement) (the “Conversion Shares”), Exercise Shares (as defined in the Purchase Agreement) (the “Exercise Shares”), and Commitment Shares (as defined in the Purchase Agreement) (the “Commitment Shares”) in accordance with the terms of the Purchase Agreement, Note (as defined below), and Warrant (as defined below). In connection with the transactions contemplated by the Purchase Agreement, the Company has registered with the U.S. Securities & Exchange Commission the following shares of Common Stock:
___________ Conversion Shares issued and/or to be issued to the Investor upon conversion of the Note (as defined in the Purchase Agreement) (the “Note”) in accordance with the Note; and
___________ Exercise Shares issued and/or to be issued to the Investor upon exerciseconversion of the Warrant (as defined in the Purchase Agreement) (the “Warrant”) in accordance with the Warrant; and
___________ Commitment Shares issued to the Investor pursuant to the Agreement.
Pursuant to the Purchase Agreement, the Company also has entered into a Registration Rights Agreement, of even date with the Purchase Agreement with the Investor (the “Registration Rights Agreement”) pursuant to which the Company agreed, among other things, to register the Conversion Shares, Exercise Shares, and Commitment Shares under the Securities Act of 1933, as amended (the “Securities Act”). In connection with the Company's obligations under the Purchase Agreement and the Registration Rights Agreement, on [_____], 2023, the Company filed a Registration Statement (File No. 333-[__________]) (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the resale of the Conversion Shares, Exercise Shares, and Commitment Shares.
In connection with the foregoing, we advise you that a member of the SEC's staff has advised us by telephone that the SEC has entered an order declaring the Registration Statement effective under the Securities Act at [_____] [A.M./P.M.] on [___________], 2023 and we have no knowledge, after telephonic inquiry of a member of the SEC's staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Conversion Shares, Exercise Shares, and Commitment Shares are available for resale under the Securities Act pursuant to the Registration Statement and may be issued without any restrictive legend.
Very truly yours,
[Company Counsel]
By:
cc: MAST HILL FUND, L.P.

Exhibit 10.34
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A OR REGULATION S UNDER SAID ACT OR OTHER APPLICABLE EXEMPTION. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
Principal Amount: $1,670,000.00
Issue Date: June 29, 2023
Actual Amount of Purchase Price: $1,503,000.00
SENIOR PROMISSORY NOTE
FOR VALUE RECEIVED, ALPINE 4 HOLDINGS, INC., a Delaware corporation (hereinafter called the “Borrower” or the “Company”) (Trading Symbol: ALPP), hereby promises to pay to the order of MAST HILL FUND, L.P., a Delaware limited partnership, or registered assigns (the “Holder”), in the form of lawful money of the United States of America, the principal sum of $1,670,000.00 (the “Principal Amount”) (subject to adjustment herein), of which $1,503,000.00 is the actual amount of the purchase price hereof plus an original issue discount in the amount of $167,000.00 (the “OID”), and to pay interest on the unpaid Principal Amount hereof at the rate of twelve percent (12%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise, as further provided herein. The maturity date shall be twelve (12) months from the Issue Date (the “Maturity Date”), and is the date upon which the Principal Amount (which includes the OID) and any accrued and unpaid interest and other fees, shall be due and payable.
This Note may not be prepaid or repaid in whole or in part except as otherwise explicitly set forth herein.
Any Principal Amount or interest on this Note which is not paid when due shall bear interest at the rate of the lesser of (i) sixteen percent (16%) per annum and (ii) the maximum amount permitted by law from the due date thereof until the same is paid (“Default Interest”). Interest and Default Interest shall be computed on the basis of a 365-day year and the actual number of days elapsed.
All payments due hereunder (to the extent not converted into shares of Class A common stock, $0.0001 par value per share, of the Borrower (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day.
Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement, dated as of the Issue Date, pursuant to which this Note was originally issued (the “Purchase Agreement”). As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed. As used herein, the term “Trading Day” means any day that shares of Common Stock are listed for trading or quotation on the Principal Market (as defined in the Purchase Agreement), provided, however, that if the Common Stock is not then listed or quoted on any Principal Market, then any calendar day.
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This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.
The following terms shall also apply to this Note:
ARTICLE I. CONVERSION RIGHTS
1.1    Conversion Right. The Holder shall have the right, on any calendar day, at any time on or following the Issue Date, to convert all or any portion of the then outstanding and unpaid Principal Amount and interest (including any Default Interest) into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified, at the Conversion Price (as defined below) determined as provided herein (a “Conversion”), by submitting to the Borrower or Borrower’s transfer agent a Notice of Conversion (as defined in this Note) by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date (as defined in this Note) prior to 11:59 p.m., New York, New York time; provided, however, that notwithstanding anything to the contrary contained herein, the Holder shall not have the right to convert any portion of this Note, pursuant to Section 1 or otherwise, to the extent that after giving effect to such issuance after conversion as set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s affiliates (the “Affiliates”), and any other Persons (as defined below) acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) conversion of the remaining, nonconverted portion of this Note beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 1.1, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”) and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Holder is solely responsible for any schedules required to be filed in accordance therewith. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. For purposes of this Section 1.1, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding at the time of the respective calculation hereunder. “Person” and “Persons” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or any department or agency thereof. The limitations contained in this paragraph shall apply to a successor holder of this Note. The number of Conversion Shares to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower or Borrower’s transfer agent by the Holder in accordance with the terms of this Note; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York, New York time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means,
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with respect to any conversion of this Note, the sum of (1) the Principal Amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such Principal Amount at the Interest Rate to the Conversion Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2). In addition to the beneficial ownership limitations provided in this Note, the sum of the number of shares of Common Stock that may be issued under this Note shall be limited to the amount described in Section 4(r) of the Purchase Agreement, unless the Shareholder Approval (as defined in the Purchase Agreement) (“Shareholder Approval”) is obtained by the Company.
1.2    Conversion Price.
(a)    Calculation of Conversion Price. The per share conversion price into which Principal Amount and interest (including any Default Interest) under this Note shall be convertible into shares of Common Stock hereunder as further described in this Note (the “Conversion Price”) shall equal $2.00, subject to adjustment as provided in this Note. If at any time the Conversion Price as determined hereunder for any conversion would be less than the par value of the Common Stock, then at the sole discretion of the Holder, the Conversion Price hereunder may equal such par value for such conversion and the Conversion Amount for such conversion may be increased to include Additional Principal, where “Additional Principal” means such additional amount to be added to the Conversion Amount to the extent necessary to cause the number of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued had the Conversion Price not been adjusted by the Holder to the par value price. Holder shall be entitled to deduct $1,750.00 from the conversion amount in each Notice of Conversion to cover Holder’s fees associated with each Notice of Conversion. All such Conversion Price determinations are to be appropriately adjusted for any stock dividend, stock split, stock combination, rights offerings, reclassification or similar transaction that proportionately decreases or increases the Common Stock. If the Company, at any time while this Note is outstanding: (i) pays astock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents, (ii) subdivides outstanding shares of Common Stock into a largernumber of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any sharesof capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to the immediately preceding sentence shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. “Common Stock Equivalents” means any securities of the Company or the Company’s subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
1.3    Authorized and Reserved Shares. The Borrower covenants that at all times until the Note is satisfied in full, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of a number of Conversion Shares equal to the greater of: (a) 1,252,500 shares of Common Stock or (b) the sum of (i) the number of Conversion Shares issuable upon the full conversion of this Note (assuming no payment of Principal Amount or interest) at the time of such calculation (taking into consideration any adjustments to the Conversion Price as provided in this Note) multiplied by (ii) one and a half (1.5) (the “Reserved Amount”). The Borrower represents that upon issuance, the Conversion Shares will be duly and validly issued, fully paid and non-assessable. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Conversion Shares or instructions to have the Conversion Shares issued as contemplated by Section 1.4(f) hereof, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates or cause the Company to electronically issue shares of Common Stock to execute and issue the necessary certificates for the Conversion Shares or cause the Conversion Shares to be issued as contemplated by Section 1.4(f) hereof in accordance with the terms and conditions of this Note.
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If, at any time, the Borrower does not maintain the Reserved Amount, it will be considered an Event of Default (as defined in this Note) under this Note.
1.4    Method of Conversion.
(a)    [Intentionally Omitted].
(b)    Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid Principal Amount is so converted. The Holder and the Borrower shall maintain records showing the Principal Amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Holder shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid Principal Amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted Principal Amount of this Note represented by this Note may be less than the amount stated on the face hereof.
(c)    Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.
(d)    Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower or Borrower’s transfer agent from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Conversion Shares (or cause the electronic delivery of the Conversion Shares as contemplated by Section 1.4(f) hereof) within one (1) Trading Day after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid Principal Amount and interest (including any Default Interest) under this Note, surrender of this Note). If the Company shall fail for any reason or for no reason to issue to the Holder on or prior to the Deadline a certificate for the number of Conversion Shares or to which the Holder is entitled hereunder and register such Conversion Shares on the Company’s share register or to credit the Holder’s balance account with DTC (as defined below) for such number of Conversion Shares to which the Holder is entitled upon the Holder’s conversion of this Note (a “Conversion Failure”), then, in addition to all other remedies available to the Holder, (i) the Company shall pay in cash to the Holder on each day after the Deadline and during such Conversion Failure an amount equal to 2.0% of the product of (A) the sum of the number of Conversion Shares not issued to the Holder on or prior to the Deadline and to which the Holder is entitled and (B) the closing sale price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such Conversion Shares to the Holder without violating this Section 1.4(d); and (ii) the Holder, upon written notice to the Company, may void all or any portion of such Notice of Conversion; provided that the voiding of all or any portion of a Notice of Conversion shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice. In addition to the foregoing, if on or prior to the Deadline the Company shall fail to issue and deliver a certificate to the Holder and register such Conversion Shares on the Company’s share register or credit the Holder’s balance account with DTC for the number of Conversion Shares to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant to the Company’s obligation pursuant to clause (ii) below, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common
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Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company, then the Company shall, within two (2) Trading Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other reasonable and customary out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Conversion Shares) or credit such Holder’s balance account with DTC for such Conversion Shares shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Conversion Shares or credit such Holder’s balance account with DTC and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the closing sales price of the Common Stock on the date of exercise. Nothing shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing the Conversion Shares (or to electronically deliver such Conversion Shares) upon the conversion of this Note as required pursuant to the terms hereof.
(e)    Obligation of Borrower to Deliver Common Stock. At the time that the Holder submits the Notice of Conversion to the Borrower or Borrower’s transfer agent, the Holder shall be deemed to be the holder of record of the Conversion Shares issuable upon such conversion, the outstanding Principal Amount and the amount of accrued and unpaid interest (including any Default Interest) under this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for the Conversion Shares (or cause the electronic delivery of the Conversion Shares as contemplated by Section 1.4(f) hereof) shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is sent to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York, New York time, on such date.
(f)    Delivery of Conversion Shares by Electronic Transfer. In lieu of delivering physical certificates representing the Conversion Shares issuable upon conversion hereof, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer or Deposit/Withdrawal at Custodian programs, upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Conversion Shares issuable upon conversion hereof to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission system.
1.5    Concerning the Shares. The Conversion Shares issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the 1933 Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be the Legal Counsel Opinion (as defined in the Purchase Agreement)) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption, or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the Conversion Shares have been registered under the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for the Conversion Shares that has not been so included in an effective registration statement or that has not been sold pursuant to an
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effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A, REGULATION S UNDER SAID ACT, OR OTHER APPLICABLE EXEMPTION. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
The legend set forth above shall be removed and the Company shall issue to the Holder a certificate for the applicable Conversion Shares without such legend upon which it is stamped or (as requested by the Holder) issue the applicable Conversion Shares by electronic delivery by crediting the account of such holder’s broker with DTC, if, unless otherwise required by applicable state securities laws: (a) such Conversion Shares are registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) the Company or the Holder provides the Legal Counsel Opinion (as contemplated by and in accordance with Section 4(m) of the Purchase Agreement) to the effect that a public sale or transfer of such Conversion Shares may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected. The Company shall be responsible for the fees of its transfer agent and all DTC fees associated with any such issuance. The Holder agrees to sell all Conversion Shares, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Holder with respect to the transfer of Conversion Shares pursuant to an exemption from registration, such as Rule 144, Rule 144A, Regulation S, or other applicable exemption, at the Deadline, notwithstanding that the conditions of Rule 144, Rule 144A, Regulation S, or other applicable exemption, as applicable, have been met, it will be considered an Event of Default under this Note.
1.6    Effect of Certain Events.
(a)    Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in this Note) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
(b)    Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of this Note, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms
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and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not effectuate any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, at least thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
(c)    Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.
(d)    Purchase Rights. If, at any time when all or any portion of this Note is issued and outstanding, the Borrower issues any convertible securities or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
(e)    Dilutive Issuance. If the Borrower, at any time while this Note or any amounts due hereunder are outstanding, issues, sells or grants (or has issued, sold or granted as of the Issue Date, as the case may be) any option to purchase, or sells or grants any right to reprice, or otherwise disposes of, or issues (or has sold or issued, as the case may be, or announces any sale, grant or any option to purchase or other disposition), any Common Stock or other securities convertible into, exercisable for, or otherwise entitle any person or entity the right to acquire, shares of Common Stock (including, without limitation, upon conversion of this Note, and any convertible notes or warrants outstanding as of or following the Issue Date), in each or any case at an effective price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (it being agreed that if the holder of the Common Stock or other securities so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced, at the option of the Holder, to a price equal to the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or other securities are issued. By way of example, and for the avoidance of doubt, if the Company issues a convertible promissory note (including but not limited to a Variable Rate Transaction (as defined in the Purchase Agreement)), and the holder of such convertible promissory note has the right to convert it into Common Stock at an effective
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price per share that is lower than the then Conversion Price (including but not limited to a conversion price with a discount that varies with the trading prices of or quotations for the Common Stock), then the Holder has the right to reduce the Conversion Price to such Base Conversion Price (including but not limited to a conversion price with a discount that varies with the trading prices of or quotations for the Common Stock) in perpetuity regardless of whether the holder of such convertible promissory note ever effectuated a conversion at the Base Conversion Price. In the event of an issuance of securities involving multiple tranches or closings, any adjustment pursuant to this Section 1.6(e) shall be calculated as if all such securities were issued at the initial closing. Notwithstanding the foregoing, this Section 1.6(e) shall not apply to a Buyout Transaction (as defined in this Note). “Buyout Transaction” shall mean any transaction if the Note is fully repaid and extinguished within two (2) business days after the Company’s closing and receipt of funds of the respective transaction.
(f)    Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in Section 1.6 of this Note, the Borrower shall, at its expense and within one (1) calendar day after the occurrence of each respective adjustment or readjustment of the Conversion Price, compute such adjustment or readjustment and prepare and furnish to the Holder a certificate setting forth (i) the Conversion Price in effect at such time based upon the Dilutive Issuance, (ii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note, (iii) the detailed facts upon which such adjustment or readjustment is based, and (iv) copies of the documentation (including but not limited to relevant transaction documents) that evidences the adjustment or readjustment. In addition, the Borrower shall, within one (1) calendar day after each written request from the Holder, furnish to such Holder a like certificate setting forth (i) the Conversion Price in effect at such time based upon the Dilutive Issuance, (ii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note, (iii) the detailed facts upon which such adjustment or readjustment is based, and (iv) copies of the documentation (including but not limited to relevant transaction documents) that evidences the adjustment or readjustment. For the avoidance of doubt, each adjustment or readjustment of the Conversion Price as a result of the events described in Section 1.6 of this Note shall occur without any action by the Holder and regardless of whether the Borrower complied with the notification provisions in Section 1.6 of this Note.
1.7    [Intentionally Omitted].
1.8    Status as Shareholder. Upon submission of a Notice of Conversion by the Holder, (i) the Conversion Shares covered thereby (other than the Conversion Shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of 7 Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if the Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies for the Borrower’s failure to convert this Note.
1.9    Prepayment. At any time prior to the date that an Event of Default occurs under this Note, the Borrower shall have the right, exercisable on ten (10) Trading Days prior written notice to the Holder of the Note, to prepay the outstanding Principal Amount and interest then due under this Note in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be ten (10) Trading Days from the date of the Optional Prepayment Notice (the “Optional Prepayment Date”). The Holder shall have the right, during the period beginning on the date of Holder’s receipt of the Optional Prepayment Notice and until the Holder’s actual receipt of the full prepayment amount on the Optional Prepayment Date, to instead convert all or any portion of the Note pursuant to the terms of this Note,
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including the amount of this Note to be prepaid by the Borrower in accordance with this Section 1.9. On the Optional Prepayment Date, the Borrower shall make payment of the amounts designated below to or upon the order of the Holder as specified by the Holder in writing to the Borrower. If the Borrower exercises its right to prepay the Note in accordance with this Section 1.9, the Borrower shall make payment to the Holder of an amount in cash equal to the sum of: (w) 100% of the Principal Amount then outstanding plus (x) accrued and unpaid interest on the Principal Amount to the Optional Prepayment Date plus (y) $750.00 to reimburse Holder for administrative fees.
1.10    Repayment from Proceeds. If, at any time prior to the full repayment or full conversion of all amounts owed under this Note, the Company or any of the Company’s Subsidiaries (as defined in the Purchase Agreement) receives cash proceeds on or after the Issue Date, from the issuance of equity or debt, the incurrence of indebtedness for borrowed money, a merchant cash advance, sale of receivables or similar transaction, the issuance of securities pursuant to an Equity Line of Credit (as defined in this Note) of the Company, or the sale of material assets by the Company or any of the Company’s Subsidiaries, the Company shall, within three (3) business days of Company’s or the Subsidiaries’ receipt of such proceeds, inform the Holder of or publicly disclose such receipt, following which the Holder shall have the right in its sole discretion to require the Company or the Subsidiaries to apply up to 20% of such proceeds (the “Repayment Percentage”) to repay all or any portion of the outstanding Principal Amount and interest (including any Default Interest) then due under this Note within three (3) business days of Holder’s request. Failure of the Company to comply with this provision shall constitute an Event of Default. “Equity Line of Credit” shall mean any transaction involving a written agreement between the Company and an investor or underwriter whereby the Company has the right to “put” its Common Stock to the investor or underwriter over an agreed period of time and at an agreed price or price formula (such Common Stock must be registered pursuant to a registration statement of the Company for the investor’s or underwriter’s resale). Notwithstanding anything in this Section 1.10 to the contrary, this Section 1.10 shall not apply to the Company’s sale of its equity interests in ElecJet Inc. or Global Autonomous Corporation, so long as in each case the Company owns at least 40% of the total equity interests of the respective entity after the consummation of the respective sale.
1.11    Amortization Payments. In addition to all other payment obligations under this Note, Borrower shall also make the following amortization payments (each an “Amortization Payment”) in cash to the Holder towards the repayment of this Note, as provided in the following table:
Payment Date:
Payment Amount:
December 29, 2023
$125,000.00 plus accrued interest through December 29, 2023
January 29, 2024
$150,000.00 plus accrued interest through January 29, 2024
February 29, 2024
$200,000.00 plus accrued interest through February 29, 2024
March 29, 2024
$250,000.00 plus accrued interest through March 29, 2024
April 29, 2024$250,000.00 plus accrued interest through April 29, 2024
May 29, 2024$300,000.00 plus accrued interest through May 29, 2024
June 29, 2024The entire remaining outstanding balance of the Note
ARTICLE II. RANKING AND CERTAIN COVENANTS
2.1    Ranking and Security. This Note shall be a senior obligation of the Borrower, with priority over all existing and future indebtedness of the Borrower, excluding asset-based lines of credit between the Company’s subsidiaries and their lenders.
2.2    Other Indebtedness. So long as the Borrower shall have any obligation under this Note, the Borrower shall not (directly or indirectly) incur or suffer to exist or guarantee any indebtedness that is senior to or
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pari passu with (in priority of payment and performance) the Borrower’s obligations hereunder except as provided in Section 2.1 of this Note, including but not limited to (a) all indebtedness of the Borrower for borrowed money or for the deferred purchase price of property or services, including any type of letters of credit, (b) all obligations of the Borrower evidenced by notes, bonds, debentures or other similar instruments, (c) purchase money indebtedness hereafter incurred by the Borrower to finance the purchase of fixed or capital assets, including all capital lease obligations of the Borrower which do not exceed the purchase price of the assets funded, (d) all guarantee obligations of the Borrower in respect of obligations of the kind referred to in clauses (a) through (c) above that the Borrower would not be permitted to incur or enter into, and (e) all obligations of the kind referred to in clauses (a) through (d) above that the Borrower is not permitted to incur or enter into that are secured and/or unsecured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured and/or unsecured by) any lien or encumbrance on property (including accounts and contract rights) owned by the Borrower, whether or not the Borrower has assumed or become liable for the payment of such obligation.
2.3    Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s disinterested directors.
2.4    Restriction on Stock Repurchases and Debt Repayments. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares, or repay any indebtedness of Borrower other than this Note.
2.5    Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent by the Holder to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition. Notwithstanding anything in this Section 2.5 to the contrary, this Section 2.5 shall not apply to the Company’s sale of its equity interests in ElecJet Inc. or Global Autonomous Corporation, so long as in each case the Company owns at least 40% of the total equity interests of the respective entity after the consummation of the respective sale.
2.6    Advances and Loans; Affiliate Transactions. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, lend money, give credit, make advances to or enter into any transaction with any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the Issue Date and which the Borrower has informed Holder in writing prior to the Issue Date, (b) in regard to transactions with unaffiliated third parties, made in the ordinary course of business or (c) in regard to transactions with unaffiliated third parties, not in excess of $100,000. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, repay any affiliate (as defined in Rule 144, but excluding a subsidiary of the Company) of the Borrower in connection with any indebtedness or accrued amounts owed to any such party.
2.7    Section 3(a)(9) or 3(a)(10) Transaction. So long as this Note is outstanding, the Borrower shall not enter into any transaction or arrangement structured in accordance with, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9) of the Securities Act (a “3(a)(9) Transaction”) or Section 3(a)(10) of the Securities Act (a “3(a)(10) Transaction”). In the event that the Borrower does enter into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction or a 3(a)(10) Transaction while this note is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note, but not less than $25,000, will be assessed and will become immediately due and payable to the Holder at its election in the form of a cash payment or added to the balance of this Note (under Holder's and Borrower's expectation that this amount will tack back to the Issue Date).
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2.8    Preservation of Business and Existence, etc. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, (a) change the nature of its business; (b) sell, divest, change the structure of any material assets other than in the ordinary course of business; (c) enter into a Variable Rate Transaction; or (d) enter into any merchant cash advance or sale of receivables transactions. In addition, so long as the Borrower shall have any obligation under this Note, the Borrower shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries (other than dormant Subsidiaries that have no or minimum assets) to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary. Notwithstanding anything in this Section 2.8 to the contrary, this Section 2.8 shall not apply to the Company’s sale of its equity interests in ElecJet Inc. or Global Autonomous Corporation, so long as in each case the Company owns at least 40% of the total equity interests of the respective entity after the consummation of the respective sale.
2.9    Noncircumvention. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate or Articles of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all the provisions of this Note and take all action as may be required to protect the rights of the Holder.
2.10    Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note.
ARTICLE III. EVENTS OF DEFAULT
It shall be considered an event of default if any of the following events listed in this Article III (each, an “Event of Default”) shall occur on or after the Issue Date:
3.1    Failure to Pay Principal or Interest. The Borrower fails to pay the Principal Amount hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise, fails to fully comply with Section 1.10, or fails to pay any Amortization Payment when due as provided in Section 1.11 of this Note, in each case subject to a cure period of five (5) business days.
3.2    Conversion and the Shares. The Borrower (i) fails to issue Conversion Shares to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, (iii) fails to reserve the Reserved Amount at all times, (iv) the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for two (2) Trading Days after the Holder shall have delivered a Notice of Conversion, and/or (v) fails to remain current in its obligations to its transfer agent (including but not limited to payment obligations to its transfer agent). It shall be an Event of Default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds
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to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be added to the principal balance of the Note.
3.3    Breach of Agreements and Covenants. The Borrower breaches any covenant, agreement, or other term or condition contained in the Purchase Agreement, Registration Rights Agreement (as defined in the Purchase Agreement) (the “Registration Rights Agreement”), this Note, Irrevocable Transfer Agent Instructions, Warrant (as defined in the Purchase Agreement) (the “Warrant”), or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith or therewith, subject in each such case to the Borrower’s right to cure such default within two (2) calendar days after the earlier of (i) the date that the Borrower receives notice from Holder demanding cure of such default or (ii) the first date that the then Chief Executive Officer, Chief Financial Officer, or Board of Directors of the Borrower has actual knowledge of the existence of the default.
3.4    Breach of Representations and Warranties. Any representation or warranty of the Borrower made in the Purchase Agreement, Registration Rights Agreement, this Note, Irrevocable Transfer Agent Instructions, Warrant, or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith or therewith shall be, in each case, false or misleading in any material respect when made.
3.5    Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.
3.6    Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $100,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.
3.7    Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.
3.8    Failure to Comply with the 1934 Act. At any time after the Issue Date, the Borrower shall fail to comply with the reporting requirements of the 1934 Act and/or the Borrower shall cease to be subject to the reporting requirements of the 1934 Act, subject in each such case to the Borrower’s right to cure such default within fifteen (15) calendar days after the earlier of (i) the date that the Borrower receives notice from Holder demanding cure of such default or (ii) the first date that the then Chief Executive Officer, Chief Financial Officer, or Board of Directors of the Borrower has actual knowledge of the existence of the default.
3.9    Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10    Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.
3.11    Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).
3.12    Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note (Excluding any restatements already existing in the SEC Documents) and until this Note is no longer outstanding, subject in each such case to the Borrower’s right to cure such default within two (2) calendar days after the earlier of (i) the date that the Borrower receives notice from Holder demanding cure of such default or (ii) the first date that the then Chief
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Executive Officer, Chief Financial Officer, or Board of Directors of the Borrower has actual knowledge of the existence of the default.
3.13    Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower, subject in each such case to the Borrower’s right to cure such default within two (2) calendar days after the earlier of (i) the date that the Borrower receives notice from Holder demanding cure of such default or (ii) the first date that the then Chief Executive Officer, Chief Financial Officer, or Board of Directors of the Borrower has actual knowledge of the existence of the default.
3.14    Cross-Default. The declaration of an event of default by any lender or other extender of credit to the Company under any notes, loans, agreements or other instruments of the Company evidencing any indebtedness of the Company (including those filed as exhibits to or described in the Company’s filings with the SEC), excluding such defaults by a Company subsidiary, after the passage of all applicable notice and cure or grace periods, subject in each such case to the Borrower’s right to cure such default within two (2) calendar days after the earlier of (i) the date that the Borrower receives notice from Holder demanding cure of such default or (ii) the first date that the then Chief Executive Officer, Chief Financial Officer, or Board of Directors of the Borrower has actual knowledge of the existence of the default.
3.15    Variable Rate Transactions. The Borrower consummates a Variable Rate Transaction at any time on or after the Issue Date.
3.16    Inside Information. Any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose, or any actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material non-public information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by Borrower’s filing of a Form 8-K pursuant to Regulation FD on that same date.
3.17    Unavailability of Rule 144. If, at any time on or after the date that is six (6) calendar months after the Issue Date, the Holder is unable to (i) obtain a standard “144 legal opinion letter” from an attorney reasonably acceptable to the Holder, the Holder’s brokerage firm (and respective clearing firm), and the Borrower’s transfer agent in order to facilitate the Holder’s conversion of any portion of the Note into free trading shares of the Borrower’s Common Stock pursuant to Rule 144, and/or (ii) thereupon deposit such shares into the Holder’s brokerage account.
3.18    Delisting, Suspension, or Quotation of Trading of Common Stock. If, at any time on or after the Issue Date, the Borrower’s Common Stock (i) is suspended from trading, (ii) halted from trading, and/or (iii) fails to be listed on The Nasdaq Capital Market.
3.19    Market Capitalization. The Borrower fails to maintain a market capitalization of at least $20,000,000 on any Trading Day, which shall be calculated by multiplying (i) the closing price of the Borrower’s common stock on the Trading Day immediately preceding the respective date of calculation by (ii) the total shares of the Borrower’s common stock issued and outstanding on the Trading Day immediately preceding the respective date of calculation, subject to the Borrower’s right to cure such default within two (2) calendar days after the earlier of (i) the date that the Borrower receives notice from Holder demanding cure of such default or (ii) the first date that the then Chief Executive Officer, Chief Financial Officer, or Board of Directors of the Borrower has actual knowledge of the existence of the default.
3.20    Shareholder Approval. The Company fails to obtain the Shareholder Approval within ninety (90) calendar days after the first date after the Issue Date that the Common Stock trades on the Principal Market at a price per share that is less than the Threshold Price (as defined in the Purchase Agreement), subject to the Borrower’s right to cure such default within two (2) calendar days after the earlier of (i) the date that the Borrower receives notice from Holder demanding cure of such default or (ii) the first date that the then Chief Executive
13


Officer, Chief Financial Officer, or Board of Directors of the Borrower has actual knowledge of the existence of the default.
3.21    Rights and Remedies Upon an Event of Default. Upon the occurrence of any Event of Default specified in this Article III that continues to exist beyond Borrower’s right of cure for that Event of Default (if applicable as provided therein), this Note shall become immediately due and payable, and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Amount then outstanding plus accrued interest (including any Default Interest) through the date of full repayment multiplied by 130% (collectively the “Default Amount”), as well as all costs, including, without limitation, legal fees and expenses, of collection, all without demand, presentment or notice, all of which hereby are expressly waived by the Borrower. Holder may, in Holder’s sole discretion, convert all or any portion of this Note (including the Default Amount) into Common Stock pursuant to the terms of this Note. For purposes of conversions into Common Stock, the conversion formula set forth in Section 1.2 shall apply as well as all other provisions of this Note. The Holder shall be entitled to exercise all other rights and remedies available at law or in equity.
ARTICLE IV. MISCELLANEOUS
4.1    Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies of the Holder existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
4.2    Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery. or delivery by e-mail whose receipt of which is acknowledged by the intended recipient by means of email reply or other written notice described under this subsection, or facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
If to the Borrower, to:
ALPINE 4 HOLDINGS, INC.
2525 E Arizona Biltmore Circle, Suite 237
Phoenix, AZ 85016
Attention: Kent Wilson
e-mail: kwilson@alpine4.com
If to the Holder:
MAST HILL FUND, L.P.
48 Parker Road
Wellesley, MA 02482
e-mail: admin@masthillfund.com
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4.3    Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.
4.4    Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. The Borrower shall not assign this Note or any rights or obligations hereunder without the prior written consent of the Holder. The Holder may assign its rights hereunder to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transaction from the Holder or to any of its “affiliates”, as that term is defined under the 1934 Act, without the consent of the Borrower. Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.
4.5    Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.
4.6    Governing Law; Venue; Attorney’s Fees. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Except as otherwise required by Section 4.15 of this Note, any action brought by the Company concerning the transactions contemplated by this Note or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in a state or federal court located in the State of Delaware. Any action brought by the Holder concerning the transactions contemplated by this Note or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in either (a) a state or federal court located in the State of Delaware, or (b) a state or federal court located in the Commonwealth of Massachusetts. Notwithstanding anything in the foregoing to the contrary, nothing herein (i) shall limit, or shall be deemed or construed to limit, the ability of the Holder to realize on any collateral or any other security, or to enforce a judgment or other court ruling in favor of the Holder, including through a legal action in any court of competent jurisdiction, or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 4.15 of this Note. The Company hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any objection to jurisdiction and venue of any action instituted hereunder, any claim that it is not personally subject to the jurisdiction of any such court, and any claim that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper (including but not limited to based upon forum non conveniens). THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTIONS CONTEMPLATED HEREBY. The Company irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Note or any other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to Company at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. The prevailing party in any action or dispute brought in connection with this Note or any other agreement, certificate, instrument or document contemplated hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s fees and costs. If any provision of this Note shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Note in that jurisdiction or the validity or enforceability of any provision of this Note in any other jurisdiction.
4.7    Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding Principal Amount (or the portion thereof required to be paid at that time) plus accrued
15


and unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.
4.8    Purchase Agreement. The Company and the Holder shall be bound by the applicable terms of the Purchase Agreement and the documents entered into in connection herewith and therewith.
4.9    Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any change in control or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9.
4.10    Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.
4.11    Construction; Headings. This Note shall be deemed to be jointly drafted by the Company and all the Holder and shall not be construed against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note.
4.12    Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any action or proceeding that may be brought by the Holder in order to enforce any right or remedy under this Note. Notwithstanding any provision to the contrary contained in this Note, it is expressly agreed and provided that the total liability of the Company under this Note for payments which under the applicable law are in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums which under the applicable law in the nature of interest that the Company may be obligated to pay under this Note exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by applicable law and applicable to this Note is increased or decreased by statute or any official governmental action subsequent to the Issue Date, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to this Note from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid
16


by the Company to the Holder with respect to indebtedness evidenced by this the Note, such excess shall be applied by the Holder to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at the Holder’s election.
4.13    Severability. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law (including any judicial ruling), then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note.
4.14    Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries of any security, or amendment to a security that was originally issued before the Issue Date, with any term that the Holder reasonably believes is more favorable to the holder of such security or with a term in favor of the holder of such security that the Holder reasonably believes was not similarly provided to the Holder in this Note (even if the holder of such other security does not receive the benefit of such more favorable term until a default occurs under such other security), then (i) the Borrower shall notify the Holder of such additional or more favorable term within one (1) business day of the issuance and/or amendment (as applicable) of the respective security, and (ii) such term, at Holder’s option, shall become a part of the transaction documents with the Holder (regardless of whether the Borrower complied with the notification provision of this Section 4.14). The types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing prepayment rate, interest rates, and original issue discounts.
4.15    Dispute Resolution.
(a)    In the case of a dispute relating to the Conversion Price, Conversion Amount, any prepayment amount or Default Amount, Issue Date, Closing Date, Maturity Date, the closing bid price, or fair market value (as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other party via electronic mail (A) if by the Company, within two (2) Trading Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to agree upon such determination or calculation within two (2) Trading Days following such initial notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option, submit the dispute to an independent, reputable investment bank or independent, outside accountant selected by the Holder (the “Independent Third Party”), and the Company shall pay all expenses of such Independent Third Party.
(b)    The Holder and the Company shall each deliver to such Independent Third Party (A) a copy of the initial dispute submission so delivered in accordance with the first sentence of this Section 15(a) and (B) written documentation supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by second (2nd) Business Day immediately following the date on which the Holder selected such Independent Third Party (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such Independent Third Party with respect to such dispute and such Independent Third Party shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such Independent Third Party prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such Independent Third Party, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such Independent Third Party in connection with such dispute, other than the Required Dispute Documentation.
(c)    The Company and the Holder shall cause such Independent Third Party to determine the resolution of such dispute and notify the Company and the Holder of such resolution no later than five (5) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of such Independent Third
17


Party shall be borne solely by the Company, and such Independent Third Party’s resolution of such dispute shall be final and binding upon all parties absent manifest error.
[signature page follows]
18


IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer on June 29, 2023.
ALPINE 4 HOLDINGS, INC.
By:/s/ Kent Wilson
Name: Kent Wilson
Title: Chief Executive Officer
19


EXHIBIT A -- NOTICE OF CONVERSION
The undersigned hereby elects to convert $_______________principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of ALPINE 4 HOLDINGS, INC., an Delaware corporation (the “Borrower”), according to the conditions of the promissory note of the Borrower dated as of June 29, 2023 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.
Box Checked as to applicable instructions:
The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).
Name of DTC Prime Broker:
Account Number:
The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:
Date of Conversion:
Applicable Conversion Price:$
Number of Shares of Common Stock to be Issued Pursuant to Conversion of the Note:
Amount of Principal Balance Due remaining Under the Note after this conversion:
By:
Name:
Title:
Date:

Exhibit 10.35
Execution Version
jhdarbielogoa.jpg
June 15, 2023

Alpine 4 Holdings Inc.
2525 E Arizona Biltmore Circle
Suite 237
Phoenix, AZ 85016
Re:    Finder’s Fee Agreement
Dear Kent Wilson:
As you know, Alpine 4 Holdings Inc. (the “Issuer”), has expressed an interest in obtaining private equity or debt capital for various purposes. This letter agreement (“Agreement”) sets forth the terms and conditions upon which J.H. Darbie & Co., Inc. (“Darbie”), will introduce the Issuer to third-party investors (each, an “Introduced Party”).
1.    Nature of Agreement and Services.
(a)    Promptly upon execution of this Agreement by the Issuer, Darbie will use its best efforts to initiate an introduction between principals of the Introduced Party and the Issuer. The Issuer understands that Darbie is not guaranteeing that a Transaction (as defined herein) will be consummated, is not offering to purchase any securities of the Issuer, and is not obligated to provide any additional services beyond the scope of this Agreement.
(b)    Issuer is not at the time of this Agreement a customer, affiliate, or representative of Darbie.
(c)    Darbie is not providing any recommendation to the Issuer in connection with any possible Transaction.
(d)    Darbie has not provided any investment banking, advisory, or analytic services to the Issuer, including underwriting or placement agent services, either as principal or agent, in connection with the offer or sale of any securities of the Issuer, and Issuer specifically acknowledges that Darbie will not provide any investment banking, advisory, or analytic services to the Issuer, including underwriting or placement agent services, either as principal or agent, in connection with the offer or sale of any securities of the Issuer under this Agreement.
(e)    Darbie is not and will not be a party to any contract entered into between the Issuer and any Introduced Party.
(f)    Darbie will not participate in any way in fulfilling any obligations to any Introduced Party undertaken by the Issuer, including services relating to the offer or sale of securities, such as: (i) performing any independent analysis of the offer or sale of securities; (ii) engaging in any due diligence activities; (iii) assisting in or providing financing for such purchases; (iv) providing any advice relating to the valuation of or the financial advisability of such an investment; (v) advising or providing information regarding the suitability of any investment for any person; or (vi) handling any funds or securities.
2.    Term.
(a)    This Agreement will remain in effect for a period of 120 days from its date (the “Term”). Darbie will have the right to terminate this Agreement immediately upon written notice to the Issuer. The Issuer will not have the right to terminate this Agreement unless there has been a breach by Darbie of a material term of this Agreement, and the Issuer has provided Darbie with written notice of such breach; provided, however, Darbie will have the right to cure such breach
J.H. Darbie & Co.
48 Wall Street, Suite 1206 New York, NY 10005
Telephone: 212-269-7271 Fax: 212-269-7330
www.jhdarbie.com

J.H. DARBIE & CO., INC.Execution Copy
Alpine 4 Holdings Inc.
June 15, 2023
Page 2
within 10 days of the date of the notice sent by the Issuer. Notwithstanding termination of this Agreement, Darbie will be entitled to receive compensation under section 3 in the event the Issuer and an Introduced Party consummate a Transaction (as defined herein) at any time during the period commencing on the date hereof and ending 12 months from the later of the date of the termination of this Agreement or the last funding of a Transaction between the Issuer and the Introduced Party. Sections 2, 3, 6, 7, and 11 will survive termination ofthis Agreement.
(b)    If: (i) during the 12 months following termination or expiration of this Agreement, any Introduced Party purchases equity or debt securities from the Issuer; or (ii) during the Term, an Introduced Party enters into an agreement to purchase securities from the Issuer, which is consummated at any time thereafter; each of the foregoing, a “Transaction,” the Issuer will pay Darbie, upon the receipt of the purchase price for the securities or the close of the Transaction, a Finder’s Fee in the amount that would otherwise have been payable to Darbie in accordance with this Agreement had such Transaction occurred during the Term.
3.    Finder’s Fee and Expenses.
(a)    In consideration of the foregoing, upon consummation of the closing regarding a financing on behalf of the Issuer, directly or through a structured Transaction, Darbie will be entitled to receive a finder fee (“Finder’s Fee”) in cash equal to 4% of the wired proceeds of an equity/convertible debt transaction and/or cash equal to 3% of the wired proceeds of a non-convertible debt transaction received by the Issuer within three business days from the closing date. The Issuer and the Introduced Party will not be obligated to pay Darbie if the Issuer does not receive the Transaction Proceeds.
(b)    Within three days of closing the Transaction a warrant in the form, appropriately completed to reflect the following terms. The Issuer also shall pay Darbie non-callable warrants of the Issuer issuable to Darbie, or its designee simultaneously with the closing of the Transaction equal to 1 % warrant coverage of the wired proceeds. The warrants shall entitle the holder thereof to purchase securities of the Issuer at a purchase price equal to 120% of the Introduced Party’s exercise price of the Transaction (such price, the “Warrant Price”). The warrants shall be exercisable immediately after the date of issuance, shall have anti-dilutive price protection, participating registration rights, and shall expire 5 years after the date of issuance. If warrants are issued to investors in a Transaction, the Darbie warrants shall have the same terms as the warrants issued to investors in the applicable Transaction, except that such Darbie warrants shall have an exercise price equal to 120% of the Warrant Price.
(c)    In the event that the Issuer proceeds with a non-financing transaction with one or more Introduced Parties, then prior to closing the Issuer and Darbie shall mutually agree upon compensation payable to Darbie which may include an ownership interest in the resulting licensed, joint venture and/or merged/acquiring entity. In the event the Issuer completes a non-financing transaction with an Introduced Party, without first agreeing with Darbie on the finder’s fee for the non-financing transaction, then Darbie shall be entitled to receive a cash fee equal to 4% of any licensing fees payable upon receipt by the licensor, a cash fee equal to 4% of the value of the Issuer related portion of the surviving entity resulting from any merger or acquisition payable upon closing of the transaction and, in the case of a joint venture, equal to 6% of Darbie’s ownership portion of the joint venture.
(d)    The Finder’s Fee will be paid in cash and will be payable whether or not the Transaction involves equity or debt securities, or a combination of equity and debt securities and cash or is made on the installment-sale basis. The Finder’s Fee will be deducted from the Transaction Proceeds by the Introduced Party, and the Introduced Party will remit the Finder’s Fee directly to Darbie on Issuer’s behalf. For purposes of this Agreement “Transaction Proceeds” will mean the fair market value of all cash and securities received by the Issuer from the Introduced Party, including a debt repayment or debt assumption, all determined in accordance with generally accepted accounting principles. Notwithstanding the foregoing, in the event that the Transaction Proceeds are received by the Issuer in installments, the compensation payable to Darbie hereunder will be due and payable upon receipt by the Issuer of each installment in the same manner described earlier in this section.


J.H. DARBIE & CO., INC.Execution Copy
Alpine 4 Holdings Inc.
June 15, 2023
Page 3
(e)    Darbie will be solely liable for the payment of any taxes imposed or arising out of any Finder s Fee received by it under this Agreement.
(f)    Issuer agrees to not circumvent Darbie by entering into business relations with any Introduced Party without providing payment of the agreed upon Finder’s Fee as stated in this Agreement.
(g)    Issuer and Darbie will each pay its own expenses arising out of or relating to this Agreement.
4.    Preexisting Relationship. In the event Issuer has prior evidentiary communication with an Introduced Party, the Issuer will notify Darbie of such a relationship and, upon written request, provide documentation of the Issuer’s prior communication with an Introduced Party. Communication will include phone or e-mail contact or written representations by both Issuer and an Introduced Party of a preexisting relationship. For purposes of this paragraph, email communication is deemed acceptable.
5.    Confidential Information. Darbie will hold in confidence, for a period of two years from the date hereof, any confidential information that the Issuer may provide to it pursuant to this Agreement unless the Issuer gives Darbie permission in writing to disclose such confidential information to a specific third party. Notwithstanding the foregoing, Darbie will not be required to maintain confidentiality for information: (a) that is or becomes part of the public domain through no fault or action of Darbie; (b) of which it had independent knowledge prior to disclosure to it by the Issuer; (c) that comes into Darbie’s possession in the normal and routine course of its own business from and through independent, nonconfidential sources; or (d) that is required to be disclosed by Darbie by governmental or security regulatory requirements. If Darbie is requested or required (by oral questions, interrogatories, requests for information or document subpoenas, civil investigative demands, or similar process) to disclose any confidential information supplied to it by the Issuer, or the existence of other negotiations in the course of its dealings with the Issuer or its representatives, Darbie will, unless prohibited by law, promptly notify the Issuer of such a request so that the Issuer may seek an appropriate protective order.
6.    Independent Contractor. Nothing in this Agreement will constitute a business combination, joint venture, partnership, or employment relationship between the Issuer and Darbie. Darbie acknowledges and agrees that it is merely and strictly acting as a finder, and not as an agent, employee, or representative of the Issuer, and has no authority to negotiate for or to bind the Issuer. This Agreement is not exclusive, and each party is free to enter into similar arrangements with third parties. Darbie agrees it will not make, publish, or distribute any advertisement or marketing material using the trademarks, logos, trade names or abbreviations thereof, or any other such identifying mark or name of the Issuer or its affiliates without the prior consent of the Issuer.
7.    Indemnification. The Issuer agrees to indemnify and hold harmless Darbie and its officers, directors, employees, agents, representatives, and controlling persons (and the officers, directors, employees, agents, representatives, and controlling persons of each of them),from and against any and all losses, claims, damages, liabilities, costs, and expenses (and all actions, suits, proceedings, or claims in respect thereof) and any legal or other expenses in giving testimony or furnishing documents in response to a subpoena or otherwise (including the cost of investigating, preparing, or defending any such action, suit, proceeding or claim, whether or not in connection with any action, suit, proceeding, or claim in which Darbie or the Issuer is a party), as and when incurred, directly or indirectly, caused by, relating to, based upon, or arising out of Darbie’s service pursuant to this Agreement, including any suit based upon the terms and conditions of a Transaction or information, representations, or warranties provided by the Issuer to a Transaction party by the Issuer. The Issuer further agrees that Darbie will incur no liability to the Issuer for any acts or omissions by Darbie arising out of or relating to this Agreement or Darbie’s performance or failure to perform any services under this Agreement, except for Darbie’s intentional or willful misconduct. Further, except for events involving Darbie’s intentional or willful misconduct, in no event will Darbie be liable to the Issuer or to any third party or Transaction party for an amount in excess of the cash compensation received pursuant to section 3 hereof. This section 7 will survive the termination of this Agreement. Notwithstanding the foregoing, no party otherwise entitled to indemnification will be entitled thereto to the extent such


J.H. DARBIE & CO., INC.Execution Copy
Alpine 4 Holdings Inc.
June 15, 2023
Page 4
party has been determined to have acted in a manner that has been deemed as gross negligence or willful misconduct regarding the matter for which indemnification is sought herein.
8.    Notices. Any notice, demand, request, or other communication permitted or required under this Agreement will be in writing and will be deemed to have been given as of the date so delivered, if personally delivered; as of the date so sent, if sent by electronic mail and receipt is acknowledged by the recipient; and one day after the date so sent, if delivered by overnight courier service; addressed as follows:
If to the Issuer:
Alpine 4 Holdings Inc.
2525 E Arizona Biltmore Circle
Suite 237
Phoenix, AZ 85016
Attn: Kent Wilson
Email: kwilson@alpine4.com
With a copy emailed to:
Peter D. Ward, Inside Counsel
Email: pward@alpine4.com
If to Darbie, to:
J. H. Darbie & Co., Inc.
48 Wall Street, Suite 1206
New York, NY 10005
Attn: Xavier Vicuna
Email: ib@jhdarbie.com
Notwithstanding the foregoing, service of legal process or other similar communications will not be given by electronic mail and will not be deemed duly given under this Agreement if delivered by such means. Each party, by notice duly given in accordance herewith, may specify a different address for the giving of any notice hereunder.
9.    Successors and Assigns. No party will assign its rights, duties, and obligations under this Agreement without the written consent of the other party, which will not be unreasonably withheld, except as otherwise specifically contemplated in this Agreement. This Agreement will be binding upon, inure to the benefit of, and be enforceable by the parties and their permitted successors and assigns.
10.    Governing Law and Enforcement. This Agreement will be governed by and construed under and in accordance with the laws of the state of New York, without giving effect to any choice or conflict of law provision or rule (whether the state ofNew York or any otherjurisdiction) that would cause the application of the laws of anyjurisdiction other than the state ofNew York. All matters involving the Issuer and Darbie, whether arising under this Agreement or otherwise will be heard and determined by mediation or arbitration.
11.    Entire Agreement. This Agreement incorporates and includes all prior negotiations, correspondence, conversations, agreements, or understandings applicable to the matters contained herein, and the parties agree that there are no commitments, agreements, or understandings concerning the subject matter of this Agreement that are not contained in this document. The parties acknowledge that, in deciding to enter into this Agreement, they have not relied upon any statements, promises, or representations, written or oral, express or implied, other than those set forth in this Agreement. Accordingly, it is agreed that no deviation from the terms hereof will be predicated upon any prior representations or agreements, whether oral or written. The parties acknowledge that they have negotiated this Agreement at arm’s-length with adequate representation on an equal basis, and the filing of a suit challenging the negotiated terms of this Agreement by either party will be deemed a default and this Agreement will be terminated as provided herein.


J.H. DARBIE & CO., INC.Execution Copy
Alpine 4 Holdings Inc.
June 15, 2023
Page 5
12.    Amendment. Any amendment, modification, or waiver of the terms of this Agreement must be executed in writing by both parties.
13.    Severability. The provisions of this Agreement are severable and should any provision hereof be void, voidable, or unenforceable under any applicable law, such void, voidable, or unenforceable provision will not affect or invalidate any other provision of this Agreement, which will continue to govern the relative rights and duties of the parties as though the void, voidable, or unenforceable provision was not a part hereof. In addition, it is the intention and agreement of the parties that all the terms and conditions hereofbe enforced to the fullest extent permitted by law.
14.    Warranty of Authority. Each of the individuals signing this Agreement on behalf of a party hereto warrants and represents that such individual is duly authorized and empowered to enter in this Agreement and bind such party hereto.
15.    Counterpart Signatures. This Agreement may be executed in any number of counterparts (and any counterpart may be executed by original, portable document format (pdf), or facsimile signature), each of which when executed and delivered will be deemed an original, but all of which will constitute one and the same instrument.
_____________________________________
If the foregoing is acceptable to you, please so indicate by signing in the space provided below and returning a signed copy of this Agreement to us for our records.
Sincerely,
J.H. DARBIE & CO., INC.
By:
/s/ Xavier Vicuna
Name: Xavier Vicuna
Title: Vice President
ALPINE 4 HOLDINGS INC.
By:
/s/ Kent Wilson
Name: Kent Wilson
Title: CEO
Agreed to and accepted this 15th day of June 2023.

Exhibit 10.36
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered effective as of the 11th day of February 2021, by and between Alpine 4 Technologies, Ltd.., a Delaware Corporation (the "Company") and Kent B. Wilson (the "Executive") and supersedes and replaces any prior employment agreement or employment letter between the Parties.
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board") has approved the Company to modify its current employment agreement with the Executive;
WHEREAS, the Executive has served as the Chief Executive Officer and President of the Company and thus the key senior executive of the Company since June 2014;
WHEREAS, the Company would like renew and update its formal agreement with the Executive to set forth the tenns of Executive's employment and to provide for certain severance payments and other benefits in the event Executive's employment is terminated by the Company without cause or by the Executive for "Good Reason'' (as defined below);
WHEREAS, the Executive would like to provide some assurance to the Company that the Executive will not solicit any employees of the Company and will not work for any entity which has any activities which compete with the Company, as further described below;
NOW THEREFORE, in consideration of the recitals and the mutual agreements herein set forth, the Company and the Executive agree as follows:
INCONSIDERATION OF the matters described above and of the mutual benefits and obligations set forth in this Agreement, the receipt and sufficiency of which consideration is hereby acknowledged, the parties to this Agreement agree as follows:
EMPLOYMENT The Company hereby employs Executive and Executive accepts employment as Chief Executive Officer and President of the Company. As its Chief Executive Officer and President, Executive shall render such services to the Company as are customarily rendered by the Chief Executive Officer and President of comparable companies and as required by the articles and by-laws of Employer. Executive accepts such employment and, consistent with fiduciary standards which exist between and employer and an employee, shall perform and discharge the duties commensurate with his position that may be assigned to him from time to time by the Company.
TERM AND RENEWAL: The term of this Agreement shall commence on the date first written above (the "Commencement Date") and shall continue until either party gives notice to terminate. Termination by the Company determined by a majority vote of the Board of Directors.
JOB DUTIES: The Employer agrees to employ the Employee as the company's Chief Executive Officer (CEO) and President. The Employee will be expected to perform the following job duties:
PRINCIPAL DUTIES: The primary duties of the Chief Executive Officer are listed as follows:
Provide the moral compass and directive to the employees of the Company.
Engage and work with capital partners; including institutional shareholders, banks, investment banks, venture funds, and family offices to help promote the best cost of capital and equity solutions for the Company.
Seek, negotiate and procure new acquisition opportunities for the Company's business strategy of DSF.
Work with the COO and CAO and other management reporting to this position on a regular basis to establish goals, objective and long-range plans for: Profit, Revenue, Expense, Capital, Sales & Marketing, and Business Development.
Provide budgetary guidelines and input at the corporate and subsidiary level.
Guide and/ or approve all corporate policies, including: Operations Policy, Fiscal Policy, Sales and Marketing Policy, Compensation and Benefit Policy, Personnel Policy.
Meet with COO, CAO (Chief Accounting Officer)/Controller, and subsidiary executives to monitor the overall financial condition of Alpine 4 Technologies, Ltd. and its subsidiaries.
Work with subsidiary executives on purchasing plans and/or replacement of equipment and facilities to ensure continued growth.
Monitor the performance of executive staff reporting to this position and conduct formal Performance Evaluations twice annually.
Establish the quality control standards for the sales and marketing, administrative, financial, production, and operations departments of the company.
Initiate the development of all necessary and appropriate acquisition and investment procedures and negotiations.



Identify, negotiate and enter into agreements to acquire businesses and new profit centers for the company.
AUTHORITY: The Chief Executive Officer has the overall authority to provide the leadership and direction to the organization and supervision of the overall company performance. This includes but is not limited to:
Inspire a shared vision and communicate that vision to the people on the management team.
Exemplify leadership characteristics and means; see the future, strategize, empower others, encourage risk taking, match requirements to needs, establish flexible lines of authority, build on intrinsic motivation, strive to make change, build around values, focus on both people and results.
Manage people: ensure that the hire, fire, promote, evaluate and discipline process of Alpine 4 Technologies, Ltd. and its subsidiaries' employees is completed. The Chief Executive Officer is ultimately responsible for the successful performance of the Alpine 4 Technologies, Ltd.'s organization and departments.
The position of Chief Executive Officer has full authority to take any action necessary to maintain the overall health and profitability of Alpine 4 Technologies, Ltd.. This includes the authority to hire and fire, sign checks, enter credit and equity agreements, banking agreements, and contracts, and maintain good business relations.
Develop, approve, implement and enforce all personnel and operating procedures and policies Make capital expenditures, take on new business debt, and otherwise manage all business assets. Contacting customers, competitors, representatives, agents and others to fulfill their responsibilities. During the absence of the Chief Executive Officer, their duties shall be assumed by a qualified employee selected by the Chief Executive Officer. This assumption of duties, however, in no way relieves the Chief Executive Officer of any of their responsibilities.
Organize the structure of Alpine 4 Technologies, Ltd. to enable the business to meet profit and growth objectives.
Make recommendations for changes to the board of directors.
COMPENSATION AND BENEFITS: During the Tern, of this Agreement, the Executive shall be entitled to the compensation ("Compensation) and benefits ("Benefits") described in in Exhibit A attached hereto.
Compensation paid to the Employee for the services rendered by the Employee as required by this Agreement (the "Compensation") will include:
oBase Salary: The Base Salary shall be pegged to 1% of revenue of the prior years revenue and shall begin and accrue from January 1st of the following year. The Base Salary shall be reported to HR from the Company by February 15th the following year. Any Base Salary that has accrued but not paid, shall be paid in a catch up payment on the next payroll cycle after the Company reports the annualized revenue to HR. Base Salary shall not be less than $325,000 and not greater than $850,000. Any drop in revenue that is less that 12% shall not require and adjustment until the second anniversary of the reduction in revenue.
oAcquisition Stock Award Bonus (ASAB): The ASAB will be paid on any acquisition the company procures. The ASAB value shall be 5% of the average 3-year adjusted EBITDA of the acquired company, and paid in Class A Common Stock or any different Class of Common or Preferred Stock that is mutually agreed to by the Employee and Company. The company will pay this stock bonus in a cashless exchange and the company will be responsible for withholding the taxes and payment of the taxes.
oAcquisition Cash Award Bonus (ACAB): The ACAB will be paid on any acquisition the company procures. The ACAB value shall be 1.5% of the average 3 year adjusted EBITDA of the acquired company, and shall be paid on the next payroll cycle post-closing of the acquisition.
oProfit Based Cash Bonus (PBCB): The PBCB shall pay 2% of the net profit for each quarter the company is net profitable. The PBCA shall have max payout of $25,000. The company will pay this cash bonus in accordance with its normal payroll cycle.
Severance Pay: If the Employee is released by the company for any reason other than cause (i.e. violence, theft, fraudulent activities, harassment, etc.), the company will pay the executive one year of salary and cover COBRA expenses for the executive's family during the same time period. Payment is due in a lump sum upon termination.
Reimbursement: The Employer will reimburse the Employee for all reasonable expenses, in accordance with the Employer's policy as in effect from time to time, including but not limited to, any travel and entertainment expenses incurred by the Employee in connection with the business of the Employer. Expenses will be paid within a reasonable time after submission of acceptable supporting documentation.



Benefits: Employee shall participate in the employees executive ESOP plan, and executive benefits plan.
Life Insurance: The company will procure a $5 million dollar life insurance policy. Of which S2 million will be paid the employee's spouse or children in the event of employee's death.
Vacation and PTO: The Employee will be entitled to six weeks of paid vacation each year during the term of this Agreement, or as entitled by law, whichever is greater.
The Employee will be entitled to six weeks of PTO each year during the tem1of this Agreement, or as entitled by law, whichever is greater.
The times and dates for any vacation will be determined by mutual agreement between the Employer and the Employee.
Upon termination of employment, the Employer will pay compensation to the Employee for any accrued and unused vacation days.
Duty to Devote Full Time: The Employee agrees to devote full-time efforts, as an employee of the Employer, to the employment duties and obligations as described in this Agreement.
Conflict of Interest: It is understood by the company that the Employee brought his DSF business model to the company. Employee has the right to procure businesses outside of the company as long as the don't directly compete with any of the subsidiaries owned by the company at the time the employee acquires them. It is also understood that the business tem1 of DSF (Driver, Stabilizer, Facilitator) is owned by the employee and that in the event that the Employee leaves the company, the parties will have to negotiate a Rights to Use Contract agreeable to the Employee.
Indemnification of Employcc: The Employee for the betterment of the Company has executed several credit agreements, banking agreements and guarantees. The company shall indemnify the Employee from any and all legal obligations of these agreements. Upon and termination for any cause the company will pay off any debt balances tied these agreements or provide employee written confirmation of Employees release from the parties related to these agreements.
Confidential Information: The Employee acknowledges that, in any position the Employee may hold, in and as a result of the Employee's employment by the Employer, the Employee will, or may, be making use of, acquiring or adding to information which is confidential to the Employer (the "Confidential Information") and the Confidential Information is the exclusive property of the Employer.
Confidential Information will include all data and information relating to the business and management of the Employer, including but not limited to, proprietary and trade secret technology and accounting records to which access is obtained by the Employee, including Work Product, Computer Software, Other Proprietary Data, Business Operations, Marketing and Development Operations, and Customer Information.
Confidential information will also include any information that has been disclosed by a third party to the Employer and is governed by a non-disclosure agreement entered into between that third party and the Employer.
Confidential Information will not include information that:
oIs generally known in the industry of the Employer;
oIs now or subsequently becomes generally available to the public through no wrongful act of the Employee;
oWas rightfully in the possession of the Employee prior to the disclosure to the Employee by the Employer;
ols independently created by the Employee without direct or indirect use of the Confidential information; or
oThe Employee rightfully obtains from a third party who has the right to transfer or disclose it.
Confidential Information will also not include anything developed or produced by the Employee during the Employee's tenn of employment with the Employer, including but not limited to, any intellectual property, process, design, development, creation, research, invention, know-how, trade name, trade-mark or copyright that:
oWas developed entirely on the Employee's own time;
oDoes not result from any work performed by the Employee for the Employer; and
oDoes not relate to any current business of the Employer.
Duties and Obligations Concerning Confidential Information: The Employee agrees that a material term of the Employee's contract with the Employer is to keep all Confidential Information absolutely confidential and protect its release from the public. The Employee agrees not to divulge, reveal, report or use, for any purpose, any of the Confidential information which the Employee has obtained or which was disclosed to the Employee by the Employer as a result of the Employee's employment by the Employer. The Employee agrees that if there is any question as to such disclosure then the Employee will seek out the Board



of Directors of the Employer prior to making any disclosure of the Employer's information that may be covered by this Agreement.
The Employee agrees and acknowledges that the Confidential Information is of a proprietary and confidential nature and that any disclosure of the Confidential Information to a third party in breach of this Agreement cannot be reasonably or adequately compensated for in money damages, would cause irreparable injury to Employer, would gravely affect the effective and successful conduct of the Employer's business and goodwill, and would be a material breach of this Agreement.
The obligations to ensure and protect the confidentiality of the Confidential Information imposed on the Employee in this Agreement and any obligations to provide notice under this Agreement will survive the expiration or termination, as the case may be, of this Agreement and will continue for a period of one (I) year from the date of such expiration or termination.
The Employee may disclose any of the Confidential Information:
To a third party where Employer has consented in writing to such disclosure; and
To the extent required by law or by the request or requirement of any judicial, legislative, administrative or other governmental body.
If the Employee loses or makes unauthorized disclosure of any of the Confidential Infom1ation, the Employee will immediately notify the Employer and take all reasonable steps necessary to retrieve the lost or improperly disclosed Confidential information.
Return of Confidential Information: The Employee agrees that, upon request of the Employer or upon termination or expiration, as the case may be, of this employment, the Employee will tum over to the Employer all Confidential Information belonging to the Employer, including but not limited to, all documents, plans, specifications, disks or other computer media, as well as any duplicates or backups made of that Confidential information in whatever form or media, in the possession or control of the Employee that:
May contain or be derived from ideas, concepts, creations, or trade secrets and other proprietary and Confidential Information as defined in this Agreement; or
Is connected with or derived from the Employee's employment with the Employer.
Contract Binding Authority: Notwithstanding any other term or condition expressed or implied in this Agreement to the contrary, the Employee will not have the authority to enter into any contracts or commitments for or on the behalf of the Employer without first obtaining the express written consent of the Employer.
Termination of Employment: Where the Employee has breached any reasonable term of this Agreement or where there is just cause for termination, the Employer may tem1inate the Employee's employment without notice, as permitted by law.
The Employee and the Employer agree that reasonable and sufficient notice of tem1ination of employment by the Employer is the greater of two (2) weeks or any minimum notice required by law.
If the Employee wishes to terminate this employment with the Employer, the Employee will provide the Employer with notice of two (2) weeks. As an alternative, if the Employee co-operates with the training and development of a replacement, then sufficient notice is given if it is sufficient notice to allow the Employer to find and train the replacement.
The Tem1ination Date specified by either the Employee or the Employer may expire on any day of the month and upon the Termination Date the Employer will forthwith pay to the Employee any outstanding portion of the wage, accrued vacation and banked time, if any, calculated to the Termination Date.
Once notice has been given by either party for any reason, the Employee and the Employer agree to execute their duties and obligations under this Agreement diligently and in good faith through to the end of the notice period. The Employer may not make any changes to wages, wage rate, or any other term or condition of this Agreement between the time termination notice is given through to the end of the notice period.
Remedies: In the event of a breach or threatened breach by the Employee of any of the provisions of this Agreement, the Employee agrees that the Employer is entitled to a permanent injunction, in addition to and not in limitation of any other rights and remedies available to the Employer at law or in equity, in order to prevent or restrain any such breach by the Employee or by the Employee's partners, agents, representatives, servants, employees, and/or any and all persons directly or indirectly acting for or with the Employee.



Severability: The Employer and the Employee acknowledge that this Agreement is reasonable, valid and enforceable. However, if any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be changed in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected, impaired or invalidated as a result.
Notices: Any notices, deliveries, requests, demands or other communications required here will be deemed to be completed when hand-delivered, delivered by agent, or seven (7) days after being placed in the post, postage prepaid, to the parties at the following addresses or as the parties may later designate in writing:
Employer:
Name:Alpine 4 Technologies, Ltd..
Address:2525 E Arizona Biltmore Cir, Suite 237, Phoenix AZ 85016
Fax:
Email:
Employee:
Name:Kent Brian Wilson
Address:Phoenix AZ 85007
Fax:
Email:kwilson@72@gmail.com
Modification of Agreement: Any amendment or modification of this Agreement or additional obligation assumed by either party in connection with this Agreement will only be binding if evidenced in writing signed by each party or an authorized representative of each party.
Governing Law: This Agreement will be construed in accordance with and governed by the laws of the state of Arizona.
Definitions: For the purpose of this Agreement the following definitions will apply:
"Overtime Hours" means the total hours worked in a day or week in excess of the maximum allowed, as defined by local statute, for a work day or a work week.
'Work Product' means work product information, including but not limited to, work product resulting from or related to work or projects performed or to be performed for the Employer or for clients of the Employer, of any type or form in any stage of actual or anticipated research and development.
'Computer Software' means computer software resulting from or related to work or projects performed or to be performed for the Employer or for clients of the Employer, of any type or fom1 in any stage of actual or anticipated research and development, including but not limited to, programs and program modules, routines and subroutines, processes, algorithms, design concepts, design specifications (design notes, annotations, documentation, flowcharts, coding sheets, and the like), source code, object code and load modules, programming, program patches and system designs.
'Other Proprietary Data' means infom1ation relating to the Employer's proprietary rights prior to any public disclosure of such information, including but not limited to, the nature of the proprietary rights, production data, technical and engineering data, test data and test results, the status and details of research and development of products and services, and information regarding acquiring, protecting, enforcing and licensing proprietary rights (including patents, copyrights and trade secrets).
'Business Operations' means operational information, including but not limited to, internal personnel and financial information, vendor names and other vendor information (including vendor characteristics, services and agreements), purchasing and internal cost information, internal services and operational manuals, and the manner and methods of conducting the Employer's business.
'Marketing and Development Operations' means marketing and development information, including but not limited to, marketing and development plans, price and cost data, price and fee amounts, pricing and billing policies, quoting procedures, marketing techniques and methods of obtaining business, forecasts and forecast assumptions and volumes, and future plans and potential strategies of the Employer which have been or are being considered.



'Customer Infonnation' means customer infom1ation, including but not limited to, names of customers and their representatives, contracts and their contents and parties, customer services, data provided by customers and the type, quantity and specifications of products and services purchased, leased, licensed or received by customers of the Employer.
'Termination Date' means the date specified in this Agreement or in a subsequent notice by either the Employee or the Employer to be the last day of employment under this Agreement. The parties acknowledge that various provisions of this Agreement will survive the Tern1ination Date.
General Provisions: Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
No failure or delay by either party to this Agreement in exercising any power, right or privilege provided in this Agreement will operate as a waiver, nor will any single or partial exercise of such rights, powers or privileges preclude any further exercise of them or the exercise of any other right, power or privilege provided in this Agreement.
This Agreement will inure to the benefit of and be binding upon the respective heirs, executors, administrators, successors and assigns, as the case may be, of the Employer and the Employee.
This Agreement may be executed in counterparts. Facsimile signatures are binding and are considered to be original signatures.
This Agreement constitutes the entire agreement between the parties and there are no further items or provisions, either oral or written. The parties to this Agreement stipulate that neither of them has made any representations with respect to the subject matter of this Agreement except such representations as are specifically set forth in this Agreement.
IN WITNESS WHEREOF, the parties have duly affixed their signatures under hand and seal on this 11th day of February, 2021.
EMPLOYER:
Alpine 4 Technologies, Ltd.
Per:/s/ Charlie Winters
Chairman of the Board
EMPLOYEE:
/s/ Kent B. Wilson
Kent Brian Wilson

Exhibit 10.37
Addendum to Employment Agreement for Kent B. Wilson
This addendum, dated November 17, 2021, removes the following language from the Executive Employment agreement entered into on February 11, 2021, by Executive Kent B. Wilson and Chairman of the Board, Charles Winters, Alpine 4 Holdings, Inc.
The language to be removed is as follows, located on page five (5) of the agreement:
exhibit1037.jpg
By removing this language, the Executive, Kent B. Wilson, CEO/President of Alpine 4 Holdings, Inc. has full authority to enter into any contracts or commitments for and on the behalf of Alpine 4 Holdings, Inc., and all subsidiary companies.
IN WITNESS WHEREOF, the parties have duly affixed their signatures under hand and seal on this 17th day of November 2021 in full agreement of this addendum.
Employer:
/s/ Charles Winters
Alpine 4 Holdings, Inc.
Per: C. Winters, Chairman of the Board
/s/ Kent B. Wilson
Kent B. Wilson

Exhibit 10.38
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered effective as of the 25th day of February 2021 (Effective Date), by and between Alpine 4 Technologies, Ltd.., a Delaware Corporation (the "Company") and Jeffrey Hail (the "Executive") and supersedes and replaces any prior employment agreement or employment letter between the Parties.
W I TN E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board") has approved the Company to modify its current employment agreement with the Executive;
WHEREAS, the Executive has served as the Chief Operating Officer of the Company since January 2019;
WHEREAS, the Company would like renew and update its formal agreement with the Executive to set forth the terms of Executive's employment and to provide for certain severance payments and other benefits in the event Executive's employment is terminated by the Company without cause or by the Executive for "Good Reason" (as defined below);
WHEREAS, the Executive would like to provide some assurance to the Company that the Executive will not solicit any employees of the Company and will not work for any entity which has any activities which compete with the Company, as further described below;
NOW THEREFORE, in consideration of the recitals and the mutual agreements herein set forth, the Company and the Executive agree as follows:
IN CONSIDERATION OF the matters described above and of the mutual benefits and obligations set forth in this Agreement, the receipt and sufficiency of which consideration is hereby acknowledged, the parties to this Agreement agree as follows:
EMPLOYMENT The Company hereby employs Executive and Executive accepts employment as Chief Operating Officer of the Company. As its Chief Operating Officer, Executive shall render such services to the Company as are customarily rendered by the Chief Operating Officer of comparable companies and as required by the articles and by-laws of Employer. Executive accepts such employment and, consistent with fiduciary standards which exist between and employer and an employee, shall perform and discharge the duties commensurate with his position that may be assigned to him from time to time by the Company.
TERM AND RENEWAL: The term of this Agreement shall commence on the date first written above (the "Commencement Date") and shall continue until either party gives notice to terminate. Termination by the Company determined by a majority vote of the Board of Directors.
JOB DUTIES: The Employer agrees to employ the Employee as the company's Chief Operating Officer (COO). The Employee will be expected to perform the following job duties:
PRINCIPAL DUTIES: The primary duties of the Chief Operating Officer are listed as follows:
Planning
In conjunction with the CEO and Board of Directors, take a lead position in formulating the company's future direction and provide recommendations to strategically enhance the Subsidiaries' performance and business opportunities.
Provide strategic input and leadership for the growth and profitability of the Subsidiaries and company.
Provide direct supervision of the company's subsidiaries for Fixed Operations, Production, and Sales. Work in conjunction with the Leadership Team to meet the goals of the Subsidiaries monthly forecast and plans.
Operations
Promote the Company's DSF Business Model and Culture throughout the organization.
Provide oversight and direction for all Subsidiary presidents and executives.
Develop and maintain good working relationships with our primary manufactures, suppliers and industry representatives, in order to maintain a dominant position in each subsidiary's the industry.



Work with ELT of the Company and subsidiaries to implement best practices from a process standpoint to produce best in class results for the company
Reporting
In conjunction with the CEO, conduct weekly (or more frequently) management meetings to develop better communication while encouraging greater awareness and accountability within the group.
Communicate the results of monthly and year to date numbers with Subsidiaries Management.
Risk Management
Identify, understand and mitigate any key elements of the company's risk profile.
Document and monitor all open legal issues involving the company, and any legal/compliance issues affecting our industry.
Work in conjunction with the ELT, HR and other departments on; vendor, customer, and governmental compliance training for all Subsidiaries.
Leadership Development
Inspire trust by being a credible leader that follows our Core Values.
Create vision by clearly defining where your team is going and how they are going to get there.
Coach and mentor by investing in each person on your team to improve performance, solve problems and grow their careers.
AUTHORITY: The Chief Operating Officer has the authority granted by the CEO to provide the leadership and direction to the organization and supervision of the overall company performance. This includes but is not limited to:
Exemplify leadership characteristics and means; see the future, strategize, empower others, encourage risk taking, match requirements to needs, establish flexible lines of authority, build on intrinsic motivation, strive to make change, build around values, focus on both people and results.
Manage people: ensure that the hire, fire, promote, evaluate and discipline process of Alpine 4 Technologies, Ltd. and its subsidiaries' employees is completed. The Chief Operating Officer is ultimately responsible for the successful performance of the Alpine 4 Technologies, Ltd.'s organization and departments.
The position of Chief Operating Officer in conjunction with the CEO has full authority to take any action necessary to maintain the overall health and profitability of Alpine 4 Technologies, Ltd.. This includes the authority to hire and fire, sign checks, enter credit and equity agreements, banking agreements, and contracts, and maintain good business relations.
Develop, approve, implement and enforce all personnel and operating procedures and policies Make capital expenditures, take on new business debt, and otherwise manage all business assets. Contacting customers, competitors, representatives, agents and others to fulfill their responsibilities. During the absence of the Chief Operating Officer, their duties shall be assumed by a qualified employee selected by the Chief Operating Officer. This assumption of duties, however, in no way relieves the Chief Operating Officer of any of their responsibilities.
Organize the structure of Alpine 4 Technologies, Ltd. to enable the business to meet profit and growth objectives.



COMPENSATION AND BENEFITS: During the Term of this Agreement, the Executive shall be entitled to the compensation ("Compensation) and benefits ("Benefits") described hereto.
Compensation paid to the Employee for the services rendered by the Employee as required by this Agreement (the "Compensation") will include:
Base Salary: The base salary shall be pegged to 75% of the CEO base salary plus board wages shall begin and accrue from January 1st• The Base Salary shall be reported to HR from the Company by February 15th. Any Base Salary that has accrued but not paid, shall be paid in a catch up payment on the next payroll cycle after the Company reports the annualized revenue to HR. Salary shall not be less than $273,000. Any drop in revenue that is less that 12% shall not require and adjustment until the second anniversary of the reduction in revenue.
Acquisition Stock Award Bonus (ASAB): The ASAB shall pay 2% of the adjusted EBITDA for the prior 3 years of any acquisition the company procures. The company will pay this stock bonus in a cashless exchange and the company will be responsible for withholding the taxes and payment of the taxes.
Profit Based Stock Award Bonus (PBSAB): The PBSAB shall pay 1.5% of the net profit for each quarter that the company is more than $SOOK net profitable.
Acquisition Cash Bonus (ACB): The ACB shall pay .5% of the adjusted average EBITA for the prior 3 years of any acquisition the company procures. The company will pay this cash bonus in accordance with its normal payroll cycle.
Profit Based Cash Bonus (PBCB): The PBCB shall pay 1.5% of the net profit for each quarter that the company is net profitable. The PBCA shall have max payout of $25,000 in any given quarter. The company will pay this cash bonus in accordance with its normal payroll cycle.
Severance Pay: If the Employee is released by the company for any reason other than cause (ie. violence, theft, fraudulent activities, harassment, etc.), the company will pay the executive one year of salary and cover COBRA expenses for the executive's family during the same time period. Payment is due in a lump sum upon termination.
Reimbursement: The Employer will reimburse the Employee for all reasonable expenses, in accordance with the Employer's policy as in effect from time to time, including but not limited to, any travel and entertainment expenses incurred by the Employee in connection with the business of the Employer. Expenses will be paid within a reasonable time after submission of acceptable supporting documentation.
Benefits: Employee shall participate in the employees executive ESOP plan, and executive benefits plan.
Life Insurance: The company will procure a $3 million dollar life insurance policy. Of which $1.5 million will be paid to the employee's estate in the event of employee's death.
Vacation and PTO: The Employee will be entitled to six weeks of paid vacation each year during the term of this Agreement, or as entitled by law, whichever is greater.
The Employee will be entitled to six weeks of PTO each year during the term of this Agreement, or as entitled by law, whichever is greater.
The times and dates for any vacation will be determined by mutual agreement between the Employer and the Employee.
Upon termination of employment, the Employer will pay compensation to the Employee for any accrued and unused vacation days.



Duty to Devote Full Time: The Employee agrees to devote full-time efforts, as an employee of the Employer, to the employment duties and obligations as described in this Agreement.
Conflict of Interest: It is understood by the company that the Employee has the right to procure businesses outside of the company as long as they don't directly compete with any of the subsidiaries owned by the company at the time the employee acquires them.
Indemnification of Employee: The Employee for the betterment of the Company has executed several credit agreements, banking agreements and guarantees. The company shall indemnify the Employee from any and all legal and monetary obligations of these agreements. Upon termination for any cause the company will pay off any debt balances tied these agreements or provide employee written confirmation of Employees release from the parties related to these agreements.
Confidential Information: The Employee acknowledges that, in any position the Employee may hold, in and as a result of the Employee's employment by the Employer, the Employee will, or may, be making use of, acquiring or adding to information which is confidential to the Employer (the "Confidential Information") and the Confidential Information is the exclusive property of the Employer.
Confidential Information will include all data and information relating to the business and management of the Employer, including but not limited to, proprietary and trade secret technology and accounting records to which access is obtained by the Employee, including Work Product, Computer Software, Other Proprietary Data, Business Operations, Marketing and Development Operations, and Customer Information.
Confidential Information will also include any information that has been disclosed by a third party to the Employer and is governed by a non-disclosure agreement entered into between that third party and the Employer.
Confidential Information will not include information that:
Is generally known in the industry of the Employer;
Is now or subsequently becomes generally available to the public through no wrongful act of the Employee;
Was rightfully in the possession of the Employee prior to the disclosure to the Employee by the Employer;
ls independently created by the Employee without direct or indirect use of the Confidential Information; or
The Employee rightfully obtains from a third party who has the right to transfer or disclose it.
Confidential Information will also not include anything developed or produced by the Employee during the Employee's term of employment with the Employer, including but not limited to, any intellectual property, process, design, development, creation, research, invention, know-how, trade name, trade-mark or copyright that:
Was developed entirely on the Employee's own time;
Does not result from any work performed by the Employee for the Employer; and
Does not relate to any current business of the Employer.
Duties and Obligations Concerning Confidential Information: The Employee agrees that a material term of the Employee's contract with the Employer is to keep all Confidential Information absolutely confidential and protect its release from the public. The Employee agrees not to divulge, reveal, report or use, for any purpose, any of the Confidential Information which the Employee has obtained or which was disclosed to the Employee by the Employer as a result of the Employee's employment by the Employer. The Employee agrees that if there is any question as to such disclosure then the Employee will seek out the Board of Directors of the Employer prior to making any disclosure of the Employer's information that may be covered by this Agreement.
The Employee agrees and acknowledges that the Confidential Information is of a proprietary and confidential nature and that any disclosure of the Confidential Information to a third party in breach of this Agreement cannot be reasonably or adequately compensated for in money damages, would cause irreparable injury to Employer,



would gravely affect the effective and successful conduct of the Employer's business and goodwill, and would be a material breach of this Agreement.
The obligations to ensure and protect the confidentiality of the Confidential Information imposed on the Employee in this Agreement and any obligations to provide notice under this Agreement will survive the expiration or termination, as the case may be, of this Agreement and will continue for a period of one (1) year from the date of such expiration or termination.
The Employee may disclose any of the Confidential Information:
To a third party where Employer has consented in writing to such disclosure; and
To the extent required by law or by the request or requirement of any judicial, legislative, administrative or other governmental body.
If the Employee loses or makes unauthorized disclosure of any of the Confidential Information, the Employee will immediately notify the Employer and take all reasonable steps necessary to retrieve the lost or improperly disclosed Confidential Information.
Return of Confidential Information: The Employee agrees that, upon request of the Employer or upon termination or expiration, as the case may be, of this employment, the Employee will turn over to the Employer all Confidential Information belonging to the Employer, including but not limited to, all documents, plans, specifications, disks or other computer media, as well as any duplicates or backups made of that Confidential Information in whatever form or media, in the possession or control of the Employee that:
May contain or be derived from ideas, concepts, creations, or trade secrets and other proprietary and Confidential Information as defined in this Agreement; or
Is connected with or derived from the Employee's employment with the Employer.
Contract Binding Authority: Employee has the authority to enter into any contracts or commitments on the behalf of the Employer as per the "Authority" section on page 2 of this Agreement.
Termination of Employment: Where the Employee has breached any reasonable term of this Agreement or where there is just cause for termination, the Employer may terminate the Employee's employment without notice, as permitted by law.
The Employee and the Employer agree that reasonable and sufficient notice of termination of employment by the Employer is the greater of two (2) weeks or any minimum notice required by law.
If the Employee wishes to terminate this employment with the Employer, the Employee will provide the Employer with notice of two (2) weeks. As an alternative, if the Employee co-operates with the training and development of a replacement, then sufficient notice is given if it is sufficient notice to allow the Employer to find and train the replacement.
The Termination Date specified by either the Employee or the Employer may expire on any day of the month and upon the Termination Date the Employer will forthwith pay to the Employee any outstanding portion of the wage, accrued vacation and banked time, if any, calculated to the Termination Date.
Once notice has been given by either party for any reason, the Employee and the Employer agree to execute their duties and obligations under this Agreement diligently and in good faith through to the end of the notice period. The Employer may not make any changes to wages, wage rate, or any other term or condition of this Agreement between the time termination notice is given through to the end of the notice period.
Remedies: In the event of a breach or threatened breach by the Employee of any of the provisions of this Agreement, the Employee agrees that the Employer is entitled to a permanent injunction, in addition to and not in limitation of any other rights and remedies available to the Employer at law or in equity, in order to prevent or



restrain any such breach by the Employee or by the Employee's partners, agents, representatives, servants, employees, and/or any and all persons directly or indirectly acting for or with the Employee.
Severability: The Employer and the Employee acknowledge that this Agreement is reasonable, valid and enforceable. However, if any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be changed in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected, impaired or invalidated as a result.
Notices: Any notices, deliveries, requests, demands or other communications required here will be deemed to be completed when emailed (to the VP of HR or the CEO) with confirmed delivery via return receipt confirmation or hand-delivered, delivered by agent, or seven (7) days after being placed in the post, postage prepaid, to the parties at the following addresses or as the parties may later designate in writing:
Employer:
Name:Alpine 4 Technologies, Ltd..
Address:2525 E Arizona Biltmore Cir, Suite 237, Phoenix AZ 85016
Fax:
Email:kwi1son@a1pine4.com
Employee:
Name:Jeffrey Hail
Address:6855 E. Camelback Rd, Unit #6003, Scottsdale, AZ 85251
Fax:
Email:Hai1strom72@gmail.com
Modification of Agreement: Any amendment or modification of this Agreement or additional obligation assumed by either party in connection with this Agreement will only be binding if evidenced in writing signed by each party or an authorized representative of each party.
Governing Law: This Agreement will be construed in accordance with and governed by the laws of the state of Arizona.
Definitions: For the purpose of this Agreement the following definitions will apply:
"Overtime Hours" means the total hours worked in a day or week in excess of the maximum allowed, as defined by local statute, for a work day or a work week.
'Work Product' means work product information, including but not limited to, work product resulting from or related to work or projects performed or to be performed for the Employer or for clients of the Employer, of any type or form in any stage of actual or anticipated research and development.
'Computer Software' means computer software resulting from or related to work or projects performed or to be performed for the Employer or for clients of the Employer, of any type or form in any stage of actual or anticipated research and development, including but not limited to, programs and program modules, routines and subroutines, processes, algorithms, design concepts, design specifications (design notes, annotations, documentation, flowcharts, coding sheets, and the like), source code, object code and load modules, programming, program patches and system designs.
'Other Proprietary Data' means information relating to the Employer's proprietary rights prior to any public disclosure of such information, including but not limited to, the nature of the proprietary rights, production data, technical and



engineering data, test data and test results, the status and details of research and development of products and services, and information regarding acquiring, protecting, enforcing and licensing proprietary rights (including patents, copyrights and trade secrets).
'Business Operations' means operational information, including but not limited to, internal personnel and financial information, vendor names and other vendor information (including vendor characteristics, services and agreements), purchasing and internal cost information, internal services and operational manuals, and the manner and methods of conducting the Employer's business.
'Marketing and Development Operations' means marketing and development information, including but not limited to, marketing and development plans, price and cost data, price and fee amounts, pricing and billing policies, quoting procedures, marketing techniques and methods of obtaining business, forecasts and forecast assumptions and volumes, and future plans and potential strategies of the Employer which have been or are being considered.
'Customer intonation' means customer information, including but not limited to, names of customers and their representatives, contracts and their contents and parties, customer services, data provided by customers and the type, quantity and specifications of products and services purchased, leased, licensed or received by customers of the Employer.
'Termination Date' means the date specified in this Agreement or in a subsequent notice by either the Employee or the Employer to be the last day of employment under this Agreement. The parties acknowledge that various provisions of this Agreement will survive the Termination Date.
General Provisions: Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
No failure or delay by either party to this Agreement in exercising any power, right or privilege provided in this Agreement will operate as a waiver, nor will any single or partial exercise of such rights, powers or privileges preclude any further exercise of them or the exercise of any other right, power or privilege provided in this Agreement.
This Agreement will inure to the benefit of and be binding upon the respective heirs, executors, administrators, successors and assigns, as the case may be, of the Employer and the Employee.
This Agreement may be executed in counterparts. Facsimile signatures are binding and are considered to be original signatures.
This Agreement constitutes the entire agreement between the parties and there are no further items or provisions, either oral or written. The parties to this Agreement stipulate that neither of them has made any representations with respect to the subject matter of this Agreement except such representations as are specifically set forth in this Agreement.
IN WITNESS WHEREOF, the parties have duly affixed their signatures under hand and seal on this 20h day of July, 2021.
EMPLOYER:
Alpine 4 Technologies, Ltd.. "' '
Per:
CEO_i_P-re s--en-t=- .,.



EMPLOYEE:
/s/ Jeffrey Hail
Jeffrey Hail

Exhibit 10.39
GENERAL SETTLEMENT AGREEMENT AND
MUTUAL RELEASE OF CLAIMS
This General Settlement Agreement and Mutual Release of Claims (the “Agreement”) is dated as of July 27, 2023, by and among Alpine 4 Holdings, Inc., a Delaware corporation (“Alpine 4”) and Alan Martin (“Martin”), each of whom is a “Party” and all of whom, collectively, are the “Parties.”
RECITALS
A.On November 30, 2016, the Parties entered into a Securities Purchase Agreement (“SPA”) under which Alpine 4 purchased Horizon Well Testing, L.L.C., an Oklahoma limited liability company, later known as Venture West Energy Services, LLC, an Oklahoma limited liability company (“HWT”).
B.The Parties closed the purchase under the SPA in January 2017.
C.The Parties agreed to amendments to the SPA in 2018.
D.On August 27, 2020, Alpine 4 commenced an action in the United States District Court, District of Arizona, case no. 2:20-cv-01679-DJH (“Litigation”) by filing a complaint alleging that Martin had breached the SPA.1
E.On October 19, 2020, Martin filed a counterclaim, which was amended on April 19 and December 3, 2021 (“Counterclaim”).
F.On September 29, 2022, in the Litigation, the court granted Martin’s motion for summary judgment in part, indicating an intent to dismiss Alpine 4’s complaint and directing that the Counterclaim proceed to trial. Alpine 4 intended to appeal that order, if final judgment was entered.
G.The Parties wish to resolve any and all disputes between them arising from the foregoing events and to the extent not otherwise forbidden by law.
H.The objective of this Agreement is to ensure that each Party’s obligations as described herein are accomplished in a timely manner so as to avoid future disputes between the Parties.
I.No Party acknowledges any liability or wrongdoing to the other by entering into this Agreement. Rather, the Parties wish to effect a complete settlement of their disputes and all of the Parties’ respective claims concerning them.
NOW, THEREFORE, in exchange for valuable consideration, the receipt and sufficiency of which are acknowledged by the Parties, the Parties hereto agree as follows:
1.Incorporation of Recitals. The Parties to this Agreement hereby acknowledge and agree that all of the matters set forth above in the above Recitals are true, accurate, correct, complete and incorporated herein by this reference.
1 Alpine 4 pled claims for tortious interference with contract and tortious interference with business expectancy against Jason Huffacker and Donald G. Belcher, which are not the subject matter of this Agreement. Jason Huffacker was dismissed from the Litigation for jurisdictional reasons.
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2.Alpine 4 Consideration. Alpine 4 shall do all of the following by the date indicated:
a. Pay Martin the sum of $100,000 within three (3) business days of execution of this Agreement by the last signing party, by wire transfer to Martin as provided in Exhibit F.
b. Issue and deliver to Alpine 4’s stock transfer agent, Vstock Transfer, LLC, 250,000 shares of Alpine 4 Class A stock (ALPP), for the benefit of and to Martin, expeditiously after execution by the last signing party. Such stock shall bear any restrictive legend required by 17 C.F.R. § 230.144.
c. On or before October 31, 2023, pay the sum of $2,000,000 to Martin, via wire transfer as provided in Exhibit F.
d. Execute a promissory note payable to Martin in the principal sum of $1,800,000, with monthly payments due on the first of each month, beginning on December 1, 2023, in the amount of $75,000, for a period of twelve months (i.e., until November 1, 2024), followed by a final payment of $900,000 on or before December 1, 2024. The promissory note shall be in the form as the attached Exhibit A.
3.Martin Consideration. Contemporaneously with execution of this Agreement, Martin, through counsel, shall stipulate to dismiss the Counterclaim, with prejudice, with each party to bear their respective fees and costs. Alpine 4, through counsel, shall simultaneously stipulate to dismissal of its complaint as against Martin, on the same terms. The form of stipulation and order are attached as Exhibits B and C, respectively.
4.Stipulated Judgment. Martin and Alpine 4 shall stipulate to an order and judgment setting aside the order of dismissal (Exhibit C) and entering judgment against Alpine 4 in the amount of $5,500,000, in the event Alpine 4 does not perform an obligation under section 2 within five (5) business days of its due date. A form of stipulation and order/judgment are attached as Exhibits D and E, respectively. If judgment is entered in the form attached as Exhibit E, Martin shall immediately declare the judgment partially satisfied as follows: a) For payment of the amount due under section 2 (a) above, $100,000; b) For delivery of the stock under section 2 (b) above, $640,000; c) For payment of the amount due under section 2 (c) above, $2,000,000; d) For any payments received under the promissory note under section 2 (d) above, the aggregate dollar amount of all such payments. Interest shall accrue on the judgment at the rate provided by 28 U.S.C. § 1961, from the date of filing partial satisfaction of judgment and not before. Upon receipt of all Alpine 4 consideration under section 2, the original
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promissory note shall be returned to Alpine 4 together with written confirmation that the stipulated judgment shall not be filed or lodged with the court.
5.Mutual General Release of All Claims Between the Parties. For and on behalf of themselves, and except for the obligations in this Agreement, the Parties hereby release each other and their officers, directors, shareholders, agents, attorneys, independent contractors, heirs, parents, subsidiaries, sibling entities, successors and assigns, hereby forever release and discharge each other, and their respective affiliates, agents, servants, employees, spouses, attorneys, successors, assigns, heirs, devisees, trust beneficiaries, and insurers for, from and against any and all claims, demands, actions, damages, debts, costs, liabilities, obligations, contracts, agreements, causes of action (whether arising in contract, tort or by statute) whether in suits at law or in equity of whatever kind, nature, character, or description whatsoever, whether known or unknown, anticipated or unanticipated, claimed or concealed, contingent or noncontingent, foreseen or unforeseeable, including, without limitation: (i) all such claims, events, occurrences, obligations, acts, omissions, or failures to act relating to or concerning or arising out of the claims or unpled counterclaims in the Litigation; (ii) that could have been alleged in any court lawsuit or action based thereon, and (iii) any claims for attorneys’ fees, experts’ fees or court costs relating to any of the above (collectively, the “Claims”).
6.Binding Agreement. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto, and their respective heirs, successors and assigns.
7.Press Release. The Parties agree to the issuance of a joint press release by Alpine 4 stating as follows: “In 2020, Alpine 4 Holdings, Inc. and Alan Martin were involved in litigation concerning Alpine 4 Holdings, Inc.’s purchase of Horizon Well Testing, L.L.C. from Alan Martin. The litigation involved claims and defenses asserted by both sides against one another. After confidential mediation before Hon. Eileen Willett, United States Magistrate Judge for the United States District Court for the District of Arizona, the parties settled their dispute on acceptable terms.” Alpine 4 may include such other language as it deems appropriate for public consumption, including safe harbor language under 15 U.S.C. § 78u-5.
8.Future Cooperation. Each of the Parties hereto agrees, on demand of the other, to execute and deliver any instrument, furnish any information, and/or perform any other acts reasonably necessary to carry out the provisions of this Agreement without undue delay or expense.
9.Attorneys’ Fees. The Parties agree to bear their own respective attorneys’ fees, costs and expenses relating to the negotiation of this Agreement and that were incurred by them before the date of this Agreement and/or in the preparation of this
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Agreement. If any party herein commences any legal or equitable action or proceeding, including, without limitation, an action for declaratory relief or for any other form of relief to enforce, interpret, rescind or in any other manner effect the provisions of this Agreement, or for the breach of this Agreement, or initiates or commences any proceedings to enforce the permanent injunction, then the prevailing party shall be entitled to recover reasonable attorneys’ and experts’ fees and court costs, which may be set by the court in the same action (including any appellate action which may be brought in connection with such action) or in any separate action brought for that purpose, in addition to any other relief to which the party may be entitled.
10.Governing Law, Venue, & Jurisdiction. This Agreement is a contract made under the laws of the State of Arizona and for all purposes it shall be construed in accordance with and governed by the laws of the State of Arizona (without reference to choice of law principles). Except as provided in sections 3 and 4, any action arising out of or relating to this Agreement shall be commenced and maintained in the Superior Court of the State of Arizona, in and for the County of Maricopa, and all Parties irrevocably consent to the sole and exclusive jurisdiction and venue in such court for such purposes.
11.Entire Agreement. This Agreement constitutes and expresses the entire agreement and understanding between the Parties hereto in reference to the matters stated herein. No prior discussions, promises, representations, warranties or understandings relative thereto, if any, or had between the Parties hereto, shall be of any force and effect.
12.Modification or Waiver of Agreement. This Agreement may not be, and shall not be deemed or construed to have been, modified, amended, rescinded or canceled, in whole or in part, except by a written instrument signed by all of the Parties hereto or, in the case of a waiver, by a written instrument signed by the party to be charged with having made such waiver. No waiver of any provision of this Agreement shall constitute or imply a further or contingent waiver. Each party shall be entitled to enforce all terms of this Agreement regardless of any prior waivers unless otherwise provided in a writing signed by all of the Parties.
13.Execution in Counterparts; Delivery by Email or Fax Transmission. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signature of all of the Parties reflected hereon as the signatories. An executed counterpart of this Agreement may be delivered by Fax Transmission or Email Transmission and any executed counterpart delivered in that manner shall be deemed an original for all purposes and deemed delivered to all other Parties to the Agreement when delivered in that manner to any of them.
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14.Severability. Should any portion of this Agreement be held void, unenforceable, or inoperative for any reason, such shall not affect any other portion of this Agreement. The remainder shall be as effective as though such ineffective portion had not been contained herein. Nevertheless, this Agreement shall be enforced and interpreted in such a manner as to affect the intent and purpose of this Agreement.
15.No Admission of Fault or Liability. This Agreement is entered into by the Parties to settle and resolve the released claims. No party to this Agreement, by entering into this Agreement, is admitting any wrongdoing or liability to any other party, nor shall this Agreement be interpreted or construed in any manner that is contrary to this intention.
16.Good Faith. The Parties undertake to act in good faith with each other’s rights under this Contract and to adopt all reasonable measures and to ensure realization of the objectives of this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates indicated at their respective signatures below.
“ALPINE 4”“MARTIN”
ALPINE 4 HOLDINGS, INC., a Delaware corporation/s/ Alan Martin7-31-23
Alan MartinDate
/s/ Kent Wilson07-31-23
By Kent WilsonDate
Its Chief Executive Officer
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EXHIBIT A
PROMISSORY NOTE
Phoenix, Arizona
$1,800,000.00July 27, 2023
The undersigned, ALPINE 4 HOLDINGS, INC., a Delaware corporation (“Borrower”), promises to pay to Alan Martin (“Lender”), or order, the principal sum of ONE MILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($1,800,000.00) (the “Loan”). This Promissory Note (the “Note”). Borrower promises to pay the principal evidenced hereby in accordance with the terms and conditions herein contained and set forth.
1.Promise to pay principal. Commencing on December 1, 2023 and on the first day of each calendar month thereafter, Borrower shall pay to Lender a payment of principal in the amount of Seventy-Five Thousand and No/100 Dollars ($75,000.00) (the “Monthly Payment”). Each Monthly Payment will be applied as of its scheduled due date and will be applied to principal. On December 1, 2024 (“Maturity Date”), Borrower shall make a final payment in the principal sum of Nin Hundred Thousand and No/100 Dollars ($900,000.00) representing the entire remaining unpaid principal balance
2.Place of payment. All payments shall be made by Borrower to Lender at Lender's residence at 1227 E. Hereford Lane, McAlester, OK 74501, or at such other place or places as Lender may designate in writing from time to time. All payments made under this Note, including any permitted prepayments, shall be applied to principal. Payment may be made by any medium. Lender shall provide wire, ACH, or any other electronic payment instructions requested by Borrower, within twenty-four (24) hours of any request by Borrower to utilize such medium of payment.
3.Lawful money. All payments shall be in lawful money of the United States of America or in such other form which is acceptable to Lender. Lender's acceptance of payment in any form other than lawful money of the United States of America for any partial payment required or permitted under the provisions of this Note shall not be a waiver of the requirement that any future payments be made in lawful money of the United States of America.
4.Prepayment. Borrower shall have the privilege to prepay the Loan in full or in part, at any time or times without penalty or premium, subject to the terms of this Note. In the event Borrower elects such prepayment privilege, Lender shall be provided with three (3) business days prior written notice of such intent to prepay. Any partial prepayment shall not postpone the due date of any subsequent payments unless Lender agrees otherwise in writing.
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5.Event of Default. The (i) existence or occurrence of the failure by Borrower to make any payment of principal due under this Note or (ii) the sale by Borrower of Borrower’s business, or all or substantially all of Borrower’s assets without timely repayment of the principal due under this Note shall constitute an Event of Default. Upon the occurrence of any Event of Default, Borrower shall have five (5) days to cure nonpayment. If Borrower shall default in the payment when due of any payment or payments as herein provided which failure is not cured within five (5) days after the due date, then the entire unpaid principal of this Note, irrespective of the Maturity Date specified herein, shall, at the election of the Lender and without further notice of such election, become immediately due and payable and Lender may exercise any remedy set forth herein, under the Settlement Agreement and Release between the Borrower and Lender executed on July 27, 2023, (“Settlement”) or otherwise available at law or in equity.
6.Payment of expenses by Borrower. Borrower shall pay Lender all actual costs, expenses, disbursements, fees (including, without limitation, attorneys’ fees), charges, witness fees and other litigation-related expenses, and all legal fees and expenses incurred by Lender in connection with: (a) the collection, attempted collection, or negotiation and documentation of any settlement or workout of any payment due hereunder, and/or (b) any suit or proceeding whatsoever arising out of this Note. It is the intent of the parties that Borrower pay all future expenses and attorneys’ fees incurred by Lender as a result of Lender’s entering into the transaction evidenced by this Note; provided, however, each party shall bear its own expenses incurred in the creation and negotiation of this Note.
7.Remedies cumulative. The rights or remedies of Lender as provided in this Note shall be cumulative and concurrent, and may be pursued singularly, successively, or together against Borrower. Notwithstanding the foregoing, this Loan is a portion of the total consideration due from Borrower to Lender under the Settlement. The amounts due hereunder shall not be added to, but rather, are subsumed by, the amounts due under the Settlement.
8.Consent and waiver of defenses. Except as otherwise required by law, Borrower waives presentment, protest and demand, notice of protest, demand and dishonor and nonpayment of this Note, all applicable appraisement, valuation exemption rights, and notices of whatsoever kind or nature, including, but not limited to, notice of intention to accelerate, notice of acceleration, notice of dishonor or other notice which Lender might otherwise be obligated to provide Borrower following an Event of Default.
9.Borrower not released. No delay or omission of Lender to exercise any of his rights and remedies under this Note at any time following the occurrence of an Event of Default shall constitute a waiver of the right of Lender to exercise such rights and
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remedies at a later time by reason of that Event of Default or by reason of any subsequently occurring Event of Default. The acceptance by Lender of payment of any sum payable hereunder after the due date of such payment shall not be a waiver of Lender’s right to either require prompt payment when due of all other sums payable hereunder or to declare an Event of Default for failure to make prompt payment. This Note, or any payment hereunder, may be extended from time to time only by agreement in writing between Lender and Borrower and any such extension shall not in any way affect the liability and obligations of Maker under this Note.
10.Amendment. This Note may not be amended, modified or changed, nor shall any waiver of any provision hereof be effective, except only by an instrument in writing and signed by the party against whom enforcement of any waiver, amendment, change, modification or discharge is sought.
11.Successors and assigns. Whenever used herein, the words “Borrower” and “Lender” shall be deemed to include their respective heirs, personal and legal representatives, successors and assigns. This paragraph shall not be a consent by Lender for Borrower to assign or transfer any property securing payment hereof or any rights, powers, obligations or duties of Borrower.
12.Choice of law and Venue. The Settlement terms concerning choice of law, jurisdiction and venue are incorporated by reference.
13.Notice. All notices or other communications required or permitted to be given or delivered under this Note shall be in writing and may be hand delivered, deposited in the United States Mail, postage prepaid, or forwarded by facsimile or email transmission addressed to said party or parties at the addresses shown below, or to such other address as Borrower or Lender may designate by giving notice in the foregoing manner. Any notice hand-delivered or sent by facsimile or email shall be deemed effective when received and any notice sent United States Mail shall be deemed effective forty-eight (48) hours following the date of mailing.
If intended for Borrower:
Alpine 4 Holdings, Inc.
c/o Kent Wilson, CEO (kwilson@alpine4.com)
2525 E. Arizona Biltmore Cir., Ste. C237
Phoenix, AZ 85016
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With a copy, to:
Ryan Lorenz, Esq. (rlorenz@clarkhill.com)
Clark Hill PLC
14850 North Scottsdale Road, Suite 500
Scottsdale, Arizona 85254
If intended for Lender:
Alan Martin (alan.martin@horizonpandc.com)
1227 E. Hereford Lane
McAlester, OK 74501
With copies to:
Bradley S. Shelts, Esq. (bsshelts@tbsslaw.com)
Joshua P. Weiss, Esq. (jweiss@tbsslaw.com)
Titus Brueckner Spitler & Shelts PLC
8355 East Hartford Drive, Suite 200
Scottsdale, AZ 85255
14.Time of essence. Time is of the essence with respect to this Note.
Borrower has executed this Note on the day first hereinbefore written.
BORROWER:
ALPINE 4 HOLDINGS, INC., a Delaware corporation
By:EXHIBIT - DO NOT SIGN
Kent Wilson
Its Chief Executive Officer
LENDER:
EXHIBIT - DO NOT SIGN
Alan W. Martin
1227 East Hereford Lane
McAlester, Oklahoma 745011
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EXHIBIT B
Ryan J. Lorenz - #019878
CLARK HILL PLC
14850 N. Scottsdale Road, Suite 500
Scottsdale, Arizona 85254
Telephone: (480) 684-1100
Facsimile: (480) 684-1167
Email: rlorenz@clarkhill.com
Attorneys for Plaintiff/Counterdefendant
Alpine 4 Technologies, Ltd.
UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA
Alpine 4 Technologies, Ltd., a Delaware corporation,Case No.2:20-cv-01679-DJH
STIPULATION TO DISMISS
Plaintiff/Counterdefendant,
vs.
Alan W. Martin; Donald G. Belcher,
Defendants/Counterclaimant.
Plaintiff/Counterdefendant Alpine 4 Technologies, Ltd. (“Alpine 4”) and Defendant/Counterclaimant Alan W. Martin (“Mr. Martin”), through counsel, hereby stipulate to dismiss the Plaintiff’s complaint [dkt 1] and the Defendants’ second amended counterclaim [dkt 61] with prejudice, with each party to bear their respective attorneys’ fees and costs. This stipulation resolves all claims except Plaintiff’s claim against Defendant Donald G. Belcher, who has been defaulted. Plaintiff’s motion for default judgment [dkt 83] was denied without prejudice [dkt 92]. This matter may be concluded and closed upon disposition of a renewed motion for default judgment.
/ / /
/ / /
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DATED this _____ day of July 2023.
CLARK HILL PLC
By:/s/ Ryan J. Lorenz
Ryan J. Lorenz
Attorneys for
Plaintiff/Counterdefendant Alpine 4 Technologies Ltd.
TITUS BRUECKNER SHITLER & SHELTS PC
By:/s/ Bradley Steven Shelts
Bradley Steven Shelts
Joshua P. Weiss
Attorneys for
Defendant/Counterclaimant Alan W. Martin
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EXHIBIT C
Ryan J. Lorenz - #019878
CLARK HILL PLC
14850 N. Scottsdale Road, Suite 500
Scottsdale, Arizona 85254
Telephone: (480) 684-1100
Facsimile: (480) 684-1167
Email: rlorenz@clarkhill.com
Attorneys for Plaintiff/Counterdefendant
Alpine 4 Technologies, Ltd.
UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA
Alpine 4 Technologies, Ltd., a Delaware corporation,Case No.2:20-cv-01679-DJH
JUDGMENT
Plaintiff/Counterdefendant,
vs.
Alan W. Martin; Donald G. Belcher,
Defendants/Counterclaimant.
This matter came before the Court on the stipulation to dismiss filed by Plaintiff/Counterdefendant Alpine 4 Technologies, Ltd. and Defendant/Counterclaimant Alan W. Martin [dkt 117]. Good cause appearing therefrom,
IT IS ORDERED, ADJUDGED AND DECREED as follows:
A.Dismissing Plaintiff’s complaint [dkt 1] with prejudice.
B.Dismissing Defendants’ second amended counterclaim [dkt 61] with prejudice.
C.Neither party shall take anything by way of dismissal and each party shall bear their respective attorneys’ fees and costs.
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D.There is no just reason for delay. This judgment is entered as a final judgment under Fed. R. Civ. P. 54(b). The only remaining claim for disposition is Plaintiff’s claims against Defendant Belcher which shall be disposed of by renewed motion for default judgment.
Dated this _____ day of _____ 2023.
Hon. Diane J. Humetewa
United States District Court Judge
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EXHIBIT D
Ryan J. Lorenz - #019878
CLARK HILL PLC
14850 N. Scottsdale Road, Suite 500
Scottsdale, Arizona 85254
Telephone: (480) 684-1100
Facsimile: (480) 684-1167
Email: rlorenz@clarkhill.com
Attorneys for Plaintiff/Counterdefendant
Alpine 4 Technologies, Ltd.
UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA
Alpine 4 Technologies, Ltd., a Delaware corporation,Case No.2:20-cv-01679-DJH
Plaintiff/Counterdefendant,STIPULATION TO SET ASIDE
ORDER OF DISMISSAL AND
ENTER JUDGMENT
vs.
Alan W. Martin; Donald G. Belcher,
Defendants/Counterclaimant.
Plaintiff/Counterdefendant Alpine 4 Technologies, Ltd. (“Alpine 4”) and Defendant/Counterclaimant Alan W. Martin (“Mr. Martin”), through counsel, hereby stipulate to set aside the court’s judgment of dismissal [dkt ___] entered on July __, 2023. The judgment of dismissal was entered as part of performances of Plaintiff’s and Defendant’s settlement agreement. Because of an issue of non-performance, the parties hereby stipulate to set aside that judgment and enter the form of judgment attached and uploaded contemporaneously.
/ / /
/ / /
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DATED this _____ day of July 2023.
CLARK HILL PLC
By:/s/ Ryan J. Lorenz
Ryan J. Lorenz
Attorneys for
Plaintiff/Counterdefendant Alpine 4 Technologies Ltd.
TITUS BRUECKNER SHITLER & SHELTS PC
By:/s/ Bradley Steven Shelts
Bradley Steven Shelts
Joshua P. Weiss
Attorneys for
Defendant/Counterclaimant Alan W. Martin
2

EXHIBIT E
Ryan J. Lorenz - #019878
CLARK HILL PLC
14850 N. Scottsdale Road, Suite 500
Scottsdale, Arizona 85254
Telephone: (480) 684-1100
Facsimile: (480) 684-1167
Email: rlorenz@clarkhill.com
Attorneys for Plaintiff/Counterdefendant
Alpine 4 Technologies, Ltd.
UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA
Alpine 4 Technologies, Ltd., a Delaware corporation,Case No.2:20-cv-01679-DJH

Plaintiff/Counterdefendant,
vs.
ORDER SETTING ASIDE
JUDGMENT OF DISMISSAL AND
ENTERING JUDGMENT ON
SECOND AMENDED
COUNTERCLAIM
Alan W. Martin; Donald G. Belcher,
Defendants/Counterclaimant.
This matter came before the Court on the stipulation [dkt _____] of dismissal [dkt _____] and to enter judgment. Good cause appearing,
IT IS ORDERED, ADJUDGED AND DECREED as follows:
A.Setting aside the Court’s judgment [dkt ___].
B.Awarding judgment in favor of Defendant and against Plaintiff on Defendants’ second amended counterclaim [dkt 61] in the principal sum of $5,500,000, together with interest on that sum at the rate provided by 28 U.S.C. § 1961 from the date of entry of judgment until paid in full.
C.This judgment, like its predecessor [dkt ___], is entered as a final judgment having disposed of all other claims between all other parties.
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Counterclaimant is directed to file a partial or full satisfaction of judgment promptly upon receipt of payment or other consideration hereunder.
Dated this _____ day of July 2023.
Hon. Diane J. Humetewa
United States District Court Judge
2

Exhibit 10.40
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this “Agreement”), dated as of __Jan 30___, 2023, is entered into among Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and the person or entity (the “Purchaser”) named on the signature page attached hereto.
WHEREAS, subject to the terms and conditions set forth herein, the Company wishes to issue and sell to the Purchaser, and the Purchaser wishes to purchase from the Company, one or more promissory notes in exchange for the consideration (the “Consideration”) set forth opposite the Purchaser’s name on the signature page hereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1.    Definitions. Capitalized terms not otherwise defined in this Agreement will have the meanings set forth in this Section 1.
1.1    “Maturity Date” means, with respect to each Note issued under this Agreement, the date that is one hundred and eighty days (180 days) following the date of issuance of such Note.
1.2    “Notes” means the one or more promissory notes issued to the Purchaser pursuant to Section 2, the form of which is attached hereto as Exhibit A.
1.3    “Securities Act” means the Securities Act of 1933, as amended.
2.    The Notes.
2.1    Purchase and Sale of Notes. In exchange for the Consideration paid by the Purchaser, the Company will sell and issue to such Purchaser one or more Notes. Each Note will have a principal balance equal to that portion of the Consideration paid by such Purchaser for such Note, as set forth opposite such Purchaser’s name on the signature page hereto.
2.2    Interest. Interest on the Note will accrue from the date of the Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the date which is 180 days from the issuance date of the Note (the “Maturity Date”).
2.3    Assignability. The Note shall not be assignable by the Purchaser without the prior written consent of the Company, which may be granted or withheld by the Company in its sole discretion. The Note and all terms thereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.



2.4    Prepayment. The Company may prepay the Note, together with all then accrued interest, in whole or in part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
2.5    Other Terms. All other terms and conditions of the Note not described above are set forth in the form of the Note attached hereto as Exhibit A.
3.    Closing. The closing of the sale of the Notes in return for the Consideration paid by the Purchaser (the “Closing”) will take place on the Closing date. On the Closing Date, the Company shall deliver to the Purchaser one or more Notes (as directed by the Purchaser) in the amount or amounts as set forth on the signature page hereto. The Company’s obligation to complete the purchase and sale and deliver the Note or Notes to the Purchaser at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company: (A) the Company’s receipt of the Investment Amount (as set forth on the signature page hereto); and (B) delivery by the Purchaser of this fully executed Agreement.
4.    Representations and Warranties of the Company. In connection with the transactions contemplated by this Agreement, the Company hereby represents and warrants to the Purchasers as follows:
4.1    Qualification and Good Standing. The Company is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify or to be in good standing would have a material adverse effect on the Company.
4.2    Authorization and Enforceability. All corporate action has been taken on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Notes. Except as may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights, the Company has taken all corporate action required to make all of the obligations of the Company reflected in the provisions of this Agreement and the Notes valid and enforceable in accordance with their terms.
5.    Representations and Warranties of the Purchasers. In connection with the transactions contemplated by this Agreement, the Purchaser hereby represents and warrants to the Company as follows:
5.1    Authorization. The Purchaser has full power and authority (and, if such Purchaser is an individual, the capacity) to enter into this Agreement and to perform all obligations required to be performed by it hereunder. This Agreement, when executed and delivered by the Purchaser, will constitute such Purchaser’s valid and legally binding obligation, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and (b) as
2


limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
5.2    Purchase Entirely for Own Account. The Purchaser acknowledges that this Agreement is made with such Purchaser in reliance upon such Purchaser’s representation to the Company, which such Purchaser confirms by executing this Agreement, that the Notes will be acquired for investment for such Purchaser’s own account, not as a nominee or agent (unless otherwise specified on such Purchaser’s signature page hereto), and not with a view to the resale or distribution of any part thereof, and that such Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that such Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Notes. If other than an individual, the Purchaser also represents it has not been organized solely for the purpose of acquiring the Notes.
5.3    Disclosure of Information; Non-Reliance. The Purchaser acknowledges that it has received all the information it considers necessary or appropriate to enable it to make an informed decision concerning an investment in the Securities. The Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Notes. The Purchaser confirms that the Company has not given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Notes. Specifically, the Company has provided information to the Purchaser, satisfactory to the Purchaser, relating to the filing status of the Company’s public reports. The Purchaser has had access to, and has reviewed to the satisfaction of the Purchaser, the Company’s publicly filed reports, including all Current Reports on Form 8-K. In deciding to purchase the Notes, the Purchaser is not relying on the advice or recommendations of the Company and such Purchaser has made its own independent decision that the investment in the Securities is suitable and appropriate for such Purchaser. The Purchaser understands that no federal or state agency has passed upon the merits or risks of an investment in the Notes or made any finding or determination concerning the fairness or advisability of this investment.
5.4    Investment Experience. The Purchaser is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Notes.
5.5    Accredited Investor. The Purchaser is either (A) an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, as updated; or (B) a “sophisticated investor,” defined by the U.S. Securities and Exchange Commission as investors who “have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective
3


investment.” The Purchaser agrees to furnish any additional information requested by the Company to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Notes.
5.6    Restricted Securities. The Purchaser understands that the Notes have not been, and will not be, registered under the Securities Act or any state securities laws, by reason of specific exemptions under the provisions thereof which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Notes are “restricted securities” under U.S. federal and applicable state securities laws and that, pursuant to these laws, such Purchaser must hold the Notes indefinitely unless their resales are registered with the Securities and Exchange Commission (“SEC”) and registered or qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Notes for resale and further acknowledges that, if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Notes, and on requirements relating to the Company which are outside of such Purchaser’s control, and which the Company is under no obligation, and may not be able, to satisfy.
5.7    No Public Market. The Purchaser understands that no public market now exists for the Notes and that the Company has made no assurances that a public market will ever exist for the Notes.
5.8    No General Solicitation. The Purchaser, and its officers, directors, employees, agents, stockholders or partners have not either directly or indirectly, including through a broker or finder, solicited offers for or offered or sold the Notes by means of any form of general solicitation or general advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act. The Purchaser acknowledges that neither the Company nor any other person offered to sell the Notes to it by means of any form of general solicitation or advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.
5.9    Residence. If the Purchaser is an individual, such Purchaser resides in the state or province identified in the address shown on the signature page hereto. If the Purchaser is a partnership, corporation, limited liability company or other entity, the Purchaser’s principal place of business is located in the state or province identified in the address shown on the signature page hereto.
5.10    Foreign Investors. If a Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), such Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Notes or any use of this Agreement, including (a) the legal requirements within its jurisdiction for the purchase of
4


the Notes; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, conversion, redemption, sale, or transfer of the Notes. The Purchaser’s subscription and payment for and continued beneficial ownership of the Notes will not violate any applicable securities or other laws of such Purchaser’s jurisdiction. The Purchaser acknowledges that the Company has taken no action in foreign jurisdictions with respect to the Notes.
6.    Miscellaneous.
6.1    Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement will inure to the benefit of, and be binding upon, the respective successors and assigns of the parties; provided, however, that the Company may not assign its obligations under this Agreement without the written consent of the Purchaser. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or will confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, except as expressly provided in this Agreement.
6.2    Choice of Law. This Agreement and the Notes, and all matters arising out of or relating to this Agreement, whether sounding in contract, tort, or statute will be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Delaware.
6.3    Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will be deemed to be one and the same agreement. Counterparts may be delivered via facsimile, email (including PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
6.4    Titles and Subtitles. The titles and subtitles used in this Agreement are included for convenience only and are not to be considered in construing or interpreting this Agreement.
6.5    Notices. All notices and other communications given or made pursuant hereto will be in writing and will be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by email or confirmed facsimile; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications will be sent to the respective parties at the addresses shown on the signature pages hereto (or to such email
5


address, facsimile number or other address as subsequently modified by written notice given in accordance with this Section 6.5).
6.6    No Finder’s Fee. Each party represents that it neither is nor will be obligated to pay any finder’s fee, broker’s fee or commission in connection (directly or indirectly) with the transactions contemplated by this Agreement. The Purchaser agrees to indemnify and to hold the Company harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Purchaser or any of its officers, employees or representatives is responsible. The Company agrees to indemnify and hold the Purchaser harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.
6.7    Expenses. Each party will pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement.
6.8    Attorneys’ Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.
6.9    Entire Agreement; Amendments and Waivers. This Agreement, the Notes and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. The Purchaser acknowledges and agrees that the Company is selling similar Notes to other purchasers. The Company’s agreements with each of the Purchasers are separate agreements, and the sales of the Notes to each of the Purchasers are separate sales. Notwithstanding the foregoing, any term of this Agreement or the Note or Notes held by the Purchaser may be amended and the observance of any term of this Agreement or the Notes may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Purchaser. Any waiver or amendment effected in accordance with this Section 6.9 will be binding upon each party to this Agreement and each holder of a Note purchased under this Agreement then outstanding and each future holder of all such Notes.
6.10    Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provisions were so excluded and this Agreement will be enforceable in accordance with its terms.
6.11    Exculpation among Purchasers. The Purchaser acknowledges that it is not relying upon any person, firm, corporation or stockholder, other than the Company and its officers and directors in their capacities as such, in making its investment or decision to
6


invest in the Company. The Purchaser agrees that no other Purchaser, nor the controlling persons, officers, directors, partners, agents, stockholders or employees of any other Purchaser, will be liable for any action heretofore or hereafter taken or not taken by any of them in connection with the purchase and sale of the Securities.
6.12    Further Assurances. From time to time, the parties will execute and deliver such additional documents and will provide such additional information as may reasonably be required to carry out the full intent and purpose of this Agreement and the Notes and any agreements executed in connection herewith, and to comply with state or federal securities laws or other regulatory approvals.
6.13    Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
[Signature page follows.]
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IN WITNESS WHEREOF, the Company has executed this Agreement as of the date set forth above.
Alpine 4 Holdings, Inc.
A Delaware Corporation
By/s/ Kent Wilson
Name:Kent Wilson
Title:CEO
8


IN WITNESS WHEREOF, the Purchaser hereto have executed this Agreement as of the date set forth above.
If an individual:
/s/ Ian Kantrowitz
(Signature)
Printed Name: Ian Kantrowitz
Note Purchase Amount:$200,000
9


EXHIBIT A
FORM OF NOTE
UNSECURED PROMISSORY NOTE
$____________February ___, 2023
This Unsecured Promissory Note (this “Note”) is dated as of February ____, 2023 (the “Issuance Date”), by and between Alpine 4 Holdings Inc., a Delaware corporation (“Alpine”) and ___________________________, an individual with an address of ______________________________________________ (the “Lender”).
AGREEMENT
FOR VALUE RECEIVED, the undersigned, Alpine, hereby promises to pay to the order of the Lender, the principal sum of ___________________________ ($___________) (the “Principal Amount”) in lawful money of the United States of America, and together with interest thereon at the rate hereinafter specified and any and all other sums which may be due and owing hereunder to the Lender, which shall be paid at the address of the Lender below, in accordance with the terms contained herein.
1.    Interest. Alpine shall pay interest from the date of this Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the Maturity Date (hereinafter defined).
2.    Calculation of Interest. Interest on the Principal Amount of this Note shall be calculated on the basis of a 180 day factor applied to the actual days on which there exists an unpaid principal balance due under this Note.
3.    Maturity. The entire Principal Amount and all accrued interest shall become fully due and payable 180 days from the Issuance Date (the “Maturity Date”).
4.    Prepayment. Alpine may prepay this Note, together with all then accrued interest, in whole or in
part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
5.    Payments. All payments made hereunder shall be in lawful money of the United States of America. All payments and prepayments shall be applied first to costs of collection, next, to accrued interest, and thereafter to principal.
6.    Default and Remedies. The following shall be a default under this Note and shall entitle the Lender to all of the rights and remedies specified herein or otherwise available under applicable law or in equity: (i) any failure to make any payment due under this Note when due or upon the failure to comply with any other terms and provisions of this Note, if such failures remain uncured for a period of ten (10) business days; (ii) a petition for relief in a bankruptcy court is filed by Alpine or Alpine applies for, consents to or acquiesces in the appointment of a trustee, custodian or receiver for Alpine or any of its assets or property or make a general assignment for the benefit of its creditors or, in the absence of such application, consent or acquiescence, a trustee, custodian or receiver is appointed for Alpine or for a substantial part of its assets or property and is not discharged within thirty (30) days thereafter; (iii) any bankruptcy, reorganization, debt arrangement or other proceeding or case under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted against Alpine and if instituted against Alpine is consented to or acquiesced in by Alpine or remains undismissed for sixty (60) days thereafter; or (iv) Alpine takes any action to authorize any of the actions described in subsection (ii) or (iii). Alpine hereby waives presentment, demand for payment, notice of dishonor, notice of protest, and protest, and all other notices or demands in connection with the delivery, acceptance and performance of this Note.
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7.    Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the State of Delaware.
8.    No Waiver. The delay or failure of the Lender to exercise its rights hereunder shall not be deemed a waiver thereof. No waiver of any rights of the Lender shall be effective unless in writing and signed by the Lender and any waiver of any right shall not apply to any other right or to such right in any subsequent event or circumstance not specifically included in such waiver.
9.    Successors and Assigns. This Note and all terms hereof shall not be assignable by the Lender without the prior written consent of Alpine, which may be granted or withheld by Alpine in its sole discretion. This Note shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
10.    Senior Debt is allowed. Alpine may at any time from the date hereof and at Alpine’s sole discretion incur, create or assume additional debt by notes or debentures or similar instruments which are senior to this Note.
11.    Evaluation and Understanding. Each of the parties hereto acknowledges that (i) he/she/it has read this Note in its entirety and understands all of its terms and conditions, (ii) he/she/it has had the opportunity to consult with any individuals of their choice regarding their agreement to the provisions contained herein, including legal counsel of their choice, and any decision not to was theirs alone, and (iii) he/she/it is entering into this Note of their own free will, without coercion from any source.
12.    Notices. Any notices or other communication required hereunder shall be deemed properly given if delivered in person or if mailed by registered or certified mail, postage prepaid, return receipt requested to the parties at the following addresses:
if to Alpine:
Alpine 4 Holdings, Inc.
2525 E Arizona Biltmore Cir Ste 237
Phoenix, Arizona, 85016
Attn: Kent Wilson
if to the Lender:
IN WITNESS WHEREOF, Alpine has caused this Note to be executed on its behalf by its duly authorized officer as of February 1st, 2023.
ALPINE 4 HOLDINGS, INC.
By:
Name: Kent B. Wilson
Title: Chief Executive Officer
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ACKNOWLEDGED AND AGREED TO
By:
(Signature)
Name:
(Printed Name)
12

Exhibit 10.41
AMENDMENT TO UNSECURED CONVERTIBLE NOTE
AND NOTE PURCHASE AGREEMENT
THIS AMENDMENT AGREEMENT (this “Agreement”) dated _July 25__, 2023, is entered into to amend certain documents between Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and _Ian Kantrowitz__ (the “Note Holder”), related to the Note Holder’s prior loan of funds to the Company. The Company and the Note Holder may each be referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
A.On or around _January 25_, 2023, the Note Holder loaned to the Company the amount set forth on the signature page hereto (the “Original Loan Amount”), pursuant to a Note Purchase Agreement (the “NPA”), and in connection with which, the Company issued an unsecured promissory note in the Original Loan Amount (the “Original Note”).
B.The Company and the Note Holder desire to amend the terms of the Original Note and the NPA, as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals, which are incorporated herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Note Holder hereby agree as follows:
1.Amendment to Original Note and NPA; New Maturity Date; No Default.
a.Pursuant to the Original Note, the Original Loan Amount and all accrued and unpaid interest was due 180 days from the issuance date of the Original Note (the “Original Maturity Date”). By entering into this Agreement, the Note Holder acknowledges and agrees to extend the maturity date of the Original Note (the “New Maturity Date”) to that date set forth on the signature page hereto. Additionally, by entering into this Agreement, the Note Holder acknowledges and agrees that any nonpayment by the Company of the Original Loan Amount or any interest accrued thereon by the Original Maturity Date shall not constitute a default pursuant to the terms of the Original Note or the NPA.
b.The New Maturity Date, as set forth on the signature page hereto, shall be the due date for the amounts to be extended pursuant to this Agreement (the “New Repayment Amount”). By entering into this Agreement, the Note Holder acknowledges and agrees that he, she, or it had the opportunity to extend all or part of the Original Principal Amount as well as all or part of the unpaid interest on the Original Principal Amount that had accrued as of the Original Maturity Date, and that the amounts indicated on the signature page hereto shall constitute the New Repayment Amount.
c.The Note Holder further acknowledges and agrees that New Repayment Amount set forth on the signature page hereto is the amount that is to be due and payable by the Company on or before the New Maturity Date.
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d.The Note Holder further acknowledges and agrees that the interest rate set forth on the signature page hereto shall be the amount of interest that shall be paid on the New Repayment Amount, and that the interest rate as specified in the Original Note shall not separately accrue on the New Repayment Amount.
2.No Other Amendments. By signing below, the Parties understand, acknowledge, and agree that all other terms of the Original Note and the NPA, except as specifically amended or modified by this Agreement, shall remain of full force and effect. This Agreement, as well as the Original Note and the NPA, as revised and modified by this Agreement, constitute and contain the entire agreement of the Company and the Note Holder and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof. To the extent that there is any conflict between the terms in this Agreement and terms in the Original Note or the NPA, the terms in this Agreement shall control the rights and obligations of the Parties.
3.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to conflicts of law rules.
4.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written.
COMPANY:
ALPINE 4 HOLDINGS, INC.
a Delaware corporation
By:/s/ Kent Wilson
Name:Kent Wilson
Its:Chief Executive Officer
Date:8/1/2023
NOTE HOLDER:
By:/s/ Ian Kantrowitz
Ian Kantrowitz
Name:Ian Kantrowitz
Date:7/31/2023
ORIGINAL AND REVISED NOTE TERMS
Original Loan Amount:$200,000
Original Term Interest Rate:15%
Original Maturity Date:July 25, 2023
Final Maturity Amount:$230,000
Payout Amount (if applicable):$NONE
New Maturity Date:January 21, 2024
New Term Interest Rate:15%
New Repayment Amount:$264,500
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Exhibit 10.42
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this “Agreement”), dated as of __January 30___, 2023, is entered into among Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and the person or entity (the “Purchaser”) named on the signature page attached hereto.
WHEREAS, subject to the terms and conditions set forth herein, the Company wishes to issue and sell to the Purchaser, and the Purchaser wishes to purchase from the Company, one or more promissory notes in exchange for the consideration (the “Consideration”) set forth opposite the Purchaser’s name on the signature page hereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1.    Definitions. Capitalized terms not otherwise defined in this Agreement will have the meanings set forth in this Section 1.
1.1    “Maturity Date” means, with respect to each Note issued under this Agreement, the date that is one hundred and eighty days (180 days) following the date of issuance of such Note.
1.2    “Notes” means the one or more promissory notes issued to the Purchaser pursuant to Section 2, the form of which is attached hereto as Exhibit A.
1.3    “Securities Act” means the Securities Act of 1933, as amended.
2.    The Notes.
2.1    Purchase and Sale of Notes. In exchange for the Consideration paid by the Purchaser, the Company will sell and issue to such Purchaser one or more Notes. Each Note will have a principal balance equal to that portion of the Consideration paid by such Purchaser for such Note, as set forth opposite such Purchaser’s name on the signature page hereto.
2.2    Interest. Interest on the Note will accrue from the date of the Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the date which is 180 days from the issuance date of the Note (the “Maturity Date”).
2.3    Assignability. The Note shall not be assignable by the Purchaser without the prior written consent of the Company, which may be granted or withheld by the Company in its sole discretion. The Note and all terms thereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.



2.4    Prepayment. The Company may prepay the Note, together with all then accrued interest, in whole or in part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
2.5    Other Terms. All other terms and conditions of the Note not described above are set forth in the form of the Note attached hereto as Exhibit A.
3.    Closing. The closing of the sale of the Notes in return for the Consideration paid by the Purchaser (the “Closing”) will take place on the Closing date. On the Closing Date, the Company shall deliver to the Purchaser one or more Notes (as directed by the Purchaser) in the amount or amounts as set forth on the signature page hereto. The Company’s obligation to complete the purchase and sale and deliver the Note or Notes to the Purchaser at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company: (A) the Company’s receipt of the Investment Amount (as set forth on the signature page hereto); and (B) delivery by the Purchaser of this fully executed Agreement.
4.    Representations and Warranties of the Company. In connection with the transactions contemplated by this Agreement, the Company hereby represents and warrants to the Purchasers as follows:
4.1    Qualification and Good Standing. The Company is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify or to be in good standing would have a material adverse effect on the Company.
4.2    Authorization and Enforceability. All corporate action has been taken on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Notes. Except as may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights, the Company has taken all corporate action required to make all of the obligations of the Company reflected in the provisions of this Agreement and the Notes valid and enforceable in accordance with their terms.
5.    Representations and Warranties of the Purchasers. In connection with the transactions contemplated by this Agreement, the Purchaser hereby represents and warrants to the Company as follows:
5.1    Authorization. The Purchaser has full power and authority (and, if such Purchaser is an individual, the capacity) to enter into this Agreement and to perform all obligations required to be performed by it hereunder. This Agreement, when executed and delivered by the Purchaser, will constitute such Purchaser’s valid and legally binding obligation, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and (b) as
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limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
5.2    Purchase Entirely for Own Account. The Purchaser acknowledges that this Agreement is made with such Purchaser in reliance upon such Purchaser’s representation to the Company, which such Purchaser confirms by executing this Agreement, that the Notes will be acquired for investment for such Purchaser’s own account, not as a nominee or agent (unless otherwise specified on such Purchaser’s signature page hereto), and not with a view to the resale or distribution of any part thereof, and that such Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that such Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Notes. If other than an individual, the Purchaser also represents it has not been organized solely for the purpose of acquiring the Notes.
5.3    Disclosure of Information; Non-Reliance. The Purchaser acknowledges that it has received all the information it considers necessary or appropriate to enable it to make an informed decision concerning an investment in the Securities. The Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Notes. The Purchaser confirms that the Company has not given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Notes. Specifically, the Company has provided information to the Purchaser, satisfactory to the Purchaser, relating to the filing status of the Company’s public reports. The Purchaser has had access to, and has reviewed to the satisfaction of the Purchaser, the Company’s publicly filed reports, including all Current Reports on Form 8-K. In deciding to purchase the Notes, the Purchaser is not relying on the advice or recommendations of the Company and such Purchaser has made its own independent decision that the investment in the Securities is suitable and appropriate for such Purchaser. The Purchaser understands that no federal or state agency has passed upon the merits or risks of an investment in the Notes or made any finding or determination concerning the fairness or advisability of this investment.
5.4    Investment Experience. The Purchaser is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Notes.
5.5    Accredited Investor. The Purchaser is either (A) an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, as updated; or (B) a “sophisticated investor,” defined by the U.S. Securities and Exchange Commission as investors who “have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective
3


investment.” The Purchaser agrees to furnish any additional information requested by the Company to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Notes.
5.6    Restricted Securities. The Purchaser understands that the Notes have not been, and will not be, registered under the Securities Act or any state securities laws, by reason of specific exemptions under the provisions thereof which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Notes are “restricted securities” under U.S. federal and applicable state securities laws and that, pursuant to these laws, such Purchaser must hold the Notes indefinitely unless their resales are registered with the Securities and Exchange Commission (“SEC”) and registered or qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Notes for resale and further acknowledges that, if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Notes, and on requirements relating to the Company which are outside of such Purchaser’s control, and which the Company is under no obligation, and may not be able, to satisfy.
5.7    No Public Market. The Purchaser understands that no public market now exists for the Notes and that the Company has made no assurances that a public market will ever exist for the Notes.
5.8    No General Solicitation. The Purchaser, and its officers, directors, employees, agents, stockholders or partners have not either directly or indirectly, including through a broker or finder, solicited offers for or offered or sold the Notes by means of any form of general solicitation or general advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act. The Purchaser acknowledges that neither the Company nor any other person offered to sell the Notes to it by means of any form of general solicitation or advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.
5.9    Residence. If the Purchaser is an individual, such Purchaser resides in the state or province identified in the address shown on the signature page hereto. If the Purchaser is a partnership, corporation, limited liability company or other entity, the Purchaser’s principal place of business is located in the state or province identified in the address shown on the signature page hereto.
5.10    Foreign Investors. If a Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), such Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Notes or any use of this Agreement, including (a) the legal requirements within its jurisdiction for the purchase of
4


the Notes; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, conversion, redemption, sale, or transfer of the Notes. The Purchaser’s subscription and payment for and continued beneficial ownership of the Notes will not violate any applicable securities or other laws of such Purchaser’s jurisdiction. The Purchaser acknowledges that the Company has taken no action in foreign jurisdictions with respect to the Notes.
6.    Miscellaneous.
6.1    Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement will inure to the benefit of, and be binding upon, the respective successors and assigns of the parties; provided, however, that the Company may not assign its obligations under this Agreement without the written consent of the Purchaser. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or will confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, except as expressly provided in this Agreement.
6.2    Choice of Law. This Agreement and the Notes, and all matters arising out of or relating to this Agreement, whether sounding in contract, tort, or statute will be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Delaware.
6.3    Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will be deemed to be one and the same agreement. Counterparts may be delivered via facsimile, email (including PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
6.4    Titles and Subtitles. The titles and subtitles used in this Agreement are included for convenience only and are not to be considered in construing or interpreting this Agreement.
6.5    Notices. All notices and other communications given or made pursuant hereto will be in writing and will be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by email or confirmed facsimile; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications will be sent to the respective parties at the addresses shown on the signature pages hereto (or to such email
5


address, facsimile number or other address as subsequently modified by written notice given in accordance with this Section 6.5).
6.6    No Finder’s Fee. Each party represents that it neither is nor will be obligated to pay any finder’s fee, broker’s fee or commission in connection (directly or indirectly) with the transactions contemplated by this Agreement. The Purchaser agrees to indemnify and to hold the Company harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Purchaser or any of its officers, employees or representatives is responsible. The Company agrees to indemnify and hold the Purchaser harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.
6.7    Expenses. Each party will pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement.
6.8    Attorneys’ Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.
6.9    Entire Agreement; Amendments and Waivers. This Agreement, the Notes and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. The Purchaser acknowledges and agrees that the Company is selling similar Notes to other purchasers. The Company’s agreements with each of the Purchasers are separate agreements, and the sales of the Notes to each of the Purchasers are separate sales. Notwithstanding the foregoing, any term of this Agreement or the Note or Notes held by the Purchaser may be amended and the observance of any term of this Agreement or the Notes may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Purchaser. Any waiver or amendment effected in accordance with this Section 6.9 will be binding upon each party to this Agreement and each holder of a Note purchased under this Agreement then outstanding and each future holder of all such Notes.
6.10    Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provisions were so excluded and this Agreement will be enforceable in accordance with its terms.
6.11    Exculpation among Purchasers. The Purchaser acknowledges that it is not relying upon any person, firm, corporation or stockholder, other than the Company and its officers and directors in their capacities as such, in making its investment or decision to
6


invest in the Company. The Purchaser agrees that no other Purchaser, nor the controlling persons, officers, directors, partners, agents, stockholders or employees of any other Purchaser, will be liable for any action heretofore or hereafter taken or not taken by any of them in connection with the purchase and sale of the Securities.
6.12    Further Assurances. From time to time, the parties will execute and deliver such additional documents and will provide such additional information as may reasonably be required to carry out the full intent and purpose of this Agreement and the Notes and any agreements executed in connection herewith, and to comply with state or federal securities laws or other regulatory approvals.
6.13    Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
[Signature page follows.]
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IN WITNESS WHEREOF, the Company has executed this Agreement as of the date set forth above.
Alpine 4 Holdings, Inc.
A Delaware Corporation
By/s/ Kent Wilson
Name:Kent Wilson
Title:CEO
8



If an individual:
/s/ Christophe Jeunot
(Signature)
Printed Name: Christophe Jeunot
Note Purchase Amount:$50,000
9


EXHIBIT A
FORM OF NOTE
UNSECURED PROMISSORY NOTE
$____________February ___, 2023
This Unsecured Promissory Note (this “Note”) is dated as of February ____, 2023 (the “Issuance Date”), by and between Alpine 4 Holdings Inc., a Delaware corporation (“Alpine”) and ___________________________, an individual with an address of ______________________________________________ (the “Lender”).
AGREEMENT
FOR VALUE RECEIVED, the undersigned, Alpine, hereby promises to pay to the order of the Lender, the principal sum of ___________________________ ($___________) (the “Principal Amount”) in lawful money of the United States of America, and together with interest thereon at the rate hereinafter specified and any and all other sums which may be due and owing hereunder to the Lender, which shall be paid at the address of the Lender below, in accordance with the terms contained herein.
1.    Interest. Alpine shall pay interest from the date of this Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the Maturity Date (hereinafter defined).
2.    Calculation of Interest. Interest on the Principal Amount of this Note shall be calculated on the basis of a 180 day factor applied to the actual days on which there exists an unpaid principal balance due under this Note.
3.    Maturity. The entire Principal Amount and all accrued interest shall become fully due and payable 180 days from the Issuance Date (the “Maturity Date”).
4.    Prepayment. Alpine may prepay this Note, together with all then accrued interest, in whole or in
part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
5.    Payments. All payments made hereunder shall be in lawful money of the United States of America. All payments and prepayments shall be applied first to costs of collection, next, to accrued interest, and thereafter to principal.
6.    Default and Remedies. The following shall be a default under this Note and shall entitle the Lender to all of the rights and remedies specified herein or otherwise available under applicable law or in equity: (i) any failure to make any payment due under this Note when due or upon the failure to comply with any other terms and provisions of this Note, if such failures remain uncured for a period of ten (10) business days; (ii) a petition for relief in a bankruptcy court is filed by Alpine or Alpine applies for, consents to or acquiesces in the appointment of a trustee, custodian or receiver for Alpine or any of its assets or property or make a general assignment for the benefit of its creditors or, in the absence of such application, consent or acquiescence, a trustee, custodian or receiver is appointed for Alpine or for a substantial part of its assets or property and is not discharged within thirty (30) days thereafter; (iii) any bankruptcy, reorganization, debt arrangement or other proceeding or case under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted against Alpine and if instituted against Alpine is consented to or acquiesced in by Alpine or remains undismissed for sixty (60) days thereafter; or (iv) Alpine takes any action to authorize any of the actions described in subsection (ii) or (iii). Alpine hereby waives presentment, demand for payment, notice of dishonor, notice of protest, and protest, and all other notices or demands in connection with the delivery, acceptance and performance of this Note.
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7.    Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the State of Delaware.
8.    No Waiver. The delay or failure of the Lender to exercise its rights hereunder shall not be deemed a waiver thereof. No waiver of any rights of the Lender shall be effective unless in writing and signed by the Lender and any waiver of any right shall not apply to any other right or to such right in any subsequent event or circumstance not specifically included in such waiver.
9.    Successors and Assigns. This Note and all terms hereof shall not be assignable by the Lender without the prior written consent of Alpine, which may be granted or withheld by Alpine in its sole discretion. This Note shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
10.    Senior Debt is allowed. Alpine may at any time from the date hereof and at Alpine’s sole discretion incur, create or assume additional debt by notes or debentures or similar instruments which are senior to this Note.
11.    Evaluation and Understanding. Each of the parties hereto acknowledges that (i) he/she/it has read this Note in its entirety and understands all of its terms and conditions, (ii) he/she/it has had the opportunity to consult with any individuals of their choice regarding their agreement to the provisions contained herein, including legal counsel of their choice, and any decision not to was theirs alone, and (iii) he/she/it is entering into this Note of their own free will, without coercion from any source.
12.    Notices. Any notices or other communication required hereunder shall be deemed properly given if delivered in person or if mailed by registered or certified mail, postage prepaid, return receipt requested to the parties at the following addresses:
if to Alpine:
Alpine 4 Holdings, Inc.
2525 E Arizona Biltmore Cir Ste 237
Phoenix, Arizona, 85016
Attn: Kent Wilson
if to the Lender:
IN WITNESS WHEREOF, Alpine has caused this Note to be executed on its behalf by its duly authorized officer as of February 1st, 2023.
ALPINE 4 HOLDINGS, INC.
By:
Name: Kent B. Wilson
Title: Chief Executive Officer
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ACKNOWLEDGED AND AGREED TO
By:
(Signature)
Name:
(Printed Name)
12

Exhibit 10.43
AMENDMENT TO UNSECURED CONVERTIBLE NOTE
AND NOTE PURCHASE AGREEMENT
THIS AMENDMENT AGREEMENT (this “Agreement”) dated _July 29__, 2023, is entered into to amend certain documents between Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and _Christophe Jeunot__ (the “Note Holder”), related to the Note Holder’s prior loan of funds to the Company. The Company and the Note Holder may each be referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
A.On or around _January 30_, 2023, the Note Holder loaned to the Company the amount set forth on the signature page hereto (the “Original Loan Amount”), pursuant to a Note Purchase Agreement (the “NPA”), and in connection with which, the Company issued an unsecured promissory note in the Original Loan Amount (the “Original Note”).
B.The Company and the Note Holder desire to amend the terms of the Original Note and the NPA, as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals, which are incorporated herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Note Holder hereby agree as follows:
1.Amendment to Original Note and NPA; New Maturity Date; No Default.
a.Pursuant to the Original Note, the Original Loan Amount and all accrued and unpaid interest was due 180 days from the issuance date of the Original Note (the “Original Maturity Date”). By entering into this Agreement, the Note Holder acknowledges and agrees to extend the maturity date of the Original Note (the “New Maturity Date”) to that date set forth on the signature page hereto. Additionally, by entering into this Agreement, the Note Holder acknowledges and agrees that any nonpayment by the Company of the Original Loan Amount or any interest accrued thereon by the Original Maturity Date shall not constitute a default pursuant to the terms of the Original Note or the NPA.
b.The New Maturity Date, as set forth on the signature page hereto, shall be the due date for the amounts to be extended pursuant to this Agreement (the “New Repayment Amount”). By entering into this Agreement, the Note Holder acknowledges and agrees that he, she, or it had the opportunity to extend all or part of the Original Principal Amount as well as all or part of the unpaid interest on the Original Principal Amount that had accrued as of the Original Maturity Date, and that the amounts indicated on the signature page hereto shall constitute the New Repayment Amount.
c.The Note Holder further acknowledges and agrees that New Repayment Amount set forth on the signature page hereto is the amount that is to be due and payable by the Company on or before the New Maturity Date.
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d.The Note Holder further acknowledges and agrees that the interest rate set forth on the signature page hereto shall be the amount of interest that shall be paid on the New Repayment Amount, and that the interest rate as specified in the Original Note shall not separately accrue on the New Repayment Amount.
2.No Other Amendments. By signing below, the Parties understand, acknowledge, and agree that all other terms of the Original Note and the NPA, except as specifically amended or modified by this Agreement, shall remain of full force and effect. This Agreement, as well as the Original Note and the NPA, as revised and modified by this Agreement, constitute and contain the entire agreement of the Company and the Note Holder and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof. To the extent that there is any conflict between the terms in this Agreement and terms in the Original Note or the NPA, the terms in this Agreement shall control the rights and obligations of the Parties.
3.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to conflicts of law rules.
4.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written.
COMPANY:
ALPINE 4 HOLDINGS, INC.
a Delaware corporation
By:/s/ Kent Wilson
Name:Kent Wilson
Its:Chief Executive Officer
Date:08-01-2023
NOTE HOLDER:
By:/s/ Christophe Jeunot
Name:Christophe Jeunot
Date:08/01/2023
ORIGINAL AND REVISED NOTE TERMS
Original Loan Amount:$50,000
Original Term Interest Rate:15%
Original Maturity Date:July 29, 2023
Final Maturity Amount:$57,500
Payout Amount (if applicable):$NONE
New Maturity Date:January 24, 2024
New Term Interest Rate:15%
New Repayment Amount:$66,125
3

Exhibit 10.44
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this “Agreement”), dated as of __Jan 30___, 2023, is entered into among Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and the person or entity (the “Purchaser”) named on the signature page attached hereto.
WHEREAS, subject to the terms and conditions set forth herein, the Company wishes to issue and sell to the Purchaser, and the Purchaser wishes to purchase from the Company, one or more promissory notes in exchange for the consideration (the “Consideration”) set forth opposite the Purchaser’s name on the signature page hereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1.    Definitions. Capitalized terms not otherwise defined in this Agreement will have the meanings set forth in this Section 1.
1.1    “Maturity Date” means, with respect to each Note issued under this Agreement, the date that is one hundred and eighty days (180 days) following the date of issuance of such Note.
1.2    “Notes” means the one or more promissory notes issued to the Purchaser pursuant to Section 2, the form of which is attached hereto as Exhibit A.
1.3    “Securities Act” means the Securities Act of 1933, as amended.
2.    The Notes.
2.1    Purchase and Sale of Notes. In exchange for the Consideration paid by the Purchaser, the Company will sell and issue to such Purchaser one or more Notes. Each Note will have a principal balance equal to that portion of the Consideration paid by such Purchaser for such Note, as set forth opposite such Purchaser’s name on the signature page hereto.
2.2    Interest. Interest on the Note will accrue from the date of the Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the date which is 180 days from the issuance date of the Note (the “Maturity Date”).
2.3    Assignability. The Note shall not be assignable by the Purchaser without the prior written consent of the Company, which may be granted or withheld by the Company in its sole discretion. The Note and all terms thereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.



2.4    Prepayment. The Company may prepay the Note, together with all then accrued interest, in whole or in part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
2.5    Other Terms. All other terms and conditions of the Note not described above are set forth in the form of the Note attached hereto as Exhibit A.
3.    Closing. The closing of the sale of the Notes in return for the Consideration paid by the Purchaser (the “Closing”) will take place on the Closing date. On the Closing Date, the Company shall deliver to the Purchaser one or more Notes (as directed by the Purchaser) in the amount or amounts as set forth on the signature page hereto. The Company’s obligation to complete the purchase and sale and deliver the Note or Notes to the Purchaser at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company: (A) the Company’s receipt of the Investment Amount (as set forth on the signature page hereto); and (B) delivery by the Purchaser of this fully executed Agreement.
4.    Representations and Warranties of the Company. In connection with the transactions contemplated by this Agreement, the Company hereby represents and warrants to the Purchasers as follows:
4.1    Qualification and Good Standing. The Company is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify or to be in good standing would have a material adverse effect on the Company.
4.2    Authorization and Enforceability. All corporate action has been taken on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Notes. Except as may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights, the Company has taken all corporate action required to make all of the obligations of the Company reflected in the provisions of this Agreement and the Notes valid and enforceable in accordance with their terms.
5.    Representations and Warranties of the Purchasers. In connection with the transactions contemplated by this Agreement, the Purchaser hereby represents and warrants to the Company as follows:
5.1    Authorization. The Purchaser has full power and authority (and, if such Purchaser is an individual, the capacity) to enter into this Agreement and to perform all obligations required to be performed by it hereunder. This Agreement, when executed and delivered by the Purchaser, will constitute such Purchaser’s valid and legally binding obligation, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and (b) as
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limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
5.2    Purchase Entirely for Own Account. The Purchaser acknowledges that this Agreement is made with such Purchaser in reliance upon such Purchaser’s representation to the Company, which such Purchaser confirms by executing this Agreement, that the Notes will be acquired for investment for such Purchaser’s own account, not as a nominee or agent (unless otherwise specified on such Purchaser’s signature page hereto), and not with a view to the resale or distribution of any part thereof, and that such Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that such Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Notes. If other than an individual, the Purchaser also represents it has not been organized solely for the purpose of acquiring the Notes.
5.3    Disclosure of Information; Non-Reliance. The Purchaser acknowledges that it has received all the information it considers necessary or appropriate to enable it to make an informed decision concerning an investment in the Securities. The Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Notes. The Purchaser confirms that the Company has not given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Notes. Specifically, the Company has provided information to the Purchaser, satisfactory to the Purchaser, relating to the filing status of the Company’s public reports. The Purchaser has had access to, and has reviewed to the satisfaction of the Purchaser, the Company’s publicly filed reports, including all Current Reports on Form 8-K. In deciding to purchase the Notes, the Purchaser is not relying on the advice or recommendations of the Company and such Purchaser has made its own independent decision that the investment in the Securities is suitable and appropriate for such Purchaser. The Purchaser understands that no federal or state agency has passed upon the merits or risks of an investment in the Notes or made any finding or determination concerning the fairness or advisability of this investment.
5.4    Investment Experience. The Purchaser is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Notes.
5.5    Accredited Investor. The Purchaser is either (A) an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, as updated; or (B) a “sophisticated investor,” defined by the U.S. Securities and Exchange Commission as investors who “have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective
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investment.” The Purchaser agrees to furnish any additional information requested by the Company to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Notes.
5.6    Restricted Securities. The Purchaser understands that the Notes have not been, and will not be, registered under the Securities Act or any state securities laws, by reason of specific exemptions under the provisions thereof which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Notes are “restricted securities” under U.S. federal and applicable state securities laws and that, pursuant to these laws, such Purchaser must hold the Notes indefinitely unless their resales are registered with the Securities and Exchange Commission (“SEC”) and registered or qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Notes for resale and further acknowledges that, if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Notes, and on requirements relating to the Company which are outside of such Purchaser’s control, and which the Company is under no obligation, and may not be able, to satisfy.
5.7    No Public Market. The Purchaser understands that no public market now exists for the Notes and that the Company has made no assurances that a public market will ever exist for the Notes.
5.8    No General Solicitation. The Purchaser, and its officers, directors, employees, agents, stockholders or partners have not either directly or indirectly, including through a broker or finder, solicited offers for or offered or sold the Notes by means of any form of general solicitation or general advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act. The Purchaser acknowledges that neither the Company nor any other person offered to sell the Notes to it by means of any form of general solicitation or advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.
5.9    Residence. If the Purchaser is an individual, such Purchaser resides in the state or province identified in the address shown on the signature page hereto. If the Purchaser is a partnership, corporation, limited liability company or other entity, the Purchaser’s principal place of business is located in the state or province identified in the address shown on the signature page hereto.
5.10    Foreign Investors. If a Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), such Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Notes or any use of this Agreement, including (a) the legal requirements within its jurisdiction for the purchase of
4


the Notes; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, conversion, redemption, sale, or transfer of the Notes. The Purchaser’s subscription and payment for and continued beneficial ownership of the Notes will not violate any applicable securities or other laws of such Purchaser’s jurisdiction. The Purchaser acknowledges that the Company has taken no action in foreign jurisdictions with respect to the Notes.
6.    Miscellaneous.
6.1    Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement will inure to the benefit of, and be binding upon, the respective successors and assigns of the parties; provided, however, that the Company may not assign its obligations under this Agreement without the written consent of the Purchaser. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or will confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, except as expressly provided in this Agreement.
6.2    Choice of Law. This Agreement and the Notes, and all matters arising out of or relating to this Agreement, whether sounding in contract, tort, or statute will be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Delaware.
6.3    Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will be deemed to be one and the same agreement. Counterparts may be delivered via facsimile, email (including PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
6.4    Titles and Subtitles. The titles and subtitles used in this Agreement are included for convenience only and are not to be considered in construing or interpreting this Agreement.
6.5    Notices. All notices and other communications given or made pursuant hereto will be in writing and will be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by email or confirmed facsimile; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications will be sent to the respective parties at the addresses shown on the signature pages hereto (or to such email
5


address, facsimile number or other address as subsequently modified by written notice given in accordance with this Section 6.5).
6.6    No Finder’s Fee. Each party represents that it neither is nor will be obligated to pay any finder’s fee, broker’s fee or commission in connection (directly or indirectly) with the transactions contemplated by this Agreement. The Purchaser agrees to indemnify and to hold the Company harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Purchaser or any of its officers, employees or representatives is responsible. The Company agrees to indemnify and hold the Purchaser harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.
6.7    Expenses. Each party will pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement.
6.8    Attorneys’ Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.
6.9    Entire Agreement; Amendments and Waivers. This Agreement, the Notes and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. The Purchaser acknowledges and agrees that the Company is selling similar Notes to other purchasers. The Company’s agreements with each of the Purchasers are separate agreements, and the sales of the Notes to each of the Purchasers are separate sales. Notwithstanding the foregoing, any term of this Agreement or the Note or Notes held by the Purchaser may be amended and the observance of any term of this Agreement or the Notes may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Purchaser. Any waiver or amendment effected in accordance with this Section 6.9 will be binding upon each party to this Agreement and each holder of a Note purchased under this Agreement then outstanding and each future holder of all such Notes.
6.10    Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provisions were so excluded and this Agreement will be enforceable in accordance with its terms.
6.11    Exculpation among Purchasers. The Purchaser acknowledges that it is not relying upon any person, firm, corporation or stockholder, other than the Company and its officers and directors in their capacities as such, in making its investment or decision to
6


invest in the Company. The Purchaser agrees that no other Purchaser, nor the controlling persons, officers, directors, partners, agents, stockholders or employees of any other Purchaser, will be liable for any action heretofore or hereafter taken or not taken by any of them in connection with the purchase and sale of the Securities.
6.12    Further Assurances. From time to time, the parties will execute and deliver such additional documents and will provide such additional information as may reasonably be required to carry out the full intent and purpose of this Agreement and the Notes and any agreements executed in connection herewith, and to comply with state or federal securities laws or other regulatory approvals.
6.13    Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
[Signature page follows.]
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IN WITNESS WHEREOF, the Company has executed this Agreement as of the date set forth above.
Alpine 4 Holdings, Inc.
A Delaware Corporation
By/s/ Kent Wilson
Name:Kent Wilson
Title:CEO
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IN WITNESS WHEREOF, the Purchaser hereto have executed this Agreement as of the date set forth above.
If an individual:
/s/ Shannon Rigney
(Signature)
Printed Name: Shannon Rigney
Note Purchase Amount:$50,000 
9


EXHIBIT A
FORM OF NOTE
UNSECURED PROMISSORY NOTE
$____________February ___, 2023
This Unsecured Promissory Note (this “Note”) is dated as of February ____, 2023 (the “Issuance Date”), by and between Alpine 4 Holdings Inc., a Delaware corporation (“Alpine”) and ___________________________, an individual with an address of ______________________________________________ (the “Lender”).
AGREEMENT
FOR VALUE RECEIVED, the undersigned, Alpine, hereby promises to pay to the order of the Lender, the principal sum of ___________________________ ($___________) (the “Principal Amount”) in lawful money of the United States of America, and together with interest thereon at the rate hereinafter specified and any and all other sums which may be due and owing hereunder to the Lender, which shall be paid at the address of the Lender below, in accordance with the terms contained herein.
1.    Interest. Alpine shall pay interest from the date of this Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the Maturity Date (hereinafter defined).
2.    Calculation of Interest. Interest on the Principal Amount of this Note shall be calculated on the basis of a 180 day factor applied to the actual days on which there exists an unpaid principal balance due under this Note.
3.    Maturity. The entire Principal Amount and all accrued interest shall become fully due and payable 180 days from the Issuance Date (the “Maturity Date”).
4.    Prepayment. Alpine may prepay this Note, together with all then accrued interest, in whole or in
part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
5.    Payments. All payments made hereunder shall be in lawful money of the United States of America. All payments and prepayments shall be applied first to costs of collection, next, to accrued interest, and thereafter to principal.
6.    Default and Remedies. The following shall be a default under this Note and shall entitle the Lender to all of the rights and remedies specified herein or otherwise available under applicable law or in equity: (i) any failure to make any payment due under this Note when due or upon the failure to comply with any other terms and provisions of this Note, if such failures remain uncured for a period of ten (10) business days; (ii) a petition for relief in a bankruptcy court is filed by Alpine or Alpine applies for, consents to or acquiesces in the appointment of a trustee, custodian or receiver for Alpine or any of its assets or property or make a general assignment for the benefit of its creditors or, in the absence of such application, consent or acquiescence, a trustee, custodian or receiver is appointed for Alpine or for a substantial part of its assets or property and is not discharged within thirty (30) days thereafter; (iii) any bankruptcy, reorganization, debt arrangement or other proceeding or case under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted against Alpine and if instituted against Alpine is consented to or acquiesced in by Alpine or remains undismissed for sixty (60) days thereafter; or (iv) Alpine takes any action to authorize any of the actions described in subsection (ii) or (iii). Alpine hereby waives
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presentment, demand for payment, notice of dishonor, notice of protest, and protest, and all other notices or demands in connection with the delivery, acceptance and performance of this Note.
7.    Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the State of Delaware.
8.    No Waiver. The delay or failure of the Lender to exercise its rights hereunder shall not be deemed a waiver thereof. No waiver of any rights of the Lender shall be effective unless in writing and signed by the Lender and any waiver of any right shall not apply to any other right or to such right in any subsequent event or circumstance not specifically included in such waiver.
9.    Successors and Assigns. This Note and all terms hereof shall not be assignable by the Lender without the prior written consent of Alpine, which may be granted or withheld by Alpine in its sole discretion. This Note shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
10.    Senior Debt is allowed. Alpine may at any time from the date hereof and at Alpine’s sole discretion incur, create or assume additional debt by notes or debentures or similar instruments which are senior to this Note.
11.    Evaluation and Understanding. Each of the parties hereto acknowledges that (i) he/she/it has read this Note in its entirety and understands all of its terms and conditions, (ii) he/she/it has had the opportunity to consult with any individuals of their choice regarding their agreement to the provisions contained herein, including legal counsel of their choice, and any decision not to was theirs alone, and (iii) he/she/it is entering into this Note of their own free will, without coercion from any source.
12.    Notices. Any notices or other communication required hereunder shall be deemed properly given if delivered in person or if mailed by registered or certified mail, postage prepaid, return receipt requested to the parties at the following addresses:
if to Alpine:
Alpine 4 Holdings, Inc.
2525 E Arizona Biltmore Cir Ste 237
Phoenix, Arizona, 85016
Attn: Kent Wilson
if to the Lender:
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IN WITNESS WHEREOF, Alpine has caused this Note to be executed on its behalf by its duly authorized officer as of February 1st, 2023.
ALPINE 4 HOLDINGS, INC.
By:
Name: Kent B. Wilson
Title: Chief Executive Officer
ACKNOWLEDGED AND AGREED TO
By:
(Signature)
Name:
(Printed Name)
12

Exhibit 10.45
AMENDMENT TO UNSECURED CONVERTIBLE NOTE
AND NOTE PURCHASE AGREEMENT
THIS AMENDMENT AGREEMENT (this “Agreement”) dated _July 29__, 2023, is entered into to amend certain documents between Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and _Shannon Rigney__ (the “Note Holder”), related to the Note Holder’s prior loan of funds to the Company. The Company and the Note Holder may each be referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
A.On or around _January 30_, 2023, the Note Holder loaned to the Company the amount set forth on the signature page hereto (the “Original Loan Amount”), pursuant to a Note Purchase Agreement (the “NPA”), and in connection with which, the Company issued an unsecured promissory note in the Original Loan Amount (the “Original Note”).
B.The Company and the Note Holder desire to amend the terms of the Original Note and the NPA, as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals, which are incorporated herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Note Holder hereby agree as follows:
1.Amendment to Original Note and NPA; New Maturity Date; No Default.
a.Pursuant to the Original Note, the Original Loan Amount and all accrued and unpaid interest was due 180 days from the issuance date of the Original Note (the “Original Maturity Date”). By entering into this Agreement, the Note Holder acknowledges and agrees to extend the maturity date of the Original Note (the “New Maturity Date”) to that date set forth on the signature page hereto. Additionally, by entering into this Agreement, the Note Holder acknowledges and agrees that any nonpayment by the Company of the Original Loan Amount or any interest accrued thereon by the Original Maturity Date shall not constitute a default pursuant to the terms of the Original Note or the NPA.
b.The New Maturity Date, as set forth on the signature page hereto, shall be the due date for the amounts to be extended pursuant to this Agreement (the “New Repayment Amount”). By entering into this Agreement, the Note Holder acknowledges and agrees that he, she, or it had the opportunity to extend all or part of the Original Principal Amount as well as all or part of the unpaid interest on the Original Principal Amount that had accrued as of the Original Maturity Date, and that the amounts indicated on the signature page hereto shall constitute the New Repayment Amount.
c.The Note Holder further acknowledges and agrees that New Repayment Amount set forth on the signature page hereto is the amount that is to be due and payable by the Company on or before the New Maturity Date.
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d.The Note Holder further acknowledges and agrees that the interest rate set forth on the signature page hereto shall be the amount of interest that shall be paid on the New Repayment Amount, and that the interest rate as specified in the Original Note shall not separately accrue on the New Repayment Amount.
2.No Other Amendments. By signing below, the Parties understand, acknowledge, and agree that all other terms of the Original Note and the NPA, except as specifically amended or modified by this Agreement, shall remain of full force and effect. This Agreement, as well as the Original Note and the NPA, as revised and modified by this Agreement, constitute and contain the entire agreement of the Company and the Note Holder and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof. To the extent that there is any conflict between the terms in this Agreement and terms in the Original Note or the NPA, the terms in this Agreement shall control the rights and obligations of the Parties.
3.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to conflicts of law rules.
4.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written.
COMPANY:
ALPINE 4 HOLDINGS, INC.
a Delaware corporation
By:/s/ Kent Wilson
Name:Kent Wilson
Its:Chief Executive Officer
Date:08-01-2023
NOTE HOLDER:
By:
/s/ Shannon Rigney
Name:Shannon Rigney
Date:7/31/23
ORIGINAL AND REVISED NOTE TERMS
Original Loan Amount:$50,000
Original Term Interest Rate:15%
Original Maturity Date:July 29, 2023
Final Maturity Amount:$57,500
Payout Amount (if applicable):$NONE
New Maturity Date:January 25, 2024
New Term Interest Rate:15%
New Repayment Amount:$66,125
3

Exhibit 10.46
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this “Agreement”), dated as of February 1, 2023, is entered into among Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and the person or entity (the “Purchaser”) named on the signature page attached hereto.
WHEREAS, subject to the terms and conditions set forth herein, the Company wishes to issue and sell to the Purchaser, and the Purchaser wishes to purchase from the Company, one or more promissory notes in exchange for the consideration (the “Consideration”) set forth opposite the Purchaser’s name on the signature page hereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1.    Definitions. Capitalized terms not otherwise defined in this Agreement will have the meanings set forth in this Section 1.
1.1    “Maturity Date” means, with respect to each Note issued under this Agreement, the date that is one hundred and eighty days (180 days) following the date of issuance of such Note.
1.2    “Notes” means the one or more promissory notes issued to the Purchaser pursuant to Section 2, the form of which is attached hereto as Exhibit A.
1.3    “Securities Act” means the Securities Act of 1933, as amended.
2.    The Notes.
2.1    Purchase and Sale of Notes. In exchange for the Consideration paid by the Purchaser, the Company will sell and issue to such Purchaser one or more Notes. Each Note will have a principal balance equal to that portion of the Consideration paid by such Purchaser for such Note, as set forth opposite such Purchaser’s name on the signature page hereto.
2.2    Interest. Interest on the Note will accrue from the date of the Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the date which is 180 days from the issuance date of the Note (the “Maturity Date”).
2.3    Assignability. The Note shall not be assignable by the Purchaser without the prior written consent of the Company, which may be granted or withheld by the Company in its sole discretion. The Note and all terms thereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.



2.4    Prepayment. The Company may prepay the Note, together with all then accrued interest, in whole or in part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
2.5    Other Terms. All other terms and conditions of the Note not described above are set forth in the form of the Note attached hereto as Exhibit A.
3.    Closing. The closing of the sale of the Notes in return for the Consideration paid by the Purchaser (the “Closing”) will take place on the Closing date. On the Closing Date, the Company shall deliver to the Purchaser one or more Notes (as directed by the Purchaser) in the amount or amounts as set forth on the signature page hereto. The Company’s obligation to complete the purchase and sale and deliver the Note or Notes to the Purchaser at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company: (A) the Company’s receipt of the Investment Amount (as set forth on the signature page hereto); and (B) delivery by the Purchaser of this fully executed Agreement.
4.    Representations and Warranties of the Company. In connection with the transactions contemplated by this Agreement, the Company hereby represents and warrants to the Purchasers as follows:
4.1    Qualification and Good Standing. The Company is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify or to be in good standing would have a material adverse effect on the Company.
4.2    Authorization and Enforceability. All corporate action has been taken on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Notes. Except as may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights, the Company has taken all corporate action required to make all of the obligations of the Company reflected in the provisions of this Agreement and the Notes valid and enforceable in accordance with their terms.
5.    Representations and Warranties of the Purchasers. In connection with the transactions contemplated by this Agreement, the Purchaser hereby represents and warrants to the Company as follows:
5.1    Authorization. The Purchaser has full power and authority (and, if such Purchaser is an individual, the capacity) to enter into this Agreement and to perform all obligations required to be performed by it hereunder. This Agreement, when executed and delivered by the Purchaser, will constitute such Purchaser’s valid and legally binding obligation, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and (b) as
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limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
5.2    Purchase Entirely for Own Account. The Purchaser acknowledges that this Agreement is made with such Purchaser in reliance upon such Purchaser’s representation to the Company, which such Purchaser confirms by executing this Agreement, that the Notes will be acquired for investment for such Purchaser’s own account, not as a nominee or agent (unless otherwise specified on such Purchaser’s signature page hereto), and not with a view to the resale or distribution of any part thereof, and that such Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that such Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Notes. If other than an individual, the Purchaser also represents it has not been organized solely for the purpose of acquiring the Notes.
5.3    Disclosure of Information; Non-Reliance. The Purchaser acknowledges that it has received all the information it considers necessary or appropriate to enable it to make an informed decision concerning an investment in the Securities. The Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Notes. The Purchaser confirms that the Company has not given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Notes. Specifically, the Company has provided information to the Purchaser, satisfactory to the Purchaser, relating to the filing status of the Company’s public reports. The Purchaser has had access to, and has reviewed to the satisfaction of the Purchaser, the Company’s publicly filed reports, including all Current Reports on Form 8-K. In deciding to purchase the Notes, the Purchaser is not relying on the advice or recommendations of the Company and such Purchaser has made its own independent decision that the investment in the Securities is suitable and appropriate for such Purchaser. The Purchaser understands that no federal or state agency has passed upon the merits or risks of an investment in the Notes or made any finding or determination concerning the fairness or advisability of this investment.
5.4    Investment Experience. The Purchaser is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Notes.
5.5    Accredited Investor. The Purchaser is either (A) an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, as updated; or (B) a “sophisticated investor,” defined by the U.S. Securities and Exchange Commission as investors who “have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective
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investment.” The Purchaser agrees to furnish any additional information requested by the Company to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Notes.
5.6    Restricted Securities. The Purchaser understands that the Notes have not been, and will not be, registered under the Securities Act or any state securities laws, by reason of specific exemptions under the provisions thereof which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Notes are “restricted securities” under U.S. federal and applicable state securities laws and that, pursuant to these laws, such Purchaser must hold the Notes indefinitely unless their resales are registered with the Securities and Exchange Commission (“SEC”) and registered or qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Notes for resale and further acknowledges that, if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Notes, and on requirements relating to the Company which are outside of such Purchaser’s control, and which the Company is under no obligation, and may not be able, to satisfy.
5.7    No Public Market. The Purchaser understands that no public market now exists for the Notes and that the Company has made no assurances that a public market will ever exist for the Notes.
5.8    No General Solicitation. The Purchaser, and its officers, directors, employees, agents, stockholders or partners have not either directly or indirectly, including through a broker or finder, solicited offers for or offered or sold the Notes by means of any form of general solicitation or general advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act. The Purchaser acknowledges that neither the Company nor any other person offered to sell the Notes to it by means of any form of general solicitation or advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.
5.9    Residence. If the Purchaser is an individual, such Purchaser resides in the state or province identified in the address shown on the signature page hereto. If the Purchaser is a partnership, corporation, limited liability company or other entity, the Purchaser’s principal place of business is located in the state or province identified in the address shown on the signature page hereto.
5.10    Foreign Investors. If a Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), such Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Notes or any use of this Agreement, including (a) the legal requirements within its jurisdiction for the purchase of
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the Notes; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, conversion, redemption, sale, or transfer of the Notes. The Purchaser’s subscription and payment for and continued beneficial ownership of the Notes will not violate any applicable securities or other laws of such Purchaser’s jurisdiction. The Purchaser acknowledges that the Company has taken no action in foreign jurisdictions with respect to the Notes.
6.    Miscellaneous.
6.1    Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement will inure to the benefit of, and be binding upon, the respective successors and assigns of the parties; provided, however, that the Company may not assign its obligations under this Agreement without the written consent of the Purchaser. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or will confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, except as expressly provided in this Agreement.
6.2    Choice of Law. This Agreement and the Notes, and all matters arising out of or relating to this Agreement, whether sounding in contract, tort, or statute will be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Delaware.
6.3    Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will be deemed to be one and the same agreement. Counterparts may be delivered via facsimile, email (including PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
6.4    Titles and Subtitles. The titles and subtitles used in this Agreement are included for convenience only and are not to be considered in construing or interpreting this Agreement.
6.5    Notices. All notices and other communications given or made pursuant hereto will be in writing and will be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by email or confirmed facsimile; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications will be sent to the respective parties at the addresses shown on the signature pages hereto (or to such email
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address, facsimile number or other address as subsequently modified by written notice given in accordance with this Section 6.5).
6.6    No Finder’s Fee. Each party represents that it neither is nor will be obligated to pay any finder’s fee, broker’s fee or commission in connection (directly or indirectly) with the transactions contemplated by this Agreement. The Purchaser agrees to indemnify and to hold the Company harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Purchaser or any of its officers, employees or representatives is responsible. The Company agrees to indemnify and hold the Purchaser harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.
6.7    Expenses. Each party will pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement.
6.8    Attorneys’ Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.
6.9    Entire Agreement; Amendments and Waivers. This Agreement, the Notes and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. The Purchaser acknowledges and agrees that the Company is selling similar Notes to other purchasers. The Company’s agreements with each of the Purchasers are separate agreements, and the sales of the Notes to each of the Purchasers are separate sales. Notwithstanding the foregoing, any term of this Agreement or the Note or Notes held by the Purchaser may be amended and the observance of any term of this Agreement or the Notes may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Purchaser. Any waiver or amendment effected in accordance with this Section 6.9 will be binding upon each party to this Agreement and each holder of a Note purchased under this Agreement then outstanding and each future holder of all such Notes.
6.10    Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provisions were so excluded and this Agreement will be enforceable in accordance with its terms.
6.11    Exculpation among Purchasers. The Purchaser acknowledges that it is not relying upon any person, firm, corporation or stockholder, other than the Company and its officers and directors in their capacities as such, in making its investment or decision to
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invest in the Company. The Purchaser agrees that no other Purchaser, nor the controlling persons, officers, directors, partners, agents, stockholders or employees of any other Purchaser, will be liable for any action heretofore or hereafter taken or not taken by any of them in connection with the purchase and sale of the Securities.
6.12    Further Assurances. From time to time, the parties will execute and deliver such additional documents and will provide such additional information as may reasonably be required to carry out the full intent and purpose of this Agreement and the Notes and any agreements executed in connection herewith, and to comply with state or federal securities laws or other regulatory approvals.
6.13    Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
[Signature page follows.]
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IN WITNESS WHEREOF, the Company has executed this Agreement as of the date set forth above.
Alpine 4 Holdings, Inc.
A Delaware Corporation
By/s/ Kent Wilson
Name:Kent Wilson
Title:CEO
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IN WITNESS WHEREOF, the Purchaser hereto have executed this Agreement as of the date set forth above.
If an individual:
/s/ Jeffrey Hail
(Signature)
Printed Name: JEFFREY HAIL
Note Purchase Amount:$65,000.00
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EXHIBIT A
FORM OF NOTE
UNSECURED PROMISSORY NOTE
$____________February ___, 2023
This Unsecured Promissory Note (this “Note”) is dated as of February ____, 2023 (the “Issuance Date”), by and between Alpine 4 Holdings Inc., a Delaware corporation (“Alpine”) and ___________________________, an individual with an address of ______________________________________________ (the “Lender”).
AGREEMENT
FOR VALUE RECEIVED, the undersigned, Alpine, hereby promises to pay to the order of the Lender, the principal sum of ___________________________ ($___________) (the “Principal Amount”) in lawful money of the United States of America, and together with interest thereon at the rate hereinafter specified and any and all other sums which may be due and owing hereunder to the Lender, which shall be paid at the address of the Lender below, in accordance with the terms contained herein.
1.    Interest. Alpine shall pay interest from the date of this Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the Maturity Date (hereinafter defined).
2.    Calculation of Interest. Interest on the Principal Amount of this Note shall be calculated on the basis of a 180 day factor applied to the actual days on which there exists an unpaid principal balance due under this Note.
3.    Maturity. The entire Principal Amount and all accrued interest shall become fully due and payable 180 days from the Issuance Date (the “Maturity Date”).
4.    Prepayment. Alpine may prepay this Note, together with all then accrued interest, in whole or in
part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
5.    Payments. All payments made hereunder shall be in lawful money of the United States of America. All payments and prepayments shall be applied first to costs of collection, next, to accrued interest, and thereafter to principal.
6.    Default and Remedies. The following shall be a default under this Note and shall entitle the Lender to all of the rights and remedies specified herein or otherwise available under applicable law or in equity: (i) any failure to make any payment due under this Note when due or upon the failure to comply with any other terms and provisions of this Note, if such failures remain uncured for a period of ten (10) business days; (ii) a petition for relief in a bankruptcy court is filed by Alpine or Alpine applies for, consents to or acquiesces in the appointment of a trustee, custodian or receiver for Alpine or any of its assets or property or make a general assignment for the benefit of its creditors or, in the absence of such application, consent or acquiescence, a trustee, custodian or receiver is appointed for Alpine or for a substantial part of its assets or property and is not discharged within thirty (30) days thereafter; (iii) any bankruptcy, reorganization, debt arrangement or other proceeding or case under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted against Alpine and if instituted against Alpine is consented to or acquiesced in by Alpine or remains undismissed for sixty (60) days thereafter; or (iv) Alpine takes any action to authorize any of the actions described in subsection (ii) or (iii). Alpine hereby waives presentment, demand for payment, notice of dishonor, notice of protest, and protest, and all other notices or demands in connection with the delivery, acceptance and performance of this Note.
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7.    Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the State of Delaware.
8.    No Waiver. The delay or failure of the Lender to exercise its rights hereunder shall not be deemed a waiver thereof. No waiver of any rights of the Lender shall be effective unless in writing and signed by the Lender and any waiver of any right shall not apply to any other right or to such right in any subsequent event or circumstance not specifically included in such waiver.
9.    Successors and Assigns. This Note and all terms hereof shall not be assignable by the Lender without the prior written consent of Alpine, which may be granted or withheld by Alpine in its sole discretion. This Note shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
10.    Senior Debt is allowed. Alpine may at any time from the date hereof and at Alpine’s sole discretion incur, create or assume additional debt by notes or debentures or similar instruments which are senior to this Note.
11.    Evaluation and Understanding. Each of the parties hereto acknowledges that (i) he/she/it has read this Note in its entirety and understands all of its terms and conditions, (ii) he/she/it has had the opportunity to consult with any individuals of their choice regarding their agreement to the provisions contained herein, including legal counsel of their choice, and any decision not to was theirs alone, and (iii) he/she/it is entering into this Note of their own free will, without coercion from any source.
12.    Notices. Any notices or other communication required hereunder shall be deemed properly given if delivered in person or if mailed by registered or certified mail, postage prepaid, return receipt requested to the parties at the following addresses:
if to Alpine:
Alpine 4 Holdings, Inc.
2525 E Arizona Biltmore Cir Ste 237
Phoenix, Arizona, 85016
Attn: Kent Wilson
if to the Lender:
IN WITNESS WHEREOF, Alpine has caused this Note to be executed on its behalf by its duly authorized officer as of February 1st, 2023.
ALPINE 4 HOLDINGS, INC.
By:
Name: Kent B. Wilson
Title: Chief Executive Officer
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ACKNOWLEDGED AND AGREED TO
By:
(Signature)
Name:
(Printed Name)
12

Exhibit 10.47
AMENDMENT TO UNSECURED CONVERTIBLE NOTE
AND NOTE PURCHASE AGREEMENT
THIS AMENDMENT AGREEMENT (this “Agreement”) dated _July 31__, 2023, is entered into to amend certain documents between Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and _Jeffrey Hail__ (the “Note Holder”), related to the Note Holder’s prior loan of funds to the Company. The Company and the Note Holder may each be referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
A.On or around _February 2_, 2023, the Note Holder loaned to the Company the amount set forth on the signature page hereto (the “Original Loan Amount”), pursuant to a Note Purchase Agreement (the “NPA”), and in connection with which, the Company issued an unsecured promissory note in the Original Loan Amount (the “Original Note”).
B.The Company and the Note Holder desire to amend the terms of the Original Note and the NPA, as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals, which are incorporated herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Note Holder hereby agree as follows:
1.Amendment to Original Note and NPA; New Maturity Date; No Default.
a.Pursuant to the Original Note, the Original Loan Amount and all accrued and unpaid interest was due 180 days from the issuance date of the Original Note (the “Original Maturity Date”). By entering into this Agreement, the Note Holder acknowledges and agrees to extend the maturity date of the Original Note (the “New Maturity Date”) to that date set forth on the signature page hereto. Additionally, by entering into this Agreement, the Note Holder acknowledges and agrees that any nonpayment by the Company of the Original Loan Amount or any interest accrued thereon by the Original Maturity Date shall not constitute a default pursuant to the terms of the Original Note or the NPA.
b.The New Maturity Date, as set forth on the signature page hereto, shall be the due date for the amounts to be extended pursuant to this Agreement (the “New Repayment Amount”). By entering into this Agreement, the Note Holder acknowledges and agrees that he, she, or it had the opportunity to extend all or part of the Original Principal Amount as well as all or part of the unpaid interest on the Original Principal Amount that had accrued as of the Original Maturity Date, and that the amounts indicated on the signature page hereto shall constitute the New Repayment Amount.
c.The Note Holder further acknowledges and agrees that New Repayment Amount set forth on the signature page hereto is the amount that is to be due and payable by the Company on or before the New Maturity Date.
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d.The Note Holder further acknowledges and agrees that the interest rate set forth on the signature page hereto shall be the amount of interest that shall be paid on the New Repayment Amount, and that the interest rate as specified in the Original Note shall not separately accrue on the New Repayment Amount.
2.No Other Amendments. By signing below, the Parties understand, acknowledge, and agree that all other terms of the Original Note and the NPA, except as specifically amended or modified by this Agreement, shall remain of full force and effect. This Agreement, as well as the Original Note and the NPA, as revised and modified by this Agreement, constitute and contain the entire agreement of the Company and the Note Holder and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof. To the extent that there is any conflict between the terms in this Agreement and terms in the Original Note or the NPA, the terms in this Agreement shall control the rights and obligations of the Parties.
3.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to conflicts of law rules.
4.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written.
COMPANY:
ALPINE 4 HOLDINGS, INC.
a Delaware corporation
By:/s/ Kent Wilson
Name:Kent Wilson
Its:Chief Executive Officer
Date:08-02-2023
NOTE HOLDER:
By:
/s/ Jeffrey Hail
Name:Jeffrey Hail
Date:August 1, 2023
ORIGINAL AND REVISED NOTE TERMS
Original Loan Amount:$65,000
Original Term Interest Rate:15%
Original Maturity Date:August 1, 2023
Final Maturity Amount:$74,750
Payout Amount (if applicable):$NONE
New Maturity Date:01/28/2024
New Term Interest Rate:15%
New Repayment Amount:$85,962.50
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Exhibit 10.48
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this “Agreement”), dated as of __Feb 2___, 2023, is entered into among Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and the person or entity (the “Purchaser”) named on the signature page attached hereto.
WHEREAS, subject to the terms and conditions set forth herein, the Company wishes to issue and sell to the Purchaser, and the Purchaser wishes to purchase from the Company, one or more promissory notes in exchange for the consideration (the “Consideration”) set forth opposite the Purchaser’s name on the signature page hereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1.    Definitions. Capitalized terms not otherwise defined in this Agreement will have the meanings set forth in this Section 1.
1.1    “Maturity Date” means, with respect to each Note issued under this Agreement, the date that is one hundred and eighty days (180 days) following the date of issuance of such Note.
1.2    “Notes” means the one or more promissory notes issued to the Purchaser pursuant to Section 2, the form of which is attached hereto as Exhibit A.
1.3    “Securities Act” means the Securities Act of 1933, as amended.
2.    The Notes.
2.1    Purchase and Sale of Notes. In exchange for the Consideration paid by the Purchaser, the Company will sell and issue to such Purchaser one or more Notes. Each Note will have a principal balance equal to that portion of the Consideration paid by such Purchaser for such Note, as set forth opposite such Purchaser’s name on the signature page hereto.
2.2    Interest. Interest on the Note will accrue from the date of the Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the date which is 180 days from the issuance date of the Note (the “Maturity Date”).
2.3    Assignability. The Note shall not be assignable by the Purchaser without the prior written consent of the Company, which may be granted or withheld by the Company in its sole discretion. The Note and all terms thereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.



2.4    Prepayment. The Company may prepay the Note, together with all then accrued interest, in whole or in part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
2.5    Other Terms. All other terms and conditions of the Note not described above are set forth in the form of the Note attached hereto as Exhibit A.
3.    Closing. The closing of the sale of the Notes in return for the Consideration paid by the Purchaser (the “Closing”) will take place on the Closing date. On the Closing Date, the Company shall deliver to the Purchaser one or more Notes (as directed by the Purchaser) in the amount or amounts as set forth on the signature page hereto. The Company’s obligation to complete the purchase and sale and deliver the Note or Notes to the Purchaser at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company: (A) the Company’s receipt of the Investment Amount (as set forth on the signature page hereto); and (B) delivery by the Purchaser of this fully executed Agreement.
4.    Representations and Warranties of the Company. In connection with the transactions contemplated by this Agreement, the Company hereby represents and warrants to the Purchasers as follows:
4.1    Qualification and Good Standing. The Company is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify or to be in good standing would have a material adverse effect on the Company.
4.2    Authorization and Enforceability. All corporate action has been taken on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Notes. Except as may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights, the Company has taken all corporate action required to make all of the obligations of the Company reflected in the provisions of this Agreement and the Notes valid and enforceable in accordance with their terms.
5.    Representations and Warranties of the Purchasers. In connection with the transactions contemplated by this Agreement, the Purchaser hereby represents and warrants to the Company as follows:
5.1    Authorization. The Purchaser has full power and authority (and, if such Purchaser is an individual, the capacity) to enter into this Agreement and to perform all obligations required to be performed by it hereunder. This Agreement, when executed and delivered by the Purchaser, will constitute such Purchaser’s valid and legally binding obligation, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and (b) as
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limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
5.2    Purchase Entirely for Own Account. The Purchaser acknowledges that this Agreement is made with such Purchaser in reliance upon such Purchaser’s representation to the Company, which such Purchaser confirms by executing this Agreement, that the Notes will be acquired for investment for such Purchaser’s own account, not as a nominee or agent (unless otherwise specified on such Purchaser’s signature page hereto), and not with a view to the resale or distribution of any part thereof, and that such Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that such Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Notes. If other than an individual, the Purchaser also represents it has not been organized solely for the purpose of acquiring the Notes.
5.3    Disclosure of Information; Non-Reliance. The Purchaser acknowledges that it has received all the information it considers necessary or appropriate to enable it to make an informed decision concerning an investment in the Securities. The Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Notes. The Purchaser confirms that the Company has not given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Notes. Specifically, the Company has provided information to the Purchaser, satisfactory to the Purchaser, relating to the filing status of the Company’s public reports. The Purchaser has had access to, and has reviewed to the satisfaction of the Purchaser, the Company’s publicly filed reports, including all Current Reports on Form 8-K. In deciding to purchase the Notes, the Purchaser is not relying on the advice or recommendations of the Company and such Purchaser has made its own independent decision that the investment in the Securities is suitable and appropriate for such Purchaser. The Purchaser understands that no federal or state agency has passed upon the merits or risks of an investment in the Notes or made any finding or determination concerning the fairness or advisability of this investment.
5.4    Investment Experience. The Purchaser is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Notes.
5.5    Accredited Investor. The Purchaser is either (A) an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, as updated; or (B) a “sophisticated investor,” defined by the U.S. Securities and Exchange Commission as investors who “have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective
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investment.” The Purchaser agrees to furnish any additional information requested by the Company to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Notes.
5.6    Restricted Securities. The Purchaser understands that the Notes have not been, and will not be, registered under the Securities Act or any state securities laws, by reason of specific exemptions under the provisions thereof which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Notes are “restricted securities” under U.S. federal and applicable state securities laws and that, pursuant to these laws, such Purchaser must hold the Notes indefinitely unless their resales are registered with the Securities and Exchange Commission (“SEC”) and registered or qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Notes for resale and further acknowledges that, if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Notes, and on requirements relating to the Company which are outside of such Purchaser’s control, and which the Company is under no obligation, and may not be able, to satisfy.
5.7    No Public Market. The Purchaser understands that no public market now exists for the Notes and that the Company has made no assurances that a public market will ever exist for the Notes.
5.8    No General Solicitation. The Purchaser, and its officers, directors, employees, agents, stockholders or partners have not either directly or indirectly, including through a broker or finder, solicited offers for or offered or sold the Notes by means of any form of general solicitation or general advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act. The Purchaser acknowledges that neither the Company nor any other person offered to sell the Notes to it by means of any form of general solicitation or advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.
5.9    Residence. If the Purchaser is an individual, such Purchaser resides in the state or province identified in the address shown on the signature page hereto. If the Purchaser is a partnership, corporation, limited liability company or other entity, the Purchaser’s principal place of business is located in the state or province identified in the address shown on the signature page hereto.
5.10    Foreign Investors. If a Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), such Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Notes or any use of this Agreement, including (a) the legal requirements within its jurisdiction for the purchase of
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the Notes; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, conversion, redemption, sale, or transfer of the Notes. The Purchaser’s subscription and payment for and continued beneficial ownership of the Notes will not violate any applicable securities or other laws of such Purchaser’s jurisdiction. The Purchaser acknowledges that the Company has taken no action in foreign jurisdictions with respect to the Notes.
6.    Miscellaneous.
6.1    Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement will inure to the benefit of, and be binding upon, the respective successors and assigns of the parties; provided, however, that the Company may not assign its obligations under this Agreement without the written consent of the Purchaser. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or will confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, except as expressly provided in this Agreement.
6.2    Choice of Law. This Agreement and the Notes, and all matters arising out of or relating to this Agreement, whether sounding in contract, tort, or statute will be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Delaware.
6.3    Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will be deemed to be one and the same agreement. Counterparts may be delivered via facsimile, email (including PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
6.4    Titles and Subtitles. The titles and subtitles used in this Agreement are included for convenience only and are not to be considered in construing or interpreting this Agreement.
6.5    Notices. All notices and other communications given or made pursuant hereto will be in writing and will be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by email or confirmed facsimile; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications will be sent to the respective parties at the addresses shown on the signature pages hereto (or to such email
5


address, facsimile number or other address as subsequently modified by written notice given in accordance with this Section 6.5).
6.6    No Finder’s Fee. Each party represents that it neither is nor will be obligated to pay any finder’s fee, broker’s fee or commission in connection (directly or indirectly) with the transactions contemplated by this Agreement. The Purchaser agrees to indemnify and to hold the Company harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Purchaser or any of its officers, employees or representatives is responsible. The Company agrees to indemnify and hold the Purchaser harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.
6.7    Expenses. Each party will pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement.
6.8    Attorneys’ Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.
6.9    Entire Agreement; Amendments and Waivers. This Agreement, the Notes and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. The Purchaser acknowledges and agrees that the Company is selling similar Notes to other purchasers. The Company’s agreements with each of the Purchasers are separate agreements, and the sales of the Notes to each of the Purchasers are separate sales. Notwithstanding the foregoing, any term of this Agreement or the Note or Notes held by the Purchaser may be amended and the observance of any term of this Agreement or the Notes may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Purchaser. Any waiver or amendment effected in accordance with this Section 6.9 will be binding upon each party to this Agreement and each holder of a Note purchased under this Agreement then outstanding and each future holder of all such Notes.
6.10    Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provisions were so excluded and this Agreement will be enforceable in accordance with its terms.
6.11    Exculpation among Purchasers. The Purchaser acknowledges that it is not relying upon any person, firm, corporation or stockholder, other than the Company and its officers and directors in their capacities as such, in making its investment or decision to
6


invest in the Company. The Purchaser agrees that no other Purchaser, nor the controlling persons, officers, directors, partners, agents, stockholders or employees of any other Purchaser, will be liable for any action heretofore or hereafter taken or not taken by any of them in connection with the purchase and sale of the Securities.
6.12    Further Assurances. From time to time, the parties will execute and deliver such additional documents and will provide such additional information as may reasonably be required to carry out the full intent and purpose of this Agreement and the Notes and any agreements executed in connection herewith, and to comply with state or federal securities laws or other regulatory approvals.
6.13    Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
[Signature page follows.]
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IN WITNESS WHEREOF, the Company has executed this Agreement as of the date set forth above.
Alpine 4 Holdings, Inc.
A Delaware Corporation
By/s/ Kent Wilson
Name:Kent Wilson
Title:CEO
8


IN WITNESS WHEREOF, the Purchaser hereto have executed this Agreement as of the date set forth above.
If an individual:
/s/ Ed Lew
(Signature)
Printed Name: ED LEW
Note Purchase Amount:$50,000
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EXHIBIT A
FORM OF NOTE
UNSECURED PROMISSORY NOTE
$____________February ___, 2023
This Unsecured Promissory Note (this “Note”) is dated as of February ____, 2023 (the “Issuance Date”), by and between Alpine 4 Holdings Inc., a Delaware corporation (“Alpine”) and ___________________________, an individual with an address of ______________________________________________ (the “Lender”).
AGREEMENT
FOR VALUE RECEIVED, the undersigned, Alpine, hereby promises to pay to the order of the Lender, the principal sum of ___________________________ ($___________) (the “Principal Amount”) in lawful money of the United States of America, and together with interest thereon at the rate hereinafter specified and any and all other sums which may be due and owing hereunder to the Lender, which shall be paid at the address of the Lender below, in accordance with the terms contained herein.
1.    Interest. Alpine shall pay interest from the date of this Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the Maturity Date (hereinafter defined).
2.    Calculation of Interest. Interest on the Principal Amount of this Note shall be calculated on the basis of a 180 day factor applied to the actual days on which there exists an unpaid principal balance due under this Note.
3.    Maturity. The entire Principal Amount and all accrued interest shall become fully due and payable 180 days from the Issuance Date (the “Maturity Date”).
4.    Prepayment. Alpine may prepay this Note, together with all then accrued interest, in whole or in
part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
5.    Payments. All payments made hereunder shall be in lawful money of the United States of America. All payments and prepayments shall be applied first to costs of collection, next, to accrued interest, and thereafter to principal.
6.    Default and Remedies. The following shall be a default under this Note and shall entitle the Lender to all of the rights and remedies specified herein or otherwise available under applicable law or in equity: (i) any failure to make any payment due under this Note when due or upon the failure to comply with any other terms and provisions of this Note, if such failures remain uncured for a period of ten (10) business days; (ii) a petition for relief in a bankruptcy court is filed by Alpine or Alpine applies for, consents to or acquiesces in the appointment of a trustee, custodian or receiver for Alpine or any of its assets or property or make a general assignment for the benefit of its creditors or, in the absence of such application, consent or acquiescence, a trustee, custodian or receiver is appointed for Alpine or for a substantial part of its assets or property and is not discharged within thirty (30) days thereafter; (iii) any bankruptcy, reorganization, debt arrangement or other proceeding or case under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted against Alpine and if instituted against Alpine is consented to or acquiesced in by Alpine or remains undismissed for sixty (60) days thereafter; or (iv) Alpine takes any action to authorize any of the actions described in subsection (ii) or (iii). Alpine hereby waives presentment, demand for payment, notice of dishonor, notice of protest, and protest, and all other notices or demands in connection with the delivery, acceptance and performance of this Note.
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7.    Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the State of Delaware.
8.    No Waiver. The delay or failure of the Lender to exercise its rights hereunder shall not be deemed a waiver thereof. No waiver of any rights of the Lender shall be effective unless in writing and signed by the Lender and any waiver of any right shall not apply to any other right or to such right in any subsequent event or circumstance not specifically included in such waiver.
9.    Successors and Assigns. This Note and all terms hereof shall not be assignable by the Lender without the prior written consent of Alpine, which may be granted or withheld by Alpine in its sole discretion. This Note shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
10.    Senior Debt is allowed. Alpine may at any time from the date hereof and at Alpine’s sole discretion incur, create or assume additional debt by notes or debentures or similar instruments which are senior to this Note.
11.    Evaluation and Understanding. Each of the parties hereto acknowledges that (i) he/she/it has read this Note in its entirety and understands all of its terms and conditions, (ii) he/she/it has had the opportunity to consult with any individuals of their choice regarding their agreement to the provisions contained herein, including legal counsel of their choice, and any decision not to was theirs alone, and (iii) he/she/it is entering into this Note of their own free will, without coercion from any source.
12.    Notices. Any notices or other communication required hereunder shall be deemed properly given if delivered in person or if mailed by registered or certified mail, postage prepaid, return receipt requested to the parties at the following addresses:
if to Alpine:
Alpine 4 Holdings, Inc.
2525 E Arizona Biltmore Cir Ste 237
Phoenix, Arizona, 85016
Attn: Kent Wilson
if to the Lender:
IN WITNESS WHEREOF, Alpine has caused this Note to be executed on its behalf by its duly authorized officer as of February 1st, 2023.
ALPINE 4 HOLDINGS, INC.
By:
Name: Kent B. Wilson
Title: Chief Executive Officer
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ACKNOWLEDGED AND AGREED TO
By:
(Signature)
Name:
(Printed Name)
12

Exhibit 10.49
AMENDMENT TO UNSECURED CONVERTIBLE NOTE
AND NOTE PURCHASE AGREEMENT
THIS AMENDMENT AGREEMENT (this “Agreement”) dated _August 1__, 2023, is entered into to amend certain documents between Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and _Edmond Lew__ (the “Note Holder”), related to the Note Holder’s prior loan of funds to the Company. The Company and the Note Holder may each be referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
A.On or around _February 2_, 2023, the Note Holder loaned to the Company the amount set forth on the signature page hereto (the “Original Loan Amount”), pursuant to a Note Purchase Agreement (the “NPA”), and in connection with which, the Company issued an unsecured promissory note in the Original Loan Amount (the “Original Note”).
B.The Company and the Note Holder desire to amend the terms of the Original Note and the NPA, as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals, which are incorporated herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Note Holder hereby agree as follows:
1.Amendment to Original Note and NPA; New Maturity Date; No Default.
a.Pursuant to the Original Note, the Original Loan Amount and all accrued and unpaid interest was due 180 days from the issuance date of the Original Note (the “Original Maturity Date”). By entering into this Agreement, the Note Holder acknowledges and agrees to extend the maturity date of the Original Note (the “New Maturity Date”) to that date set forth on the signature page hereto. Additionally, by entering into this Agreement, the Note Holder acknowledges and agrees that any nonpayment by the Company of the Original Loan Amount or any interest accrued thereon by the Original Maturity Date shall not constitute a default pursuant to the terms of the Original Note or the NPA.
b.The New Maturity Date, as set forth on the signature page hereto, shall be the due date for the amounts to be extended pursuant to this Agreement (the “New Repayment Amount”). By entering into this Agreement, the Note Holder acknowledges and agrees that he, she, or it had the opportunity to extend all or part of the Original Principal Amount as well as all or part of the unpaid interest on the Original Principal Amount that had accrued as of the Original Maturity Date, and that the amounts indicated on the signature page hereto shall constitute the New Repayment Amount.
c.The Note Holder further acknowledges and agrees that New Repayment Amount set forth on the signature page hereto is the amount that is to be due and payable by the Company on or before the New Maturity Date.
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d.The Note Holder further acknowledges and agrees that the interest rate set forth on the signature page hereto shall be the amount of interest that shall be paid on the New Repayment Amount, and that the interest rate as specified in the Original Note shall not separately accrue on the New Repayment Amount.
2.No Other Amendments. By signing below, the Parties understand, acknowledge, and agree that all other terms of the Original Note and the NPA, except as specifically amended or modified by this Agreement, shall remain of full force and effect. This Agreement, as well as the Original Note and the NPA, as revised and modified by this Agreement, constitute and contain the entire agreement of the Company and the Note Holder and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof. To the extent that there is any conflict between the terms in this Agreement and terms in the Original Note or the NPA, the terms in this Agreement shall control the rights and obligations of the Parties.
3.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to conflicts of law rules.
4.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written.
COMPANY:
ALPINE 4 HOLDINGS, INC.
a Delaware corporation
By:/s/ Kent Wilson
Name:Kent Wilson
Its:Chief Executive Officer
Date:08-01-2023
NOTE HOLDER:
By:
/s/ Edmond Lew
Name:Edmond Lew
Date:8/1/23
ORIGINAL AND REVISED NOTE TERMS
Original Loan Amount:$50,000
Original Term Interest Rate:15%
Original Maturity Date:August 1, 2023
Final Maturity Amount:$57,500
Payout Amount (if applicable):$NONE
New Maturity Date:January 28, 2024
New Term Interest Rate:15%
New Repayment Amount:$66,125
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Exhibit 10.50
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this “Agreement”), dated as of __Feb 3, 2023, is entered into among Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and the person or entity (the “Purchaser”) named on the signature page attached hereto.
WHEREAS, subject to the terms and conditions set forth herein, the Company wishes to issue and sell to the Purchaser, and the Purchaser wishes to purchase from the Company, one or more promissory notes in exchange for the consideration (the “Consideration”) set forth opposite the Purchaser’s name on the signature page hereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1.    Definitions. Capitalized terms not otherwise defined in this Agreement will have the meanings set forth in this Section 1.
1.1    “Maturity Date” means, with respect to each Note issued under this Agreement, the date that is one hundred and eighty days (180 days) following the date of issuance of such Note.
1.2    “Notes” means the one or more promissory notes issued to the Purchaser pursuant to Section 2, the form of which is attached hereto as Exhibit A.
1.3    “Securities Act” means the Securities Act of 1933, as amended.
2.    The Notes.
2.1    Purchase and Sale of Notes. In exchange for the Consideration paid by the Purchaser, the Company will sell and issue to such Purchaser one or more Notes. Each Note will have a principal balance equal to that portion of the Consideration paid by such Purchaser for such Note, as set forth opposite such Purchaser’s name on the signature page hereto.
2.2    Interest. Interest on the Note will accrue from the date of the Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the date which is 180 days from the issuance date of the Note (the “Maturity Date”).
2.3    Assignability. The Note shall not be assignable by the Purchaser without the prior written consent of the Company, which may be granted or withheld by the Company in its sole discretion. The Note and all terms thereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.



2.4    Prepayment. The Company may prepay the Note, together with all then accrued interest, in whole or in part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
2.5    Other Terms. All other terms and conditions of the Note not described above are set forth in the form of the Note attached hereto as Exhibit A.
3.    Closing. The closing of the sale of the Notes in return for the Consideration paid by the Purchaser (the “Closing”) will take place on the Closing date. On the Closing Date, the Company shall deliver to the Purchaser one or more Notes (as directed by the Purchaser) in the amount or amounts as set forth on the signature page hereto. The Company’s obligation to complete the purchase and sale and deliver the Note or Notes to the Purchaser at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company: (A) the Company’s receipt of the Investment Amount (as set forth on the signature page hereto); and (B) delivery by the Purchaser of this fully executed Agreement.
4.    Representations and Warranties of the Company. In connection with the transactions contemplated by this Agreement, the Company hereby represents and warrants to the Purchasers as follows:
4.1    Qualification and Good Standing. The Company is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify or to be in good standing would have a material adverse effect on the Company.
4.2    Authorization and Enforceability. All corporate action has been taken on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Notes. Except as may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights, the Company has taken all corporate action required to make all of the obligations of the Company reflected in the provisions of this Agreement and the Notes valid and enforceable in accordance with their terms.
5.    Representations and Warranties of the Purchasers. In connection with the transactions contemplated by this Agreement, the Purchaser hereby represents and warrants to the Company as follows:
5.1    Authorization. The Purchaser has full power and authority (and, if such Purchaser is an individual, the capacity) to enter into this Agreement and to perform all obligations required to be performed by it hereunder. This Agreement, when executed and delivered by the Purchaser, will constitute such Purchaser’s valid and legally binding obligation, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and (b) as
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limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
5.2    Purchase Entirely for Own Account. The Purchaser acknowledges that this Agreement is made with such Purchaser in reliance upon such Purchaser’s representation to the Company, which such Purchaser confirms by executing this Agreement, that the Notes will be acquired for investment for such Purchaser’s own account, not as a nominee or agent (unless otherwise specified on such Purchaser’s signature page hereto), and not with a view to the resale or distribution of any part thereof, and that such Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that such Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Notes. If other than an individual, the Purchaser also represents it has not been organized solely for the purpose of acquiring the Notes.
5.3    Disclosure of Information; Non-Reliance. The Purchaser acknowledges that it has received all the information it considers necessary or appropriate to enable it to make an informed decision concerning an investment in the Securities. The Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Notes. The Purchaser confirms that the Company has not given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Notes. Specifically, the Company has provided information to the Purchaser, satisfactory to the Purchaser, relating to the filing status of the Company’s public reports. The Purchaser has had access to, and has reviewed to the satisfaction of the Purchaser, the Company’s publicly filed reports, including all Current Reports on Form 8-K. In deciding to purchase the Notes, the Purchaser is not relying on the advice or recommendations of the Company and such Purchaser has made its own independent decision that the investment in the Securities is suitable and appropriate for such Purchaser. The Purchaser understands that no federal or state agency has passed upon the merits or risks of an investment in the Notes or made any finding or determination concerning the fairness or advisability of this investment.
5.4    Investment Experience. The Purchaser is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Notes.
5.5    Accredited Investor. The Purchaser is either (A) an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, as updated; or (B) a “sophisticated investor,” defined by the U.S. Securities and Exchange Commission as investors who “have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective
3


investment.” The Purchaser agrees to furnish any additional information requested by the Company to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Notes.
5.6    Restricted Securities. The Purchaser understands that the Notes have not been, and will not be, registered under the Securities Act or any state securities laws, by reason of specific exemptions under the provisions thereof which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Notes are “restricted securities” under U.S. federal and applicable state securities laws and that, pursuant to these laws, such Purchaser must hold the Notes indefinitely unless their resales are registered with the Securities and Exchange Commission (“SEC”) and registered or qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Notes for resale and further acknowledges that, if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Notes, and on requirements relating to the Company which are outside of such Purchaser’s control, and which the Company is under no obligation, and may not be able, to satisfy.
5.7    No Public Market. The Purchaser understands that no public market now exists for the Notes and that the Company has made no assurances that a public market will ever exist for the Notes.
5.8    No General Solicitation. The Purchaser, and its officers, directors, employees, agents, stockholders or partners have not either directly or indirectly, including through a broker or finder, solicited offers for or offered or sold the Notes by means of any form of general solicitation or general advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act. The Purchaser acknowledges that neither the Company nor any other person offered to sell the Notes to it by means of any form of general solicitation or advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.
5.9    Residence. If the Purchaser is an individual, such Purchaser resides in the state or province identified in the address shown on the signature page hereto. If the Purchaser is a partnership, corporation, limited liability company or other entity, the Purchaser’s principal place of business is located in the state or province identified in the address shown on the signature page hereto.
5.10    Foreign Investors. If a Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), such Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Notes or any use of this Agreement, including (a) the legal requirements within its jurisdiction for the purchase of
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the Notes; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, conversion, redemption, sale, or transfer of the Notes. The Purchaser’s subscription and payment for and continued beneficial ownership of the Notes will not violate any applicable securities or other laws of such Purchaser’s jurisdiction. The Purchaser acknowledges that the Company has taken no action in foreign jurisdictions with respect to the Notes.
6.    Miscellaneous.
6.1    Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement will inure to the benefit of, and be binding upon, the respective successors and assigns of the parties; provided, however, that the Company may not assign its obligations under this Agreement without the written consent of the Purchaser. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or will confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, except as expressly provided in this Agreement.
6.2    Choice of Law. This Agreement and the Notes, and all matters arising out of or relating to this Agreement, whether sounding in contract, tort, or statute will be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Delaware.
6.3    Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will be deemed to be one and the same agreement. Counterparts may be delivered via facsimile, email (including PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
6.4    Titles and Subtitles. The titles and subtitles used in this Agreement are included for convenience only and are not to be considered in construing or interpreting this Agreement.
6.5    Notices. All notices and other communications given or made pursuant hereto will be in writing and will be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by email or confirmed facsimile; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications will be sent to the respective parties at the addresses shown on the signature pages hereto (or to such email
5


address, facsimile number or other address as subsequently modified by written notice given in accordance with this Section 6.5).
6.6    No Finder’s Fee. Each party represents that it neither is nor will be obligated to pay any finder’s fee, broker’s fee or commission in connection (directly or indirectly) with the transactions contemplated by this Agreement. The Purchaser agrees to indemnify and to hold the Company harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Purchaser or any of its officers, employees or representatives is responsible. The Company agrees to indemnify and hold the Purchaser harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.
6.7    Expenses. Each party will pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement.
6.8    Attorneys’ Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.
6.9    Entire Agreement; Amendments and Waivers. This Agreement, the Notes and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. The Purchaser acknowledges and agrees that the Company is selling similar Notes to other purchasers. The Company’s agreements with each of the Purchasers are separate agreements, and the sales of the Notes to each of the Purchasers are separate sales. Notwithstanding the foregoing, any term of this Agreement or the Note or Notes held by the Purchaser may be amended and the observance of any term of this Agreement or the Notes may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Purchaser. Any waiver or amendment effected in accordance with this Section 6.9 will be binding upon each party to this Agreement and each holder of a Note purchased under this Agreement then outstanding and each future holder of all such Notes.
6.10    Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provisions were so excluded and this Agreement will be enforceable in accordance with its terms.
6.11    Exculpation among Purchasers. The Purchaser acknowledges that it is not relying upon any person, firm, corporation or stockholder, other than the Company and its officers and directors in their capacities as such, in making its investment or decision to
6


invest in the Company. The Purchaser agrees that no other Purchaser, nor the controlling persons, officers, directors, partners, agents, stockholders or employees of any other Purchaser, will be liable for any action heretofore or hereafter taken or not taken by any of them in connection with the purchase and sale of the Securities.
6.12    Further Assurances. From time to time, the parties will execute and deliver such additional documents and will provide such additional information as may reasonably be required to carry out the full intent and purpose of this Agreement and the Notes and any agreements executed in connection herewith, and to comply with state or federal securities laws or other regulatory approvals.
6.13    Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL- ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
[Signature page follows.]
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IN WITNESS WHEREOF, the Company has executed this Agreement as of the date set forth above.
Alpine 4 Holdings, Inc.
A Delaware Corporation
By/s/ Kent Wilson
Name:Kent Wilson
Title:CEO
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IN WITNESS WHEREOF, the Purchaser hereto have executed this Agreement as of the date set forth above.
If an individual:
/s/ Gabriel Garcia
(Signature)
Printed Name: Gabriel Garcia
Note Purchase Amount:$20,000.00
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EXHIBIT A
FORM OF NOTE
UNSECURED PROMISSORY NOTE
$____________February ___, 2023
This Unsecured Promissory Note (this “Note”) is dated as of February ____, 2023 (the “Issuance Date”), by and between Alpine 4 Holdings Inc., a Delaware corporation (“Alpine”) and ___________________________, an individual with an address of ______________________________________________ (the “Lender”).
AGREEMENT
FOR VALUE RECEIVED, the undersigned, Alpine, hereby promises to pay to the order of the Lender, the principal sum of ___________________________ ($___________) (the “Principal Amount”) in lawful money of the United States of America, and together with interest thereon at the rate hereinafter specified and any and all other sums which may be due and owing hereunder to the Lender, which shall be paid at the address of the Lender below, in accordance with the terms contained herein.
1.    Interest. Alpine shall pay interest from the date of this Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the Maturity Date (hereinafter defined).
2.    Calculation of Interest. Interest on the Principal Amount of this Note shall be calculated on the basis of a 180 day factor applied to the actual days on which there exists an unpaid principal balance due under this Note.
3.    Maturity. The entire Principal Amount and all accrued interest shall become fully due and payable 180 days from the Issuance Date (the “Maturity Date”).
4.    Prepayment. Alpine may prepay this Note, together with all then accrued interest, in whole or in
part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
5.    Payments. All payments made hereunder shall be in lawful money of the United States of America. All payments and prepayments shall be applied first to costs of collection, next, to accrued interest, and thereafter to principal.
6.    Default and Remedies. The following shall be a default under this Note and shall entitle the Lender to all of the rights and remedies specified herein or otherwise available under applicable law or in equity: (i) any failure to make any payment due under this Note when due or upon the failure to comply with any other terms and provisions of this Note, if such failures remain uncured for a period of ten (10) business days; (ii) a petition for relief in a bankruptcy court is filed by Alpine or Alpine applies for, consents to or acquiesces in the appointment of a trustee, custodian or receiver for Alpine or any of its assets or property or make a general assignment for the benefit of its creditors or, in the absence of such application, consent or acquiescence, a trustee, custodian or receiver is appointed for Alpine or for a substantial part of its assets or property and is not discharged within thirty (30) days thereafter; (iii) any bankruptcy, reorganization, debt arrangement or other proceeding or case under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted against Alpine and if instituted against Alpine is consented to or acquiesced in by Alpine or remains undismissed for sixty (60) days thereafter; or (iv) Alpine takes any action to authorize any of the actions described in subsection (ii) or (iii). Alpine hereby waives presentment, demand for payment, notice of dishonor, notice of protest, and protest, and all other notices or demands in connection with the delivery, acceptance and performance of this Note.
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7.    Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the State of Delaware.
8.    No Waiver. The delay or failure of the Lender to exercise its rights hereunder shall not be deemed a waiver thereof. No waiver of any rights of the Lender shall be effective unless in writing and signed by the Lender and any waiver of any right shall not apply to any other right or to such right in any subsequent event or circumstance not specifically included in such waiver.
9.    Successors and Assigns. This Note and all terms hereof shall not be assignable by the Lender without the prior written consent of Alpine, which may be granted or withheld by Alpine in its sole discretion. This Note shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
10.    Senior Debt is allowed. Alpine may at any time from the date hereof and at Alpine’s sole discretion incur, create or assume additional debt by notes or debentures or similar instruments which are senior to this Note.
11.    Evaluation and Understanding. Each of the parties hereto acknowledges that (i) he/she/it has read this Note in its entirety and understands all of its terms and conditions, (ii) he/she/it has had the opportunity to consult with any individuals of their choice regarding their agreement to the provisions contained herein, including legal counsel of their choice, and any decision not to was theirs alone, and (iii) he/she/it is entering into this Note of their own free will, without coercion from any source.
12.    Notices. Any notices or other communication required hereunder shall be deemed properly given if delivered in person or if mailed by registered or certified mail, postage prepaid, return receipt requested to the parties at the following addresses:
if to Alpine:
Alpine 4 Holdings, Inc.
2525 E Arizona Biltmore Cir Ste 237
Phoenix, Arizona, 85016
Attn: Kent Wilson
if to the Lender:
IN WITNESS WHEREOF, Alpine has caused this Note to be executed on its behalf by its duly authorized officer as of February 1st, 2023.
ALPINE 4 HOLDINGS, INC.
By:
Name: Kent B. Wilson
Title: Chief Executive Officer
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ACKNOWLEDGED AND AGREED TO
By:
(Signature)
Name:
(Printed Name)
12

Exhibit 10.51
AMENDMENT TO UNSECURED CONVERTIBLE NOTE
AND NOTE PURCHASE AGREEMENT
THIS AMENDMENT AGREEMENT (this “Agreement”) dated _August 2_____ , 2023, is entered into to amend certain documents between Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and _Gabriel Garcia ________________________________________ (the “Note Holder”), related to the Note Holder’s prior loan of funds to the Company. The Company and the Note Holder may each be referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
A.On or around -February 3_, 2023, the Note Holder loaned to the Company the amount set forth on the signature page hereto (the “Original Loan Amount”), pursuant to a Note Purchase Agreement (the “NPA”), and in connection with which, the Company issued an unsecured promissory note in the Original Loan Amount (the “Original Note”).
B.The Company and the Note Holder desire to amend the terms of the Original Note and the NPA, as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals, which are incorporated herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Note Holder hereby agree as follows:
1.Amendment to Original Note and NPA; New Maturity Date; No Default.
a.Pursuant to the Original Note, the Original Loan Amount and all accrued and unpaid interest was due 180 days from the issuance date of the Original Note (the “Original Maturity Date”). By entering into this Agreement, the Note Holder acknowledges and agrees to extend the maturity date of the Original Note (the “New Maturity Date”) to that date set forth on the signature page hereto. Additionally, by entering into this Agreement, the Note Holder acknowledges and agrees that any nonpayment by the Company of the Original Loan Amount or any interest accrued thereon by the Original Maturity Date shall not constitute a default pursuant to the terms of the Original Note or the NPA.
b.The New Maturity Date, as set forth on the signature page hereto, shall be the due date for the amounts to be extended pursuant to this Agreement (the “New Repayment Amount”). By entering into this Agreement, the Note Holder acknowledges and agrees that he, she, or it had the opportunity to extend all or part of the Original Principal Amount as well as all or part of the unpaid interest on the Original Principal Amount that had accrued as of the Original Maturity Date, and that the amounts indicated on the signature page hereto shall constitute the New Repayment Amount.
c.The Note Holder further acknowledges and agrees that New Repayment Amount set forth on the signature page hereto is the amount that is to be due and payable by the Company on or before the New Maturity Date.
d.The Note Holder further acknowledges and agrees that the interest rate set forth on the signature page hereto shall be the amount of interest that shall be paid on the New Repayment Amount, and that the interest rate as specified in the Original Note shall not separately accrue on the New Repayment Amount.
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2.No Other Amendments. By signing below, the Parties understand, acknowledge, and agree that all other terms of the Original Note and the NPA, except as specifically amended or modified by this Agreement, shall remain of full force and effect. This Agreement, as well as the Original Note and the NPA, as revised and modified by this Agreement, constitute and contain the entire agreement of the Company and the Note Holder and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof. To the extent that there is any conflict between the terms in this Agreement and terms in the Original Note or the NPA, the terms in this Agreement shall control the rights and obligations of the Parties.
3.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to conflicts of law rules.
4.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written.
COMPANY:
ALPINE 4 HOLDINGS, INC.
a Delaware corporation
By:/s/ Kent Wilson
Name: Kent Wilson
Its: Chief Executive Officer
Date:08-03-2023
NOTE HOLDER:
By:/s/ Gabriel Garcia
Name:Gabriel Garcia
Date:08/03/2023
ORIGINAL AND REVISED NOTE TERMS
Original Loan Amount:$     20,000
Original Term Interest Rate: 15%
Original Maturity Date:August 2, 2023
Final Maturity Amount: $23,000
Payout Amount (if applicable):$     NONE
New Maturity Date:January 28, 2024
New Term Interest Rate:15%
New Repayment Amount:$26,450
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Exhibit 10.52

NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this “Agreement”), dated as of February 9, 2023, is entered into among Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and the person or entity (the “Purchaser”) named on the signature page attached hereto.
WHEREAS, subject to the terms and conditions set forth herein, the Company wishes to issue and sell to the Purchaser, and the Purchaser wishes to purchase from the Company, one or more promissory notes in exchange for the consideration (the “Consideration”) set forth opposite the Purchaser’s name on the signature page hereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1.    Definitions. Capitalized terms not otherwise defined in this Agreement will have the meanings set forth in this Section 1.
1.1    “Maturity Date” means, with respect to each Note issued under this Agreement, the date that is one hundred and eighty days (180 days) following the date of issuance of such Note.
1.2    “Notes” means the one or more promissory notes issued to the Purchaser pursuant to Section 2, the form of which is attached hereto as Exhibit A.
1.3    “Securities Act” means the Securities Act of 1933, as amended.
2.    The Notes.
2.1    Purchase and Sale of Notes. In exchange for the Consideration paid by the Purchaser, the Company will sell and issue to such Purchaser one or more Notes. Each Note will have a principal balance equal to that portion of the Consideration paid by such Purchaser for such Note, as set forth opposite such Purchaser’s name on the signature page hereto.
2.2    Interest. Interest on the Note will accrue from the date of the Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the date which is 180 days from the issuance date of the Note (the “Maturity Date”).
2.3    Assignability. The Note shall not be assignable by the Purchaser without the prior written consent of the Company, which may be granted or withheld by the Company in its sole discretion. The Note and all terms thereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.



2.4    Prepayment. The Company may prepay the Note, together with all then accrued interest, in whole or in part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
2.5    Other Terms. All other terms and conditions of the Note not described above are set forth in the form of the Note attached hereto as Exhibit A.
3.    Closing. The closing of the sale of the Notes in return for the Consideration paid by the Purchaser (the “Closing”) will take place on the Closing date. On the Closing Date, the Company shall deliver to the Purchaser one or more Notes (as directed by the Purchaser) in the amount or amounts as set forth on the signature page hereto. The Company’s obligation to complete the purchase and sale and deliver the Note or Notes to the Purchaser at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company: (A) the Company’s receipt of the Investment Amount (as set forth on the signature page hereto); and (B) delivery by the Purchaser of this fully executed Agreement.
4.    Representations and Warranties of the Company. In connection with the transactions contemplated by this Agreement, the Company hereby represents and warrants to the Purchasers as follows:
4.1    Qualification and Good Standing. The Company is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify or to be in good standing would have a material adverse effect on the Company.
4.2    Authorization and Enforceability. All corporate action has been taken on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Notes. Except as may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights, the Company has taken all corporate action required to make all of the obligations of the Company reflected in the provisions of this Agreement and the Notes valid and enforceable in accordance with their terms.
5.    Representations and Warranties of the Purchasers. In connection with the transactions contemplated by this Agreement, the Purchaser hereby represents and warrants to the Company as follows:
5.1    Authorization. The Purchaser has full power and authority (and, if such Purchaser is an individual, the capacity) to enter into this Agreement and to perform all obligations required to be performed by it hereunder. This Agreement, when executed and delivered by the Purchaser, will constitute such Purchaser’s valid and legally binding obligation, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and (b) as
2


limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
5.2    Purchase Entirely for Own Account. The Purchaser acknowledges that this Agreement is made with such Purchaser in reliance upon such Purchaser’s representation to the Company, which such Purchaser confirms by executing this Agreement, that the Notes will be acquired for investment for such Purchaser’s own account, not as a nominee or agent (unless otherwise specified on such Purchaser’s signature page hereto), and not with a view to the resale or distribution of any part thereof, and that such Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that such Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Notes. If other than an individual, the Purchaser also represents it has not been organized solely for the purpose of acquiring the Notes.
5.3    Disclosure of Information; Non-Reliance. The Purchaser acknowledges that it has received all the information it considers necessary or appropriate to enable it to make an informed decision concerning an investment in the Securities. The Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Notes. The Purchaser confirms that the Company has not given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Notes. Specifically, the Company has provided information to the Purchaser, satisfactory to the Purchaser, relating to the filing status of the Company’s public reports. The Purchaser has had access to, and has reviewed to the satisfaction of the Purchaser, the Company’s publicly filed reports, including all Current Reports on Form 8-K. In deciding to purchase the Notes, the Purchaser is not relying on the advice or recommendations of the Company and such Purchaser has made its own independent decision that the investment in the Securities is suitable and appropriate for such Purchaser. The Purchaser understands that no federal or state agency has passed upon the merits or risks of an investment in the Notes or made any finding or determination concerning the fairness or advisability of this investment.
5.4    Investment Experience. The Purchaser is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Notes.
5.5    Accredited Investor. The Purchaser is either (A) an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, as updated; or (B) a “sophisticated investor,” defined by the U.S. Securities and Exchange Commission as investors who “have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective
3


investment.” The Purchaser agrees to furnish any additional information requested by the Company to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Notes.
5.6    Restricted Securities. The Purchaser understands that the Notes have not been, and will not be, registered under the Securities Act or any state securities laws, by reason of specific exemptions under the provisions thereof which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Notes are “restricted securities” under U.S. federal and applicable state securities laws and that, pursuant to these laws, such Purchaser must hold the Notes indefinitely unless their resales are registered with the Securities and Exchange Commission (“SEC”) and registered or qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Notes for resale and further acknowledges that, if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Notes, and on requirements relating to the Company which are outside of such Purchaser’s control, and which the Company is under no obligation, and may not be able, to satisfy.
5.7    No Public Market. The Purchaser understands that no public market now exists for the Notes and that the Company has made no assurances that a public market will ever exist for the Notes.
5.8    No General Solicitation. The Purchaser, and its officers, directors, employees, agents, stockholders or partners have not either directly or indirectly, including through a broker or finder, solicited offers for or offered or sold the Notes by means of any form of general solicitation or general advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act. The Purchaser acknowledges that neither the Company nor any other person offered to sell the Notes to it by means of any form of general solicitation or advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.
5.9    Residence. If the Purchaser is an individual, such Purchaser resides in the state or province identified in the address shown on the signature page hereto. If the Purchaser is a partnership, corporation, limited liability company or other entity, the Purchaser’s principal place of business is located in the state or province identified in the address shown on the signature page hereto.
5.10    Foreign Investors. If a Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), such Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Notes or any use of this Agreement, including (a) the legal requirements within its jurisdiction for the purchase of
4


the Notes; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, conversion, redemption, sale, or transfer of the Notes. The Purchaser’s subscription and payment for and continued beneficial ownership of the Notes will not violate any applicable securities or other laws of such Purchaser’s jurisdiction. The Purchaser acknowledges that the Company has taken no action in foreign jurisdictions with respect to the Notes.
6.    Miscellaneous.
6.1    Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement will inure to the benefit of, and be binding upon, the respective successors and assigns of the parties; provided, however, that the Company may not assign its obligations under this Agreement without the written consent of the Purchaser. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or will confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, except as expressly provided in this Agreement.
6.2    Choice of Law. This Agreement and the Notes, and all matters arising out of or relating to this Agreement, whether sounding in contract, tort, or statute will be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Delaware.
6.3    Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will be deemed to be one and the same agreement. Counterparts may be delivered via facsimile, email (including PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
6.4    Titles and Subtitles. The titles and subtitles used in this Agreement are included for convenience only and are not to be considered in construing or interpreting this Agreement.
6.5    Notices. All notices and other communications given or made pursuant hereto will be in writing and will be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by email or confirmed facsimile; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications will be sent to the respective parties at the addresses shown on the signature pages hereto (or to such email
5


address, facsimile number or other address as subsequently modified by written notice given in accordance with this Section 6.5).
6.6    No Finder’s Fee. Each party represents that it neither is nor will be obligated to pay any finder’s fee, broker’s fee or commission in connection (directly or indirectly) with the transactions contemplated by this Agreement. The Purchaser agrees to indemnify and to hold the Company harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Purchaser or any of its officers, employees or representatives is responsible. The Company agrees to indemnify and hold the Purchaser harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.
6.7    Expenses. Each party will pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement.
6.8    Attorneys’ Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.
6.9    Entire Agreement; Amendments and Waivers. This Agreement, the Notes and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. The Purchaser acknowledges and agrees that the Company is selling similar Notes to other purchasers. The Company’s agreements with each of the Purchasers are separate agreements, and the sales of the Notes to each of the Purchasers are separate sales. Notwithstanding the foregoing, any term of this Agreement or the Note or Notes held by the Purchaser may be amended and the observance of any term of this Agreement or the Notes may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Purchaser. Any waiver or amendment effected in accordance with this Section 6.9 will be binding upon each party to this Agreement and each holder of a Note purchased under this Agreement then outstanding and each future holder of all such Notes.
6.10    Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provisions were so excluded and this Agreement will be enforceable in accordance with its terms.
6.11    Exculpation among Purchasers. The Purchaser acknowledges that it is not relying upon any person, firm, corporation or stockholder, other than the Company and its officers and directors in their capacities as such, in making its investment or decision to
6


invest in the Company. The Purchaser agrees that no other Purchaser, nor the controlling persons, officers, directors, partners, agents, stockholders or employees of any other Purchaser, will be liable for any action heretofore or hereafter taken or not taken by any of them in connection with the purchase and sale of the Securities.
6.12    Further Assurances. From time to time, the parties will execute and deliver such additional documents and will provide such additional information as may reasonably be required to carry out the full intent and purpose of this Agreement and the Notes and any agreements executed in connection herewith, and to comply with state or federal securities laws or other regulatory approvals.
6.13    Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
[Signature page follows.]
7


IN WITNESS WHEREOF, the Company has executed this Agreement as of the date set forth above.
Alpine 4 Holdings, Inc.
A Delaware Corporation
By/s/ Kent Wilson
Name:Kent Wilson
Title:CEO
8


IN WITNESS WHEREOF, the Purchaser hereto have executed this Agreement as of the date set forth above.
If an individual:
/s/ Jeffrey Hail
(Signature)
Printed Name: JEFFREY HAIL
Note Purchase Amount:$110,000.00
9


EXHIBIT A
FORM OF NOTE
UNSECURED PROMISSORY NOTE
$____________February ___, 2023
This Unsecured Promissory Note (this “Note”) is dated as of February ____, 2023 (the “Issuance Date”), by and between Alpine 4 Holdings Inc., a Delaware corporation (“Alpine”) and ___________________________, an individual with an address of ______________________________________________ (the “Lender”).
AGREEMENT
FOR VALUE RECEIVED, the undersigned, Alpine, hereby promises to pay to the order of the Lender, the principal sum of ___________________________ ($___________) (the “Principal Amount”) in lawful money of the United States of America, and together with interest thereon at the rate hereinafter specified and any and all other sums which may be due and owing hereunder to the Lender, which shall be paid at the address of the Lender below, in accordance with the terms contained herein.
1.    Interest. Alpine shall pay interest from the date of this Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the Maturity Date (hereinafter defined).
2.    Calculation of Interest. Interest on the Principal Amount of this Note shall be calculated on the basis of a 180 day factor applied to the actual days on which there exists an unpaid principal balance due under this Note.
3.    Maturity. The entire Principal Amount and all accrued interest shall become fully due and payable 180 days from the Issuance Date (the “Maturity Date”).
4.    Prepayment. Alpine may prepay this Note, together with all then accrued interest, in whole or in
part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
5.    Payments. All payments made hereunder shall be in lawful money of the United States of America. All payments and prepayments shall be applied first to costs of collection, next, to accrued interest, and thereafter to principal.
6.    Default and Remedies. The following shall be a default under this Note and shall entitle the Lender to all of the rights and remedies specified herein or otherwise available under applicable law or in equity: (i) any failure to make any payment due under this Note when due or upon the failure to comply with any other terms and provisions of this Note, if such failures remain uncured for a period of ten (10) business days; (ii) a petition for relief in a bankruptcy court is filed by Alpine or Alpine applies for, consents to or acquiesces in the appointment of a trustee, custodian or receiver for Alpine or any of its assets or property or make a general assignment for the benefit of its creditors or, in the absence of such application, consent or acquiescence, a trustee, custodian or receiver is appointed for Alpine or for a substantial part of its assets or property and is not discharged within thirty (30) days thereafter; (iii) any bankruptcy, reorganization, debt arrangement or other proceeding or case under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted against Alpine and if instituted against Alpine is consented to or acquiesced in by Alpine or remains undismissed for sixty (60) days thereafter; or (iv) Alpine takes any action to authorize any of the actions described in subsection (ii) or (iii). Alpine hereby waives presentment, demand for payment, notice of dishonor, notice of protest, and protest, and all other notices or demands in connection with the delivery, acceptance and performance of this Note.
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7.    Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the State of Delaware.
8.    No Waiver. The delay or failure of the Lender to exercise its rights hereunder shall not be deemed a waiver thereof. No waiver of any rights of the Lender shall be effective unless in writing and signed by the Lender and any waiver of any right shall not apply to any other right or to such right in any subsequent event or circumstance not specifically included in such waiver.
9.    Successors and Assigns. This Note and all terms hereof shall not be assignable by the Lender without the prior written consent of Alpine, which may be granted or withheld by Alpine in its sole discretion. This Note shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
10.    Senior Debt is allowed. Alpine may at any time from the date hereof and at Alpine’s sole discretion incur, create or assume additional debt by notes or debentures or similar instruments which are senior to this Note.
11.    Evaluation and Understanding. Each of the parties hereto acknowledges that (i) he/she/it has read this Note in its entirety and understands all of its terms and conditions, (ii) he/she/it has had the opportunity to consult with any individuals of their choice regarding their agreement to the provisions contained herein, including legal counsel of their choice, and any decision not to was theirs alone, and (iii) he/she/it is entering into this Note of their own free will, without coercion from any source.
12.    Notices. Any notices or other communication required hereunder shall be deemed properly given if delivered in person or if mailed by registered or certified mail, postage prepaid, return receipt requested to the parties at the following addresses:
if to Alpine:
Alpine 4 Holdings, Inc.
2525 E Arizona Biltmore Cir Ste 237
Phoenix, Arizona, 85016
Attn: Kent Wilson
if to the Lender:
IN WITNESS WHEREOF, Alpine has caused this Note to be executed on its behalf by its duly authorized officer as of February 1st, 2023.
ALPINE 4 HOLDINGS, INC.
By:
Name: Kent B. Wilson
Title: Chief Executive Officer
11


ACKNOWLEDGED AND AGREED TO
By:
(Signature)
Name:
(Printed Name)
12

Exhibit 10.53
AMENDMENT TO UNSECURED CONVERTIBLE NOTE
AND NOTE PURCHASE AGREEMENT
THIS AMENDMENT AGREEMENT (this “Agreement”) dated _August 1__, 2023, is entered into to amend certain documents between Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and _Jeffrey Hail__ (the “Note Holder”), related to the Note Holder’s prior loan of funds to the Company. The Company and the Note Holder may each be referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
A.On or around _February 9_, 2023, the Note Holder loaned to the Company the amount set forth on the signature page hereto (the “Original Loan Amount”), pursuant to a Note Purchase Agreement (the “NPA”), and in connection with which, the Company issued an unsecured promissory note in the Original Loan Amount (the “Original Note”).
B.The Company and the Note Holder desire to amend the terms of the Original Note and the NPA, as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals, which are incorporated herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Note Holder hereby agree as follows:
1.Amendment to Original Note and NPA; New Maturity Date; No Default.
a.Pursuant to the Original Note, the Original Loan Amount and all accrued and unpaid interest was due 180 days from the issuance date of the Original Note (the “Original Maturity Date”). By entering into this Agreement, the Note Holder acknowledges and agrees to extend the maturity date of the Original Note (the “New Maturity Date”) to that date set forth on the signature page hereto. Additionally, by entering into this Agreement, the Note Holder acknowledges and agrees that any nonpayment by the Company of the Original Loan Amount or any interest accrued thereon by the Original Maturity Date shall not constitute a default pursuant to the terms of the Original Note or the NPA.
b.The New Maturity Date, as set forth on the signature page hereto, shall be the due date for the amounts to be extended pursuant to this Agreement (the “New Repayment Amount”). By entering into this Agreement, the Note Holder acknowledges and agrees that he, she, or it had the opportunity to extend all or part of the Original Principal Amount as well as all or part of the unpaid interest on the Original Principal Amount that had accrued as of the Original Maturity Date, and that the amounts indicated on the signature page hereto shall constitute the New Repayment Amount.
c.The Note Holder further acknowledges and agrees that New Repayment Amount set forth on the signature page hereto is the amount that is to be due and payable by the Company on or before the New Maturity Date.
1


d.The Note Holder further acknowledges and agrees that the interest rate set forth on the signature page hereto shall be the amount of interest that shall be paid on the New Repayment Amount, and that the interest rate as specified in the Original Note shall not separately accrue on the New Repayment Amount.
2.No Other Amendments. By signing below, the Parties understand, acknowledge, and agree that all other terms of the Original Note and the NPA, except as specifically amended or modified by this Agreement, shall remain of full force and effect. This Agreement, as well as the Original Note and the NPA, as revised and modified by this Agreement, constitute and contain the entire agreement of the Company and the Note Holder and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof. To the extent that there is any conflict between the terms in this Agreement and terms in the Original Note or the NPA, the terms in this Agreement shall control the rights and obligations of the Parties.
3.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to conflicts of law rules.
4.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.
[Signature page follows.]
2


IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written.
COMPANY:
ALPINE 4 HOLDINGS, INC.
a Delaware corporation
By:/s/ Kent Wilson
Name:Kent Wilson
Its:Chief Executive Officer
Date:08-02-2023
NOTE HOLDER:
By:
/s/ Jeffrey Hail
Name:Jeffrey Hail
Date:August 1, 2023
ORIGINAL AND REVISED NOTE TERMS
Original Loan Amount:$110,000
Original Term Interest Rate:15%
Original Maturity Date:August 9, 2023
Final Maturity Amount:$126,500
Payout Amount (if applicable):$NONE
New Maturity Date:02/05/2024
New Term Interest Rate:15%
New Repayment Amount:$145,475
3

Exhibit 10.54
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this “Agreement”), dated as of __Feb 10___, 2023, is entered into among Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and the person or entity (the “Purchaser”) named on the signature page attached hereto.
WHEREAS, subject to the terms and conditions set forth herein, the Company wishes to issue and sell to the Purchaser, and the Purchaser wishes to purchase from the Company, one or more promissory notes in exchange for the consideration (the “Consideration”) set forth opposite the Purchaser’s name on the signature page hereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1.    Definitions. Capitalized terms not otherwise defined in this Agreement will have the meanings set forth in this Section 1.
1.1    “Maturity Date” means, with respect to each Note issued under this Agreement, the date that is one hundred and eighty days (180 days) following the date of issuance of such Note.
1.2    “Notes” means the one or more promissory notes issued to the Purchaser pursuant to Section 2, the form of which is attached hereto as Exhibit A.
1.3    “Securities Act” means the Securities Act of 1933, as amended.
2.    The Notes.
2.1    Purchase and Sale of Notes. In exchange for the Consideration paid by the Purchaser, the Company will sell and issue to such Purchaser one or more Notes. Each Note will have a principal balance equal to that portion of the Consideration paid by such Purchaser for such Note, as set forth opposite such Purchaser’s name on the signature page hereto.
2.2    Interest. Interest on the Note will accrue from the date of the Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the date which is 180 days from the issuance date of the Note (the “Maturity Date”).
2.3    Assignability. The Note shall not be assignable by the Purchaser without the prior written consent of the Company, which may be granted or withheld by the Company in its sole discretion. The Note and all terms thereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.



2.4    Prepayment. The Company may prepay the Note, together with all then accrued interest, in whole or in part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
2.5    Other Terms. All other terms and conditions of the Note not described above are set forth in the form of the Note attached hereto as Exhibit A.
3.    Closing. The closing of the sale of the Notes in return for the Consideration paid by the Purchaser (the “Closing”) will take place on the Closing date. On the Closing Date, the Company shall deliver to the Purchaser one or more Notes (as directed by the Purchaser) in the amount or amounts as set forth on the signature page hereto. The Company’s obligation to complete the purchase and sale and deliver the Note or Notes to the Purchaser at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company: (A) the Company’s receipt of the Investment Amount (as set forth on the signature page hereto); and (B) delivery by the Purchaser of this fully executed Agreement.
4.    Representations and Warranties of the Company. In connection with the transactions contemplated by this Agreement, the Company hereby represents and warrants to the Purchasers as follows:
4.1    Qualification and Good Standing. The Company is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify or to be in good standing would have a material adverse effect on the Company.
4.2    Authorization and Enforceability. All corporate action has been taken on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Notes. Except as may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights, the Company has taken all corporate action required to make all of the obligations of the Company reflected in the provisions of this Agreement and the Notes valid and enforceable in accordance with their terms.
5.    Representations and Warranties of the Purchasers. In connection with the transactions contemplated by this Agreement, the Purchaser hereby represents and warrants to the Company as follows:
5.1    Authorization. The Purchaser has full power and authority (and, if such Purchaser is an individual, the capacity) to enter into this Agreement and to perform all obligations required to be performed by it hereunder. This Agreement, when executed and delivered by the Purchaser, will constitute such Purchaser’s valid and legally binding obligation, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and (b) as
2


limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
5.2    Purchase Entirely for Own Account. The Purchaser acknowledges that this Agreement is made with such Purchaser in reliance upon such Purchaser’s representation to the Company, which such Purchaser confirms by executing this Agreement, that the Notes will be acquired for investment for such Purchaser’s own account, not as a nominee or agent (unless otherwise specified on such Purchaser’s signature page hereto), and not with a view to the resale or distribution of any part thereof, and that such Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that such Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Notes. If other than an individual, the Purchaser also represents it has not been organized solely for the purpose of acquiring the Notes.
5.3    Disclosure of Information; Non-Reliance. The Purchaser acknowledges that it has received all the information it considers necessary or appropriate to enable it to make an informed decision concerning an investment in the Securities. The Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Notes. The Purchaser confirms that the Company has not given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Notes. Specifically, the Company has provided information to the Purchaser, satisfactory to the Purchaser, relating to the filing status of the Company’s public reports. The Purchaser has had access to, and has reviewed to the satisfaction of the Purchaser, the Company’s publicly filed reports, including all Current Reports on Form 8-K. In deciding to purchase the Notes, the Purchaser is not relying on the advice or recommendations of the Company and such Purchaser has made its own independent decision that the investment in the Securities is suitable and appropriate for such Purchaser. The Purchaser understands that no federal or state agency has passed upon the merits or risks of an investment in the Notes or made any finding or determination concerning the fairness or advisability of this investment.
5.4    Investment Experience. The Purchaser is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Notes.
5.5    Accredited Investor. The Purchaser is either (A) an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, as updated; or (B) a “sophisticated investor,” defined by the U.S. Securities and Exchange Commission as investors who “have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective
3


investment.” The Purchaser agrees to furnish any additional information requested by the Company to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Notes.
5.6    Restricted Securities. The Purchaser understands that the Notes have not been, and will not be, registered under the Securities Act or any state securities laws, by reason of specific exemptions under the provisions thereof which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Notes are “restricted securities” under U.S. federal and applicable state securities laws and that, pursuant to these laws, such Purchaser must hold the Notes indefinitely unless their resales are registered with the Securities and Exchange Commission (“SEC”) and registered or qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Notes for resale and further acknowledges that, if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Notes, and on requirements relating to the Company which are outside of such Purchaser’s control, and which the Company is under no obligation, and may not be able, to satisfy.
5.7    No Public Market. The Purchaser understands that no public market now exists for the Notes and that the Company has made no assurances that a public market will ever exist for the Notes.
5.8    No General Solicitation. The Purchaser, and its officers, directors, employees, agents, stockholders or partners have not either directly or indirectly, including through a broker or finder, solicited offers for or offered or sold the Notes by means of any form of general solicitation or general advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act. The Purchaser acknowledges that neither the Company nor any other person offered to sell the Notes to it by means of any form of general solicitation or advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.
5.9    Residence. If the Purchaser is an individual, such Purchaser resides in the state or province identified in the address shown on the signature page hereto. If the Purchaser is a partnership, corporation, limited liability company or other entity, the Purchaser’s principal place of business is located in the state or province identified in the address shown on the signature page hereto.
5.10    Foreign Investors. If a Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), such Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Notes or any use of this Agreement, including (a) the legal requirements within its jurisdiction for the purchase of
4


the Notes; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, conversion, redemption, sale, or transfer of the Notes. The Purchaser’s subscription and payment for and continued beneficial ownership of the Notes will not violate any applicable securities or other laws of such Purchaser’s jurisdiction. The Purchaser acknowledges that the Company has taken no action in foreign jurisdictions with respect to the Notes.
6.    Miscellaneous.
6.1    Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement will inure to the benefit of, and be binding upon, the respective successors and assigns of the parties; provided, however, that the Company may not assign its obligations under this Agreement without the written consent of the Purchaser. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or will confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, except as expressly provided in this Agreement.
6.2    Choice of Law. This Agreement and the Notes, and all matters arising out of or relating to this Agreement, whether sounding in contract, tort, or statute will be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Delaware.
6.3    Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will be deemed to be one and the same agreement. Counterparts may be delivered via facsimile, email (including PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
6.4    Titles and Subtitles. The titles and subtitles used in this Agreement are included for convenience only and are not to be considered in construing or interpreting this Agreement.
6.5    Notices. All notices and other communications given or made pursuant hereto will be in writing and will be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by email or confirmed facsimile; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications will be sent to the respective parties at the addresses shown on the signature pages hereto (or to such email
5


address, facsimile number or other address as subsequently modified by written notice given in accordance with this Section 6.5).
6.6    No Finder’s Fee. Each party represents that it neither is nor will be obligated to pay any finder’s fee, broker’s fee or commission in connection (directly or indirectly) with the transactions contemplated by this Agreement. The Purchaser agrees to indemnify and to hold the Company harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Purchaser or any of its officers, employees or representatives is responsible. The Company agrees to indemnify and hold the Purchaser harmless from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.
6.7    Expenses. Each party will pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement.
6.8    Attorneys’ Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.
6.9    Entire Agreement; Amendments and Waivers. This Agreement, the Notes and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. The Purchaser acknowledges and agrees that the Company is selling similar Notes to other purchasers. The Company’s agreements with each of the Purchasers are separate agreements, and the sales of the Notes to each of the Purchasers are separate sales. Notwithstanding the foregoing, any term of this Agreement or the Note or Notes held by the Purchaser may be amended and the observance of any term of this Agreement or the Notes may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Purchaser. Any waiver or amendment effected in accordance with this Section 6.9 will be binding upon each party to this Agreement and each holder of a Note purchased under this Agreement then outstanding and each future holder of all such Notes.
6.10    Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provisions were so excluded and this Agreement will be enforceable in accordance with its terms.
6.11    Exculpation among Purchasers. The Purchaser acknowledges that it is not relying upon any person, firm, corporation or stockholder, other than the Company and its officers and directors in their capacities as such, in making its investment or decision to
6


invest in the Company. The Purchaser agrees that no other Purchaser, nor the controlling persons, officers, directors, partners, agents, stockholders or employees of any other Purchaser, will be liable for any action heretofore or hereafter taken or not taken by any of them in connection with the purchase and sale of the Securities.
6.12    Further Assurances. From time to time, the parties will execute and deliver such additional documents and will provide such additional information as may reasonably be required to carry out the full intent and purpose of this Agreement and the Notes and any agreements executed in connection herewith, and to comply with state or federal securities laws or other regulatory approvals.
6.13    Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALLENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
[Signature page follows.]
7


IN WITNESS WHEREOF, the Company has executed this Agreement as of the date set forth above.
Alpine 4 Holdings, Inc.
A Delaware Corporation
By/s/ Jeff Hail
Name:Jeff Hail
Title:COO
8


IN WITNESS WHEREOF, the Purchaser hereto have executed this Agreement as of the date set forth above.
If an individual:
/s/ Kent Wilson
(Signature)
Printed Name: Kent Wilson
Note Purchase Amount:$10,000
9


EXHIBIT A
FORM OF NOTE
UNSECURED PROMISSORY NOTE
$____________February ___, 2023
This Unsecured Promissory Note (this “Note”) is dated as of February ____, 2023 (the “Issuance Date”), by and between Alpine 4 Holdings Inc., a Delaware corporation (“Alpine”) and ___________________________, an individual with an address of ______________________________________________ (the “Lender”).
AGREEMENT
FOR VALUE RECEIVED, the undersigned, Alpine, hereby promises to pay to the order of the Lender, the principal sum of ___________________________ ($___________) (the “Principal Amount”) in lawful money of the United States of America, and together with interest thereon at the rate hereinafter specified and any and all other sums which may be due and owing hereunder to the Lender, which shall be paid at the address of the Lender below, in accordance with the terms contained herein.
1.    Interest. Alpine shall pay interest from the date of this Note on the Principal Amount outstanding from time to time at a rate per six months equal to fifteen percent (15%). The interest shall be due and payable on the Maturity Date (hereinafter defined).
2.    Calculation of Interest. Interest on the Principal Amount of this Note shall be calculated on the basis of a 180 day factor applied to the actual days on which there exists an unpaid principal balance due under this Note.
3.    Maturity. The entire Principal Amount and all accrued interest shall become fully due and payable 180 days from the Issuance Date (the “Maturity Date”).
4.    Prepayment. Alpine may prepay this Note, together with all then accrued interest, in whole or in
part at any time, or from time to time, without penalty or additional interest. Any amounts prepaid hereunder shall be applied as provided in Section 5 below.
5.    Payments. All payments made hereunder shall be in lawful money of the United States of America. All payments and prepayments shall be applied first to costs of collection, next, to accrued interest, and thereafter to principal.
6.    Default and Remedies. The following shall be a default under this Note and shall entitle the Lender to all of the rights and remedies specified herein or otherwise available under applicable law or in equity: (i) any failure to make any payment due under this Note when due or upon the failure to comply with any other terms and provisions of this Note, if such failures remain uncured for a period of ten (10) business days; (ii) a petition for relief in a bankruptcy court is filed by Alpine or Alpine applies for, consents to or acquiesces in the appointment of a trustee, custodian or receiver for Alpine or any of its assets or property or make a general assignment for the benefit of its creditors or, in the absence of such application, consent or acquiescence, a trustee, custodian or receiver is appointed for Alpine or for a substantial part of its assets or property and is not discharged within thirty (30) days thereafter; (iii) any bankruptcy, reorganization, debt arrangement or other proceeding or case under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted against Alpine and if instituted against Alpine is consented to or acquiesced in by Alpine or remains undismissed for sixty (60) days thereafter; or (iv) Alpine takes any action to authorize any of the actions described in subsection (ii) or (iii). Alpine hereby waives presentment, demand for payment, notice of dishonor, notice of protest, and protest, and all other notices or demands in connection with the delivery, acceptance and performance of this Note.
10


ACKNOWLEDGED AND AGREED TO
By:
(Signature)
Name:
(Printed Name)
11

Exhibit 10.55
AMENDMENT TO UNSECURED CONVERTIBLE NOTE
AND NOTE PURCHASE AGREEMENT
THIS AMENDMENT AGREEMENT (this “Agreement”) dated _August 1__, 2023, is entered into to amend certain documents between Alpine 4 Holdings, Inc., a Delaware corporation (the “Company”), and _Kent Wilson__ (the “Note Holder”), related to the Note Holder’s prior loan of funds to the Company. The Company and the Note Holder may each be referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
A.On or around _February 10_, 2023, the Note Holder loaned to the Company the amount set forth on the signature page hereto (the “Original Loan Amount”), pursuant to a Note Purchase Agreement (the “NPA”), and in connection with which, the Company issued an unsecured promissory note in the Original Loan Amount (the “Original Note”).
B.The Company and the Note Holder desire to amend the terms of the Original Note and the NPA, as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals, which are incorporated herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Note Holder hereby agree as follows:
1.Amendment to Original Note and NPA; New Maturity Date; No Default.
a.Pursuant to the Original Note, the Original Loan Amount and all accrued and unpaid interest was due 180 days from the issuance date of the Original Note (the “Original Maturity Date”). By entering into this Agreement, the Note Holder acknowledges and agrees to extend the maturity date of the Original Note (the “New Maturity Date”) to that date set forth on the signature page hereto. Additionally, by entering into this Agreement, the Note Holder acknowledges and agrees that any nonpayment by the Company of the Original Loan Amount or any interest accrued thereon by the Original Maturity Date shall not constitute a default pursuant to the terms of the Original Note or the NPA.
b.The New Maturity Date, as set forth on the signature page hereto, shall be the due date for the amounts to be extended pursuant to this Agreement (the “New Repayment Amount”). By entering into this Agreement, the Note Holder acknowledges and agrees that he, she, or it had the opportunity to extend all or part of the Original Principal Amount as well as all or part of the unpaid interest on the Original Principal Amount that had accrued as of the Original Maturity Date, and that the amounts indicated on the signature page hereto shall constitute the New Repayment Amount.
c.The Note Holder further acknowledges and agrees that New Repayment Amount set forth on the signature page hereto is the amount that is to be due and payable by the Company on or before the New Maturity Date.
1


d.The Note Holder further acknowledges and agrees that the interest rate set forth on the signature page hereto shall be the amount of interest that shall be paid on the New Repayment Amount, and that the interest rate as specified in the Original Note shall not separately accrue on the New Repayment Amount.
2.No Other Amendments. By signing below, the Parties understand, acknowledge, and agree that all other terms of the Original Note and the NPA, except as specifically amended or modified by this Agreement, shall remain of full force and effect. This Agreement, as well as the Original Note and the NPA, as revised and modified by this Agreement, constitute and contain the entire agreement of the Company and the Note Holder and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof. To the extent that there is any conflict between the terms in this Agreement and terms in the Original Note or the NPA, the terms in this Agreement shall control the rights and obligations of the Parties.
3.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to conflicts of law rules.
4.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.
[Signature page follows.]
2


IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written.
COMPANY:
ALPINE 4 HOLDINGS, INC.
a Delaware corporation
By:/s/ Jeffrey Hail
Name:Jeffrey Hail
Its:Chief Operating Officer
Date:August 1, 2023
NOTE HOLDER:
By:/s/ Kent Wilson
Name:Kent Wilson
Date:08-01-2023
ORIGINAL AND REVISED NOTE TERMS
Original Loan Amount:$10,000
Original Term Interest Rate:15%
Original Maturity Date:August 10, 2023
Final Maturity Amount:$11,500
Payout Amount (if applicable):$NONE
New Maturity Date:February 5, 2024
New Term Interest Rate:15%
New Repayment Amount:$13,225
3

Exhibit 21
SUBSIDIARIES OF THE COMPANY

A4 Corporate Services, LLC – Delaware limited liability company
ALTIA, LLC – Arizona limited liability company
Quality Circuit Assembly, Inc. – California corporation
Morris Sheet Metal, Corp. – Indiana corporation
JTD Spiral, Inc. – Indiana corporation
Excel Construction Services, LLC – Idaho limited liability company
SPECTRUMebos, Inc. – Delaware corporation
Vayu Aerospace Corp. – Delaware corporation
Thermal Dynamics International, Inc. – Florida corporation
Alternative Laboratories, LLC. – Delaware limited liability company
Identified Technologies, Corp. – Delaware corporation
ElecJet Corp. – Delaware corporation
DTI Services LLC (doing business as RCA Commercial Electronics ("RCA")) – Indiana limited liability company
Global Autonomous Corp. ("GAC") – Delaware corporation

Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the inclusion in this Registration Statement on Form S-1 of our report dated April 13, 2022, except for the restatement discussed in Note 1 as to which the date is March 16, 2023, with respect to the audited consolidated financial statements of Alpine 4 Holdings, Inc. for the year ended December 31, 2021.
We also consent to the references to us under the heading “Experts” in such Registration Statement.
/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
August 4, 2023

Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the use in this Registration Statement on Form S-1 of Alpine 4 Holding, Inc. of our report dated May 5, 2023, relating to the consolidated financial statements of Alpine 4 Holdings, Inc., appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to our firm under the heading “Experts” in such Prospectus.
/s/ RSM US LLP
Phoenix, Arizona
August 4, 2023
1

v3.23.2
Cover
6 Months Ended
Jun. 30, 2023
Cover [Abstract]  
Entity Registrant Name ALPINE 4 HOLDINGS, INC.
Entity Incorporation, State or Country Code DE
Entity Tax Identification Number 46-5482689
Entity Address, Address Line One 2525 E Arizona Biltmore Circle
Entity Address, Address Line Two Suite 237
Entity Address, City or Town Phoenix
Entity Address, State or Province AZ
Entity Address, Postal Zip Code 85016
City Area Code 480
Local Phone Number 702-2431
Document Type S-1
Entity Central Index Key 0001606698
Amendment Flag false
Entity Filer Category Non-accelerated Filer
Document Fiscal Year Focus 2023
Document Fiscal Period Focus Q2
Entity Small Business true
Entity Emerging Growth Company true
Entity Ex Transition Period false

v3.23.2
CONSOLIDATED BALANCE SHEETS- 10K - USD ($)
Dec. 31, 2022
Dec. 31, 2021
CURRENT ASSETS:    
Cash $ 2,673,541 $ 3,715,666
Accounts receivable, net 17,139,944 11,875,176
Contract assets 1,402,788 877,904
Inventory 25,258,369 24,419,654
Prepaid expenses and other current assets 2,428,223 1,955,907
Total current assets 48,902,865 42,844,307
Property and equipment, net 19,503,485 28,101,471
Intangible assets, net 36,282,609 39,180,664
Right of use assets, net 16,407,566 1,460,206
Goodwill 22,680,084 22,680,084
Other non-current assets 1,855,605 357,118
TOTAL ASSETS 145,632,214 134,623,850
CURRENT LIABILITIES:    
Accounts payable 8,608,554 7,744,957
Accrued expenses 6,749,890 5,074,006
Contract liabilities 5,284,285 6,359,449
Notes payable, current portion 3,201,136 5,690,524
Line of credit, current portion 7,426,814 4,473,489
Financing lease obligation, current portion 725,302 649,343
Operating lease obligation, current portion 1,318,885 428,596
Total current liabilities 33,314,866 30,420,364
Notes payable, net of current portion 4,266,350 8,426,105
Line of credit, net of current portion 7,215,520 5,640,051
Financing lease obligations, net of current portion 14,592,813 15,319,467
Operating lease obligations, net of current portion 15,262,494 1,066,562
Series C and Series D preferred stock subject to redemption 0 400,092
Deferred tax liability 988,150 1,861,165
TOTAL LIABILITIES 75,640,193 63,133,806
Commitment and contingencies (Note 7)  
STOCKHOLDERS' EQUITY (DEFICIT):    
Additional paid-in capital 141,723,921 130,348,267
Accumulated deficit (71,734,395)  
Total stockholders equity 69,992,021 71,491,476
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 145,632,214 134,623,850
Previously Reported    
STOCKHOLDERS' EQUITY (DEFICIT):    
Accumulated deficit (71,751,827) (58,876,514)
Total stockholders equity 69,992,021 71,490,044
Series B Preferred Stock    
STOCKHOLDERS' EQUITY (DEFICIT):    
Preferred stock 5 5
Class A Common Stock    
STOCKHOLDERS' EQUITY (DEFICIT):    
Common Stock $ 2,230  
Common stock, par value (in dollars per share) $ 0.0001  
Common stock, shares authorized (in shares) 200,000,000  
Common stock, shares issued (in shares) 22,303,333  
Common stock, shares outstanding (in shares) 22,303,333  
Class A Common Stock | Previously Reported    
STOCKHOLDERS' EQUITY (DEFICIT):    
Common Stock $ 17,844 $ 16,182
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, shares authorized (in shares) 295,000,000 295,000,000
Common stock, shares issued (in shares)   161,798,817
Common stock, shares outstanding (in shares)   161,798,817
Class B Common Stock    
STOCKHOLDERS' EQUITY (DEFICIT):    
Common Stock $ 107  
Common stock, par value (in dollars per share) $ 0.0001  
Common stock, shares authorized (in shares) 10,000,000  
Common stock, shares issued (in shares) 1,068,512  
Common stock, shares outstanding (in shares) 1,068,512  
Class B Common Stock | Previously Reported    
STOCKHOLDERS' EQUITY (DEFICIT):    
Common Stock $ 854 $ 854
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, shares authorized (in shares) 10,000,000 10,000,000
Common stock, shares issued (in shares) 8,548,088 8,548,088
Common stock, shares outstanding (in shares) 8,548,088 8,548,088
Class C Common Stock    
STOCKHOLDERS' EQUITY (DEFICIT):    
Common Stock $ 153  
Common stock, par value (in dollars per share) $ 0.0001  
Common stock, shares authorized (in shares) 15,000,000  
Common stock, shares issued (in shares) 1,529,888  
Common stock, shares outstanding (in shares) 1,529,888  
Class C Common Stock | Previously Reported    
STOCKHOLDERS' EQUITY (DEFICIT):    
Common Stock $ 1,224 $ 1,250
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, shares authorized (in shares) 15,000,000 15,000,000
Common stock, shares issued (in shares)   12,500,200
Common stock, shares outstanding (in shares)   12,500,200

v3.23.2
CONSOLIDATED BALANCE SHEETS - 10K (Parenthetical) - $ / shares
May 12, 2023
May 11, 2023
Mar. 31, 2023
Dec. 31, 2022
Jan. 31, 2022
Jan. 30, 2022
Dec. 31, 2021
Preferred stock, par value (in dollars per share)     $ 0.0001 $ 0.0001     $ 0.0001
Preferred stock, shares authorized (in shares)     5,000,000 5,000,000     5,000,000
Preferred stock, shares issued (in shares)       5,000,000      
Series B Preferred Stock              
Preferred stock, par value (in dollars per share)     $ 1.00 $ 1.00     $ 1.00
Preferred stock, shares authorized (in shares)     100 100     100
Preferred stock, shares issued (in shares)     4 5     5
Preferred stock, shares outstanding (in shares)     4 5     5
Class A Common Stock              
Common stock, par value (in dollars per share)     $ 0.0001 $ 0.0001      
Common stock, shares authorized (in shares) 200,000,000 295,000,000 200,000,000 200,000,000 295,000,000 195,000,000  
Common stock, shares issued (in shares) 22,504,669 180,037,350 22,304,761 22,303,333      
Common stock, shares outstanding (in shares) 22,504,669 180,037,350 22,304,761 22,303,333      
Class B Common Stock              
Common stock, par value (in dollars per share)     $ 0.0001 $ 0.0001      
Common stock, shares authorized (in shares)     10,000,000 10,000,000      
Common stock, shares issued (in shares)     1,068,512 1,068,512      
Common stock, shares outstanding (in shares)     1,068,512 1,068,512      
Class C Common Stock              
Common stock, par value (in dollars per share)     $ 0.0001 $ 0.0001      
Common stock, shares authorized (in shares)     15,000,000 15,000,000      
Common stock, shares issued (in shares)     1,528,460 1,529,888      
Common stock, shares outstanding (in shares)     1,528,460 1,529,888      

v3.23.2
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Income Statement [Abstract]    
Revenues, net $ 104,563,002 $ 51,640,813
Cost of revenues 82,848,600 43,942,815
Gross profit 21,714,402 7,697,998
Operating expenses:    
General and administrative expenses 37,531,794 27,987,920
Research and development 876,542 1,464,918
Impairment loss of intangible asset and goodwill 0 367,519
Gain on sale of property (5,938,150) 0
Total operating expenses 32,470,186 29,820,357
Loss from operations (10,755,784) (22,122,359)
Other income (expenses)    
Interest expense (3,124,132) (3,289,233)
Gain on extinguishment of debt 0 803,079
Gain on forgiveness of debt 0 3,896,108
Impairment loss on equity investment 0 (1,350,000)
Other income 270,609 635,526
Total other income (expenses) (2,853,523) 695,480
Loss before income tax (13,609,307) (21,426,879)
Income tax (733,994) (1,943,741)
Net loss $ (12,875,313) $ (19,483,138)
Weighted average shares outstanding:    
Basic (in shares) 190,779,052 164,216,808
Diluted (in shares) 190,779,052 164,216,808
Earnings Per Share, Basic [Abstract]    
Basic loss per share (in dollars per share) $ (0.07) $ (0.12)
Earnings Per Share, Diluted [Abstract]    
Diluted loss per share (in dollars per share) $ (0.07) $ (0.12)

v3.23.2
CONSOLIDATED STATEMENTS CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($)
Total
Previously Reported
Conversion of Class C to Class A
Conversion of Class C to Class A
Previously Reported
Conversion of Class B to Class A
Conversion of series D preferred stock to Class A
Conversion of series D preferred stock to Class A
Previously Reported
Conversion of series C preferred stock to Class A
Conversion of series C preferred stock to Class A
Previously Reported
Additional Paid-in Capital
Additional Paid-in Capital
Previously Reported
Additional Paid-in Capital
Conversion of series D preferred stock to Class A
Additional Paid-in Capital
Conversion of series D preferred stock to Class A
Previously Reported
Additional Paid-in Capital
Conversion of series C preferred stock to Class A
Additional Paid-in Capital
Conversion of series C preferred stock to Class A
Previously Reported
Accumulated Deficit
Accumulated Deficit
Previously Reported
Series B Preferred Stock
Series B Preferred Stock
Preferred Stock
Series B Preferred Stock
Preferred Stock
Previously Reported
Series C Preferred Stock
Series C Preferred Stock
Preferred Stock
Series C Preferred Stock
Preferred Stock
Previously Reported
Series D Preferred Stock
Preferred Stock
Series D Preferred Stock
Preferred Stock
Previously Reported
Class A Common Stock
Class A Common Stock
Previously Reported
Class A Common Stock
Common Stock
Class A Common Stock
Common Stock
Previously Reported
Class A Common Stock
Common Stock
Conversion of Class C to Class A
Class A Common Stock
Common Stock
Conversion of Class C to Class A
Previously Reported
Class A Common Stock
Common Stock
Conversion of Class B to Class A
Class A Common Stock
Common Stock
Conversion of series D preferred stock to Class A
Class A Common Stock
Common Stock
Conversion of series D preferred stock to Class A
Previously Reported
Class A Common Stock
Common Stock
Conversion of series C preferred stock to Class A
Class A Common Stock
Common Stock
Conversion of series C preferred stock to Class A
Previously Reported
Class B Common Stock
Class B Common Stock
Previously Reported
Class B Common Stock
Common Stock
Class B Common Stock
Common Stock
Previously Reported
Class B Common Stock
Common Stock
Conversion of Class B to Class A
Class C Common Stock
Class C Common Stock
Previously Reported
Class C Common Stock
Common Stock
Class C Common Stock
Common Stock
Previously Reported
Class C Common Stock
Common Stock
Conversion of Class C to Class A
Class C Common Stock
Common Stock
Conversion of Class C to Class A
Previously Reported
Beginning balance (in shares) at Dec. 31, 2020                                     5     0   0                                              
Beginning balance (in shares) at Dec. 31, 2020                                                       126,363,158                     9,023,088         14,162,267      
Beginning balance at Dec. 31, 2020 $ (14,234,280)                 $ 25,144,136           $ (39,393,376)     $ 5     $ 0   $ 0       $ 12,636                     $ 902         $ 1,417      
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                                                                              
Issuance of shares of common stock for cash (in shares)                                                       18,428,827                                      
Issuance of shares of common stock for cash 76,492,993                 76,491,149                                   $ 1,844                                      
Conversion of convertible securities (in shares)                                                   7,384,018       1,617,067   475,000 1,066,868   1,342,390           (475,000)         (1,617,067)  
Issuance of shares of stock in conversion     $ 0   $ 0 $ 5,194,434   $ 6,361,287   1,886,156   $ 5,194,329   $ 6,361,153                           $ 740   $ 162   $ 48 $ 105   $ 134           $ (48)         $ (162)  
Repurchase of class C common stock (in shares)                                                                                       (45,000)      
Repurchase of class C common stock (185,850)                 (185,845)                                                                   $ (5)      
Issuance of shares of common stock for compensation (in shares)                                                       199,018                                      
Issuance of shares of common stock for compensation 261,525                 261,504                                   $ 21                                      
Issuance of shares for acquisition (in shares)                                                       4,922,471                                      
Issuance of shares for acquisition 15,067,211                 15,066,719                                   $ 492                                      
Share-based compensation expense 36,538                 36,538                                                                          
Beneficial conversion feature on convertible notes 92,428                 92,428                                                                          
Net loss (19,483,138)                             (19,483,138)                                                              
Ending balance (in shares) at Dec. 31, 2021                                   5 5 5 10,149   0   0                                            
Ending balance (in shares) at Dec. 31, 2021                                                     161,798,817 20,224,938 161,798,817                 8,548,088 1,068,512 8,548,088     12,500,200 1,562,635 12,500,200    
Ending balance at Dec. 31, 2021 71,491,476 $ 71,490,044               130,348,267 $ 130,348,267         (58,859,082) $ (58,876,514)   $ 5 $ 5     $ 0   $ 0     $ 2,022 $ 16,182                   $ 107 $ 854       $ 156 $ 1,250    
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                                                                              
Conversion of convertible securities (in shares)                                                                 7,989   1,031                        
Issuance of shares of stock in conversion           $ 365,464   $ 34,622       $ 365,463   $ 34,622                                     $ 1                            
Issuance of shares of common stock for compensation (in shares)                                                       4,924                                      
Issuance of shares of common stock for compensation 99,248                 99,248                                                                          
Net loss (3,999,560)                             (3,999,560)                                                              
Ending balance (in shares) at Mar. 31, 2022                                     5                                                        
Ending balance (in shares) at Mar. 31, 2022                                                       20,238,882                     1,068,512         1,562,635      
Ending balance at Mar. 31, 2022 68,084,447                 130,940,797           (62,858,642)     $ 5                 $ 2,023                     $ 107         $ 156      
Beginning balance (in shares) at Dec. 31, 2021                                   5 5 5 10,149   0   0                                            
Beginning balance (in shares) at Dec. 31, 2021                                                     161,798,817 20,224,938 161,798,817                 8,548,088 1,068,512 8,548,088     12,500,200 1,562,635 12,500,200    
Beginning balance at Dec. 31, 2021 71,491,476 71,490,044               130,348,267 130,348,267         (58,859,082) (58,876,514)   $ 5 $ 5     $ 0   $ 0     $ 2,022 $ 16,182                   $ 107 $ 854       $ 156 $ 1,250    
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                                                                              
Issuance of shares of common stock for cash (in shares)                                                         14,492,754                                    
Issuance of shares of common stock for cash   9,175,000                 9,173,552                                   $ 1,448                                    
Conversion of convertible securities (in shares)                                                       7,384,018     224,468     63,907   8,245                     (224,468)
Issuance of shares of stock in conversion 1,886,896     $ 0     $ 365,470   $ 34,622       $ 365,463   $ 34,622                               $ 22     $ 7                         $ (22)
Issuance of shares of common stock for compensation (in shares)                                                         211,236                                    
Issuance of shares of common stock for compensation   231,577                 231,555                                   $ 22                                    
Exchange of shares of common stock for compensation (in shares)                                                         37,500                               (37,500)    
Exchange of shares of common stock for compensation   0                                                     $ 4                               $ (4)    
Issuance of shares for services (in shares)                                                         1,589,005                                    
Issuance of shares for services   1,097,462                 1,097,303                                   $ 159                                    
Share-based compensation expense   473,159                 473,159                                                                        
Net loss (12,875,313) (12,875,313)                             (12,875,313)                                                            
Ending balance (in shares) at Dec. 31, 2022                                   5 5 5 0   0   0                                            
Ending balance (in shares) at Dec. 31, 2022                                                   22,303,333   22,303,333 178,425,932               1,068,512 8,548,088 1,068,512 8,548,088   1,529,888   1,529,888 12,238,232    
Ending balance at Dec. 31, 2022 69,992,021 $ 69,992,021               141,723,921 $ 141,723,921         (71,734,395) $ (71,751,827)   $ 5 $ 5     $ 0   $ 0     $ 2,230 $ 17,844                   $ 107 $ 854       $ 153 $ 1,224    
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                                                                              
Conversion of convertible securities (in shares)                                                       1,428                               (1,428)      
Net loss (5,769,143)                             (5,769,143)                                                              
Ending balance (in shares) at Mar. 31, 2023                                   4 4                                                        
Ending balance (in shares) at Mar. 31, 2023                                                   22,304,761   22,304,761                 1,068,512   1,068,512     1,528,460   1,528,460      
Ending balance at Mar. 31, 2023 $ 64,405,467                 $ 141,906,511           $ (77,503,538)     $ 4                 $ 2,230                     $ 107         $ 153      

v3.23.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
OPERATING ACTIVITIES:    
Net loss $ (12,875,313) $ (19,483,138)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation 3,026,483 2,396,966
Amortization 3,148,055 1,757,393
Gain on extinguishment of debt 0 (803,079)
Gain on forgiveness of debt 0 (3,896,108)
Amortization of preferred stock fair value 0 (545,509)
Income tax benefit (733,994) (1,943,741)
Gain on sale of property (5,938,150) 0
Bad debt expense 202,761 3,028,757
Employee stock compensation 704,736 298,063
Amortization of debt discounts 0 1,436,052
Operating lease expense 1,006,683 412,898
Impairment loss on equity investment 0 1,350,000
Impairment loss of intangible asset and goodwill 0 367,519
Write off of inventory 691,061 237,192
Change in current assets and liabilities:    
Accounts receivable (5,467,529) (4,235,353)
Inventory (1,529,776) (6,795,719)
Contract assets (524,884) (160,483)
Prepaid expenses and other assets (1,970,803) (87,950)
Accounts payable 724,576 725,596
Accrued expenses 1,675,884 614,399
Contract liabilities (1,075,164) 332,032
Operating lease liability (642,822) (429,529)
Net cash used in operating activities (19,578,196) (25,423,742)
INVESTING ACTIVITIES:    
Capital expenditures (1,067,157) (3,571,253)
Proceeds from sale of asset 140,710 0
Proceeds from sale of building 12,454,943 0
Cash paid in international technology agreement (250,000) 0
Cash paid for acquisitions 0 (37,324,035)
Cash paid for equity investment 0 (350,000)
Cash assumed in acquisition 0 81,442
Net cash used in investing activities 11,278,496 (41,163,846)
FINANCING ACTIVITIES:    
Proceeds from the sale of common stock 11,097,462 76,492,993
Proceeds from issuances of notes payable, non-related party 500,000 16,078
Proceeds from issuances of convertible notes payable 0 408,000
Net proceeds from lines of credit 4,795,213 2,575,552
Cash paid for debt issuance costs (266,419) 0
Cash paid for equity issuance costs (825,000) 0
Repurchase of common stock 0 (185,850)
Repayment of mortgage (4,642,043) 0
Repayments of notes payable, related party 0 (238,651)
Repayments of notes payable, non-related parties (2,750,943) (7,161,807)
Repayments of convertible notes payable 0 (1,688,464)
Cash paid on financing lease obligations (650,695) (637,180)
Net cash provided by financing activities 7,257,575 69,580,671
CASH , BEGINNING BALANCE 3,715,666 722,583
CASH, ENDING BALANCE 2,673,541 3,715,666
NET INCREASE (DECREASE) IN CASH (1,042,125) 2,993,083
CASH PAID FOR:    
Interest 2,231,600 1,973,818
Income taxes 0 54,058
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:    
Common stock issued for convertible note payable and accrued interest 0 1,886,896
ROU asset and operating lease obligation recognized under Topic 842 15,729,043 95,029
Equipment purchased on financing lease 243,843 0
Beneficial conversion feature on convertible notes 0 92,428
Common stock issued for acquisition 0 15,067,211
Remeasurement of finance lease liability 0 279,287
Mortgage on property purchase 0 4,680,000
Accounts receivable converted to equity investment 0 1,000,000
Issuance of shares of series D preferred stock for acquisition 0 6,653,309
Notes payable issued to the Sellers for the purchase of DTI 0 2,000,000
Conversion of series D preferred stock to Class A    
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:    
Conversion of stock 0 136
Conversion of series C preferred stock to Class A    
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:    
Conversion of stock $ 0 $ 171

v3.23.2
CONSOLIDATED BALANCE SHEETS - 10Q - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
CURRENT ASSETS:      
Cash $ 475,300 $ 2,673,541  
Accounts receivable, net 15,540,528 17,139,944 $ 11,875,176
Inventory 25,262,659 25,258,369 24,419,654
Contract assets 1,835,432 1,402,788 877,904
Prepaid expenses and other current assets 2,449,395 2,428,223 1,955,907
Total current assets 45,563,314 48,902,865 42,844,307
Property and equipment, net 20,265,637 19,503,485 28,101,471
Intangible assets, net 35,494,596 36,282,609 39,180,664
Right of use assets, net 15,949,731 16,407,566 1,460,206
Goodwill 22,680,084 22,680,084 22,680,084
Other non-current assets 1,991,363 1,855,605 357,118
TOTAL ASSETS 141,944,725 145,632,214 134,623,850
CURRENT LIABILITIES:      
Accounts payable 11,830,582 8,608,554 7,744,957
Accrued expenses 6,256,263 6,749,890 5,074,006
Contract liabilities 5,700,142 5,284,285 6,359,449
Line of credit, current portion 8,970,460 7,426,814 4,473,489
Notes payable, current portion 5,998,347 3,201,136 5,690,524
Notes payable, related party 535,000 0  
Financing lease obligation, current portion 743,157 725,302 649,343
Operating lease obligation, current portion 1,484,846 1,318,885 428,596
Total current liabilities 41,518,797 33,314,866 30,420,364
Notes payable, net of current portion 2,229,684 4,266,350 8,426,105
Line of credit, net of current portion 3,928,105 7,215,520 5,640,051
Financing lease obligations, net of current portion 14,395,926 14,592,813 15,319,467
Operating lease obligations, net of current portion 14,841,129 15,262,494 1,066,562
Deferred tax liability 625,617 988,150 1,861,165
TOTAL LIABILITIES 77,539,258 75,640,193 63,133,806
Commitment and contingencies (Note 7)  
STOCKHOLDERS' EQUITY (DEFICIT):      
Additional paid-in capital 141,906,511 141,723,921 130,348,267
Accumulated deficit (77,503,538) (71,734,395)  
Total stockholders equity 64,405,467 69,992,021 71,491,476
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 141,944,725 145,632,214 134,623,850
Series B Preferred Stock      
STOCKHOLDERS' EQUITY (DEFICIT):      
Preferred stock 4 5 $ 5
Class A Common Stock      
STOCKHOLDERS' EQUITY (DEFICIT):      
Common stock 2,230 2,230  
Class B Common Stock      
STOCKHOLDERS' EQUITY (DEFICIT):      
Common stock 107 107  
Class C Common Stock      
STOCKHOLDERS' EQUITY (DEFICIT):      
Common stock $ 153 $ 153  

v3.23.2
CONSOLIDATED BALANCE SHEETS - 10Q (Parenthetical) - $ / shares
May 12, 2023
May 11, 2023
Mar. 31, 2023
Dec. 31, 2022
Jan. 31, 2022
Jan. 30, 2022
Dec. 31, 2021
Preferred stock, par value (in dollars per share)     $ 0.0001 $ 0.0001     $ 0.0001
Preferred stock, shares authorized (in shares)     5,000,000 5,000,000     5,000,000
Preferred stock, shares issued (in shares)       5,000,000      
Series B Preferred Stock              
Preferred stock, par value (in dollars per share)     $ 1.00 $ 1.00     $ 1.00
Preferred stock, shares authorized (in shares)     100 100     100
Preferred stock, shares issued (in shares)     4 5     5
Preferred stock, shares outstanding (in shares)     4 5     5
Class A Common Stock              
Common stock, par value (in dollars per share)     $ 0.0001 $ 0.0001      
Common stock, shares authorized (in shares) 200,000,000 295,000,000 200,000,000 200,000,000 295,000,000 195,000,000  
Common stock, shares issued (in shares) 22,504,669 180,037,350 22,304,761 22,303,333      
Common stock, shares outstanding (in shares) 22,504,669 180,037,350 22,304,761 22,303,333      
Class B Common Stock              
Common stock, par value (in dollars per share)     $ 0.0001 $ 0.0001      
Common stock, shares authorized (in shares)     10,000,000 10,000,000      
Common stock, shares issued (in shares)     1,068,512 1,068,512      
Common stock, shares outstanding (in shares)     1,068,512 1,068,512      
Class C Common Stock              
Common stock, par value (in dollars per share)     $ 0.0001 $ 0.0001      
Common stock, shares authorized (in shares)     15,000,000 15,000,000      
Common stock, shares issued (in shares)     1,528,460 1,529,888      
Common stock, shares outstanding (in shares)     1,528,460 1,529,888      

v3.23.2
CONSOLIDATED STATEMENTS OF OPERATIONS - 10Q - USD ($)
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Income Statement [Abstract]    
Revenues, net $ 24,361,713 $ 25,592,154
Cost of revenues 19,145,257 19,954,697
Gross profit 5,216,456 5,637,457
Operating expenses:    
General and administrative expenses 10,243,023 9,201,682
Research and development 113,906 191,930
Total operating expenses 10,356,929 9,393,612
Loss from operations (5,140,473) (3,756,155)
Other income (expenses)    
Interest expense (998,870) (608,961)
Other income 43,200 32,719
Total other income (expenses) (955,670) (576,242)
Loss before income tax (6,096,143) (4,332,397)
Income tax (327,000) (332,837)
Net loss $ (5,769,143) $ (3,999,560)
Weighted average shares outstanding:    
Basic (in shares) 24,901,733 22,879,056
Diluted (in shares) 24,901,733 22,879,056
Earnings Per Share, Basic [Abstract]    
Basic loss per share (in dollars per share) $ (0.23) $ (0.17)
Earnings Per Share, Diluted [Abstract]    
Diluted loss per share (in dollars per share) $ (0.23) $ (0.17)

v3.23.2
CONSOLIDATED STATEMENTS CHANGES IN STOCKHOLDER'S EQUITY - 10Q - USD ($)
Total
Conversion of series D preferred stock to Class A
Conversion of series C preferred stock to Class A
Additional Paid-in Capital
Additional Paid-in Capital
Conversion of series D preferred stock to Class A
Additional Paid-in Capital
Conversion of series C preferred stock to Class A
Accumulated Deficit
Series B Preferred Stock
Series B Preferred Stock
Preferred Stock
Class A Common Stock
Class A Common Stock
Common Stock
Class A Common Stock
Common Stock
Conversion of series D preferred stock to Class A
Class A Common Stock
Common Stock
Conversion of series C preferred stock to Class A
Class B Common Stock
Class B Common Stock
Common Stock
Class C Common Stock
Class C Common Stock
Common Stock
Beginning balance (in shares) at Dec. 31, 2020                 5                
Beginning balance (in shares) at Dec. 31, 2020                     126,363,158       9,023,088   14,162,267
Beginning balance at Dec. 31, 2020 $ (14,234,280)     $ 25,144,136     $ (39,393,376)   $ 5   $ 12,636       $ 902   $ 1,417
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Conversion of convertible securities (in shares)                   7,384,018   1,066,868 1,342,390        
Conversion of convertible securities   $ 5,194,434 $ 6,361,287 1,886,156 $ 5,194,329 $ 6,361,153         $ 740 $ 105 $ 134        
Issuance of shares of common stock for compensation (in shares)                     199,018            
Issuance of shares of common stock for compensation 261,525     261,504             $ 21            
Net loss (19,483,138)           (19,483,138)                    
Ending balance (in shares) at Dec. 31, 2021               5 5                
Ending balance at Dec. 31, 2021 71,491,476     130,348,267     (58,859,082)   $ 5   $ 2,022       $ 107   $ 156
Ending balance (in shares) at Dec. 31, 2021                     20,224,938       1,068,512   1,562,635
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Conversion of convertible securities (in shares)                       7,989 1,031        
Conversion of convertible securities   $ 365,464 $ 34,622   $ 365,463 $ 34,622           $ 1          
Issuance of shares of common stock for compensation (in shares)                     4,924            
Issuance of shares of common stock for compensation 99,248     99,248                          
Share-based compensation expense 93,197     93,197                          
Net loss (3,999,560)           (3,999,560)                    
Ending balance (in shares) at Mar. 31, 2022                 5                
Ending balance at Mar. 31, 2022 68,084,447     130,940,797     (62,858,642)   $ 5   $ 2,023       $ 107   $ 156
Ending balance (in shares) at Mar. 31, 2022                     20,238,882       1,068,512   1,562,635
Beginning balance (in shares) at Dec. 31, 2021               5 5                
Beginning balance (in shares) at Dec. 31, 2021                     20,224,938       1,068,512   1,562,635
Beginning balance at Dec. 31, 2021 71,491,476     130,348,267     (58,859,082)   $ 5   $ 2,022       $ 107   $ 156
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Conversion of convertible securities (in shares)                     7,384,018            
Conversion of convertible securities 1,886,896                                
Net loss (12,875,313)                                
Ending balance (in shares) at Dec. 31, 2022               5 5                
Ending balance at Dec. 31, 2022 69,992,021     141,723,921     (71,734,395)   $ 5   $ 2,230       $ 107   $ 153
Ending balance (in shares) at Dec. 31, 2022                   22,303,333 22,303,333     1,068,512 1,068,512 1,529,888 1,529,888
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Conversion of convertible securities (in shares)                     1,428           (1,428)
Series B Preferred Share removal (in shares)                 (1)                
Series B Preferred Share removal 0     1         $ (1)                
Share-based compensation expense 182,589     182,589                          
Net loss (5,769,143)           (5,769,143)                    
Ending balance (in shares) at Mar. 31, 2023               4 4                
Ending balance at Mar. 31, 2023 $ 64,405,467     $ 141,906,511     $ (77,503,538)   $ 4   $ 2,230       $ 107   $ 153
Ending balance (in shares) at Mar. 31, 2023                   22,304,761 22,304,761     1,068,512 1,068,512 1,528,460 1,528,460

v3.23.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - 10Q - USD ($)
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
OPERATING ACTIVITIES:    
Net loss $ (5,769,143) $ (3,999,560)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation 739,771 733,459
Amortization 788,013 736,205
Employee stock compensation 182,589 192,449
Income tax benefit (362,533) (332,837)
Amortization of debt discounts 36,820 0
Non-cash lease expense 457,835 105,281
Write off of inventory 46,054 66,789
Bad debt expense 134,306 113,727
Change in current assets and liabilities:    
Accounts receivable 1,465,110 (1,855,245)
Inventory (50,344) 1,760,757
Contract assets (432,644) (329,702)
Prepaid expenses and other assets (156,930) (881,906)
Accounts payable 3,222,028 (397,124)
Accrued expenses (493,627) (29,364)
Contract liabilities 415,857 (1,680,316)
Operating lease liability (255,404) (103,375)
Net cash used in operating activities (32,242) (5,900,762)
INVESTING ACTIVITIES:    
Capital expenditures (1,501,923) (363,053)
Net cash used in investing activities (1,501,923) (363,053)
FINANCING ACTIVITIES:    
Proceeds from issuances of notes payable, non-related party 850,145 0
Proceeds from issuances of convertible notes payable 535,000 0
Net proceeds/(repayments) from line of credit (1,780,589) 3,816,742
Repayments of notes payable, non-related parties (89,600) (210,194)
Cash paid on financing lease obligations (179,032) (157,585)
Net cash provided by financing activities (664,076) 3,448,963
NET INCREASE (DECREASE) IN CASH (2,198,241) (2,814,852)
CASH , BEGINNING BALANCE 2,673,541 3,715,666
CASH, ENDING BALANCE 475,300 900,814
CASH PAID FOR:    
Interest 998,870 579,793
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:    
Equipment purchased on note payable 0 182,586
Series B Preferred Share Removal 1 0
Conversion of Series D preferred stock for common stock $ 0 $ 400,092

v3.23.2
Restatement of Consolidated Financial Statements
6 Months Ended
Jun. 30, 2023
Accounting Changes and Error Corrections [Abstract]  
Restatement of Consolidated Financial Statements Restatement of Consolidated Financial StatementsAs more fully discussed in the Form 10-K/A filed on March 17, 2023, the Company restated its consolidated financial statements as of December 31, 2021 and 2020, and for the years then ended to correct errors related to purchase accounting impacting income taxes related to the deferred tax liabilities for certain acquisitions the Company made in 2020 and 2021, the classification of the Series C and Series D preferred shares issued in connection with these acquisitions, errors in the valuation of certain assets acquired for one of the acquisitions in 2021, and errors in the recording of forgiveness of PPP loans that were assumed as part of certain acquisitions in 2020 and 2021.

v3.23.2
Organization and Basis of Presentation
6 Months Ended
Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Basis of Presentation Organization and Basis of Presentation
Alpine 4 Holdings, Inc. (together with its subsidiaries, the “Company,” “we,” or “our”), 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. On March 2, 2021, the Company changed its name from Alpine 4 Technologies Ltd. to Alpine 4 Holdings, Inc.
Effective April 1, 2016, the Company purchased all of the outstanding capital stock of Quality Circuit Assembly, Inc., a California corporation (“QCA”).
Effective January 1, 2019, the Company purchased all of the outstanding capital stock of Morris Sheet Metal Corp., an Indiana corporation (“MSM”), 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” or “MSM”).
Effective November 6, 2019, the Company purchased all of the outstanding capital stock and units of Deluxe Sheet Metal, Inc., an Indiana corporation, and DSM Holding, LLC, an Indiana limited liability company, and purchased certain real estate from Lonewolf Enterprises, LLC, an Indiana limited liability company (collectively “Deluxe”).
Effective February 21, 2020, the Company purchased all of the outstanding units of Excel Fabrication, LLC., an Idaho limited liability company (“Excel”).
Effective December 15, 2020, the Company purchased the assets of Impossible Aerospace Corporation, a Delaware corporation (“IA”).
Effective February 8, 2021, the Company purchased the assets of Vayu (US), Inc., a Delaware corporation (“Vayu”).
On May 5, 2021, the Company acquired all of the outstanding shares of stock of Thermal Dynamics, Inc., a Delaware corporation (“TDI”).
On May 10, 2021, the Company acquired all of the outstanding membership interests of KAI Enterprises, LLC, a Florida limited liability company, the sole asset of which was all of the outstanding membership interests of Alternative Laboratories, LLC, a Delaware limited liability company (“Alt Labs”).
On October 20, 2021, the Company acquired 100% of the outstanding shares of Identified Technologies Corporation, a Delaware corporation (“Identified Technologies”).
On November 29, 2021, the Company, and a newly formed and wholly owned subsidiary of the Company named ALPP Acquisition Corporation 3, Inc. (“AC3”), entered into a merger agreement with ElecJet Corp., (“ElecJet”) and the three ElecJet shareholders. Pursuant to the agreement, AC3 merged with and into ElecJet with ElecJet being the surviving entity following the merger.
On December 9, 2021, the Company, and A4 Technologies, Inc., a wholly owned subsidiary of the Company (“A4 Technologies”), entered into a Membership Interest Purchase Agreement with DTI Services Limited Liability Company (doing business as RCA Commercial Electronics), (“DTI”), Direct Tech Sales LLC, (also having an assumed business name of RCA Commercial Electronics), (“Direct Tech”), PMI Group, LLC, (“PMI”), Continu.Us, LLC, (“Continu.Us”), Solas Ray, LLC, (“Solas”), and the individual owners of the interests of the various entities. DTI, Direct Tech, PMI, Continu.Us, and Solas were each referred to in the Membership Interest Purchase Agreement collectively as “RCA.” Pursuant to the MIPA, the Company acquired all of the outstanding membership interests of RCA.
In Q1 2022, the Company formed Global Autonomous Corporation (“GAC”) with several key employees and consultants. The Company owns 71.43% of the outstanding shares of stock of GAC, which has remained consistent throughout the year. There was no assignment of assets or other financial activity on the entity during the current year.
As of the date of this Report, the Company was a holding company owning, directly or indirectly, fourteen companies:
A4 Corporate Services, LLC;
ALTIA, LLC;
Quality Circuit Assembly, Inc.;
Morris Sheet Metal, Corp;
JTD Spiral, Inc.;
Excel Construction Services, LLC;
SPECTRUMebos, Inc.;
Vayu (US)
Thermal Dynamics International, Inc.;
Alternative Laboratories, LLC.;
Identified Technologies, Corp.;
ElecJet Corp.;
DTI Services Limited Liability Company (doing business as RCA Commercial Electronics); and
Global Autonomous Corporation,
Basis of presentation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).
Liquidity
The Company’s financial statements are prepared in accordance with U.S. GAAP applicable to a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued.
In accordance with Financial Accounting Standards Board (the “FASB”), Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our
ability to continue as a going concern within one year after the date that the financial statements are issued (further detail in the going concern sub-section below).
As shown in the accompanying consolidated financial statements, the Company has incurred significant recurring losses and negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. While the Company experienced a loss for the year ended December 31, 2022, of $12.9 million, and had a negative cash flow used in operations of $19.6 million, this was an improvement over the same period last year, for the year ended December 31, 2021, when there was a net loss of $19.5 million had a negative cash flow used in operations of $25.4 million.
As of December 31, 2022, the Company has positive working capital of approximately $15.6 million. The Company has also secured bank financing totaling $33.0 million ($33.0 million in Lines of Credit including $0.5 million in capital expenditures lines of credit availability) of which $3.8 million was available and unused at December 31, 2022. There are two lines of credit that are set to mature during 2023. These two line of credits total $8.0 million, of which $7.5 million was used as of December 31, 2022, and are shown as a current liability on the consolidated balance sheet.
The Company plans to continue to generate additional revenue (and improve cash flows from operations) partly from the acquisitions of the six operating companies, which closed in 2021, combined with improved gross profit performance from the existing operating companies. The Company also plans to continue to raise funds through debt financing and the sale of shares through its planned at-the-market offering.
Going Concern
The accompanying financial statements have been prepared on a going concern basis. While the working capital deficiency of prior years has improved, and working capital of the Company is currently positive, continued operating losses causes doubt as to the ability of the Company to continue. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's plan of operations, and its ultimate transition to profitable operations are necessary for the Company to continue. The uncertainty that exists with these factors raises substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
In order to mitigate the risk related to the going concern uncertainty, the Company has a three-fold plan to resolve these risks. First, the operating subsidiaries of QCA, TDI, IDT and RCA plan to expand their revenues and profits yielding increased cash flow in those operating segments. This plan will allow for an increased level of cash flow to the Company. Second, the Company has expanded its credit facilities at the subsidiary level over the past 12 months to allow for greater borrowing accessibility if needed for the expansion of product lines and sales opportunities and plans to extend or refinance any lines of credit coming due over the next 12 months in order to provide additional financing. Finally, operating companies hard hit by the supply-chain related price increases such as MSM, Alt Labs, and Excel Construction have begun to experience an easing in the procurement and cost overruns of limited product supply. This subsequently has added to increased cash flow to those entities and less reliance on the Company to fund those activities. Although this plan is in place to mitigate the risk related to the going concern uncertainty, substantial doubt remains due to uncertainty around the growth projections and lack of control of many of the factors included in the Company’s plan.
Organization and Basis of Presentation
The unaudited consolidated financial statements were prepared by Alpine 4 Holdings, Inc. (‘we,” “our,” or 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 consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on May 5, 2023. The results for the three months ended March 31, 2023, are not necessarily indicative of the results to be expected for the year ending December 31, 2023.
The Company was incorporated under the laws of the State of Delaware in April 2014. We are a publicly traded conglomerate that acquires businesses that fit into our disruptive DSF business model of Drivers, Stabilizers, and Facilitators.
As of the date of this Report, the Company was a holding company owning, directly or indirectly, fourteen companies:
A4 Corporate Services, LLC;
ALTIA, LLC;
Quality Circuit Assembly, Inc. ("QCA");
Morris Sheet Metal, Corporation ("MSM");
JTD Spiral, Inc.;
Excel Construction Services, LLC ("Excel");
SPECTRUMebos, Inc.;
Vayu Aerospace Corporation;
Thermal Dynamics International, Inc. ("TDI");
Alternative Laboratories, LLC. ("Alt Labs");
Identified Technologies, Corporation ("IDT");
ElecJet Corporation.;
DTI Services LLC (doing business as RCA Commercial Electronics ("RCA")); and
Global Autonomous Corporation ("GAC").
In February 2023, the Company made a $0.3 million investment for a 10% equity interest in a battery materials company, which includes a seat on its board of directors, and participation rights in future funding rounds. The investment is accounted for as an equity method investment as the board representation allows us to have significant influence over the operating and financial policies of the battery materials company. The investment is presented in other non-current assets on the consolidated balance sheet with the value of the investment being adjusted in arrears on a quarterly basis based on its financial performance.
Basis of presentation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).
Liquidity
The Company’s financial statements are prepared in accordance with U.S. GAAP applicable to a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued. In accordance with Financial Accounting Standards Board (the “FASB”), Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued (further detail in the Going Concern sub-section below).
As shown in the accompanying consolidated financial statements, the Company has incurred significant recurring losses and negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Although the Company has experienced net losses of $5.8 million and $4.0 million for the three months ended March 31, 2023 and 2022, respectively, net cash flows used in operations has improved to nearly breakeven for the three months ended March 31, 2023, from $5.9 million for the three months ended March 31, 2022.
As of March 31, 2023, the Company had positive working capital of approximately $4.0 million, which was a decrease of $11.5 million compared to December 31, 2022. The Company has bank financing totaling $33.0 million ($33.0 million in lines of credit including $0.1 million in capital expenditures lines of credit availability) of which approximately $3.8 million was available and unused as of March 31, 2023. There are three lines of credit that are set to mature during the next twelve months. These three lines of credits total $11.7 million, of which $9.0 million was used as of March 31, 2023, and are shown as a Current Liability on the Consolidated Balance Sheet.
The Company plans to continue to generate additional revenue, improve cash flows from operations, and improve gross profit performance across all of its subsidiaries. The Company also may raise funds through debt financing, securing additional lines of credit, and the sale of shares in public or private offerings.
Going Concern
The accompanying financial statements have been prepared on a going concern basis. While the working capital deficiency of prior years has improved, and working capital of the Company is currently positive, continued operating losses causes doubt as to the ability of the Company to continue. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's plan of operations, and its ultimate transition to profitable operations are necessary for the Company to continue. The uncertainty that exists with these factors raises substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
In order to mitigate the risk related to the going concern uncertainty, the Company has a three-fold plan to resolve these risks. First, the operating subsidiaries of QCA, QCA-C, IDT, TDI, and RCA plan to expand their revenues and profits yielding increased cash flow in those operating segments. This plan will allow for an increased level of cash flow to the Company. Second, the Company has expanded its credit facilities at the subsidiary level over the past twelve months to allow for greater borrowing accessibility if needed for the expansion of product lines and sales opportunities and plans to extend or refinance any lines of credit coming due over the next twelve months in order to provide additional financing. Finally, operating companies hard hit by the supply-chain related price increases such as MSM, Alt Labs, and Excel Construction have begun to experience an easing in the procurement and cost overruns of limited product supply. This subsequently has added to increased cash flow to those entities and less reliance on the Company to fund those activities. Although this plan is in place to mitigate the risk related to the going concern uncertainty, substantial doubt remains due to uncertainty around the growth projections and lack of control of many of the factors included in the Company’s plan.
Entity level risks
Our operations and performance may depend on global, regional, economic and geopolitical conditions. Russia’s invasion and military attacks on Ukraine have triggered significant sanctions from North American and European leaders. As of the date of this Report, those events were continuing to escalate and create increasingly volatile global economic conditions. Resulting changes in North American trade policy could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a “trade war.” A trade war could result in increased costs for raw materials that we use in our manufacturing and could otherwise limit our ability to sell our products abroad. These increased costs would have a negative effect on our financial condition and profitability. Furthermore, the military conflict between Russia and Ukraine is increasing supply interruptions and further hindering our ability to find the materials we need to make our products. If the conflict between Russia and Ukraine continues for a long period of time, or if other countries become further involved in the conflict, we could face significant adverse effects to our business and financial condition. The Company is not able to fully quantify the impact that these factors will have on the Company’s financial results during 2023 and beyond.

v3.23.2
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies 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 December 31, 2022 and 2021. Significant intercompany balances and transactions have been eliminated.
Use of estimates
The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable. In many instances, the Company could have reasonably used different accounting estimates and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. This applies in particular to useful lives of long-lived assets, reserves for accounts receivable and inventory, valuation allowance for deferred tax assets, fair values assigned to intangible assets acquired, and impairment of long-lived assets. Actual results could differ significantly from our estimates. To the extent that there are material differences between these estimates and actual results, the Company’s future financial statement presentation, financial condition, results of operations and cash flows will be affected.
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 December 31, 2022, and 2021, the Company had no cash equivalents.
The FDIC insures up to $250,000 per account with any excess amount in each account being uninsured. Total bank balances were approximately $3.2 million and $3.5 million, respectively as of December 31, 2022 and December 31, 2021. Of this amount, approximately $2.0 million and $2.0 million, respectively, were uninsured. All uninsured amounts are held with J.P. Morgan Chase.
Major Customers
The Company had no customers that made up over 10% of accounts receivable as of December 31, 2022, and 2021.
For the year ended December 31, 2022, the Company had one customer that made up 14% of total Company revenues within the A4 Technology - RCA segment. This customer had an accounts receivable balance of $1.2 million as December 31, 2022. For the year ended December 31, 2021, the Company had two customers that each made up 11% of total Company revenues with the A4 Manufacturing - QCA segment and A4 Manufacturing - Alt Labs segment. The customer within A4 Manufacturing - QCA segment had an accounts receivable balance of $1.0 million as of December 31, 2021. The customer within A4 Manufacturing - Alt Labs segment had an accounts receivable balance of $0, as of December 31, 2021, as the account receivable related to this customer was written off as bad debt expense noted in the section below.
For the year ended December 31, 2022, the Company had 9% of total revenues made up of government contracts.
Major Vendors
For the year ended December 31, 2022, there was one vendor that made up 14% of total Company purchases within the A4 Technology - RCA segment.. For the year ended December 31, 2021, there were no vendors that made up at least 10% of total purchases within the Company.
Accounts Receivable, net
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 December 31, 2022 and 2021, allowance for bad debt was $52,531 and $199,936, respectively. During the years ended December 31, 2022 and 2021, the Company wrote off $202,761 and $3,028,757, respectively to bad debts expense.
Inventory
Inventory for all subsidiaries is valued at weighted average. 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-process and finished goods. Inventory as of December 31, 2022 and 2021 consisted of:
December 31,
2022
December 31,
2021
Raw materials$9,116,824 $8,253,104 
Work in process3,165,876 2,480,979 
Finished goods12,975,669 13,685,571 
Inventory$25,258,369 $24,419,654 
Property and Equipment, net
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 five years to 39 years as follows:
Automobiles and trucks
5 to 7 years
Machinery and equipment10 years
Office furniture and fixtures5 years
Buildings and improvements39 years
Maintenance and repair costs are expensed as incurred. Significant improvements are capitalized and depreciated over the estimated life of the asset.
Property and equipment consisted of the following as of December 31, 2022 and 2021:
December 31,
2022
December 31,
2021
Automobiles and trucks$1,056,551 $1,251,187 
Machinery and equipment9,864,846 8,876,402 
Office furniture and fixtures186,464 167,581 
Buildings and improvements16,696,926 23,630,250 
Total Property and equipment27,804,787 33,925,420 
Less: Accumulated depreciation(8,301,302)(5,823,949)
Property and equipment, net$19,503,485 $28,101,471 
Included in Buildings and improvements in the above table are two buildings of $9,000,000 and $2,000,000 related to sale leaseback transactions. (See Note 3)
The Company recorded depreciation expense of $3,026,483 and $2,396,966 in 2022 and 2021, respectively.
Purchased Intangibles and Other Long-Lived Assets, net
The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between one and seventeen years as follows:
Software5 years
Non-compete agreements
1-15 years
Customer list
3-16 years
Patents, trademarks, and licenses
3-17 years
Proprietary technology15 years
Intangible assets consisted of the following as of December 31, 2022 and 2021:
CostWeighted Average Amortization PeriodDecember 31,
2022
December 31,
2021
Software2.0 years$128,474 $128,474 
Non-compete agreement6.3 years1,426,276 1,378,772 
Customer list11.9 years13,011,187 13,011,187 
Patents, trademarks, and licenses13.9 years7,127,408 7,174,912 
Proprietary technology13.5 years19,866,743 19,616,743 
12.9 years41,560,088 41,310,088 
Accumulated amortization
Software$(77,084)$(64,757)
Non-compete agreement(478,510)(210,465)
Customer list(1,711,327)(1,112,797)
Patents, trademarks, and licenses(962,258)(8,444)
Proprietary technology(2,048,300)(732,961)
(5,277,479)(2,129,424)
Intangibles assets, net$36,282,609 $39,180,664 
Expected amortization expense of intangible assets over the next 5 years and thereafter is as follows:
Years Ending December 31,
2023$3,152,048 
20243,152,048 
20252,919,686 
20262,900,686 
20272,762,686 
Thereafter21,395,455 
Total$36,282,609 
The Company recorded amortization expense of $3,148,055 and $1,757,393 in 2022 and 2021, respectively.
Other Long-Term Assets
Other long-term assets consisted of the following as of December 31, 2022 and 2021:
December 31,
2022
December 31,
2021
Deposits$578,545 $149,517 
Other1,277,060 207,601 
$1,855,605 $357,118 
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 the third quarter of 2022, there was a triggering event related to the customer list for Alt Labs which required an analysis to be performed. This analysis was performed in conjunction with a third-party valuation expert. As a result of the analysis, it was determined that the value of the estimated future cash flows were greater than the carrying value of the reporting unit's assets. No impairment was recognized during the year ended December 31, 2022.
During the year ended December 31, 2021, due to the significant impact of COVID-19, the Company determined that the customer list for Excel was impaired and took a charge to earnings of $359,890.
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 December 31, 2022 and 2021, the reporting units with goodwill were QCA, Morris, Alt Labs, TDI, Identified Technology, ElecJet, and RCA.
During the year ended December 31, 2021, the Company determined that the goodwill for Excel was impaired and took a charge to earnings of $7,629. During the 2022 fourth quarter, we conducted our annual goodwill impairment test and no impairment charges were recorded. The estimated fair values of all our reporting units exceeded their carrying amounts. Based on the analysis, the ElecJet reporting unit is considered an at-risk reporting unit. Our methods and assumptions were consistent with those discussed below in the Fair Value Measurement subsection. This reporting unit is primarily considered at-risk as it is a start-up subsidiary with minimal to no revenue to offset its research & development expenses. The DCF model includes revenue growth assumptions of us executing large new customer and/or supplier agreements within the next two years and then steadily increasing revenue at a more normalized rate thereafter. If we fail to execute these customer and/or supplier arrangements, this would negatively impact the key growth assumptions.
Leases
The Company accounts for its leases under ASC 842, Leases (“ASC 842”). Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease
term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. The Company excludes short-term leases having initial terms of 12 months or less as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.
Fair Value Measurement
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.
We apply the provisions of fair value measurement to various nonrecurring measurements for our financial and nonfinancial assets and liabilities. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, convertible notes, notes payable and lines of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches. For the income approach, we use a discounted cash flow models developed in connection with our third-party valuation specialists that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates; and estimated discount rates. For the market approach, we use analyses based primarily on market comparables. We base these assumptions on historical data and experience, industry projections, and general economic conditions.
The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. As of December 31, 2022 and 2021, the Company had no financial assets or liabilities that were required to be fair valued on a recurring basis as all of our financial assets and liabilities were Level 1.
Equity Investments
The Company’s equity investments consisted of investment in one private company in which the Company does not have the ability to exercise significant influence over their operating and financial activities. This investment is carried at cost as there is no market for the membership units, accordingly, no quoted market price is available. The investment is tested for impairment, at least annually, and more frequently upon the occurrences of certain events. As of December 31, 2021, in accordance with the ASC 321 guidelines, the Company recognized a loss on impairment for the entire value of $1,350,000. The current book value for this investment as of December 31, 2022 is $0.
Research and Development
The Company focuses on quality control and development of new products and the improvement of existing products. All costs related to research and development activities are expensed as incurred. During the years ended December 31, 2022 and 2021, research and development cost totaled $876,542 and $1,464,918, respectively.
Revenue Recognition
The Company recognizes revenue under ASC Topic 606, Revenue from contract with Customers ("Topic 606"). The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
Revenue is recognized under Topic 606, at a point in time and over a period of time, in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
executed 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 Company’s subsidiaries are all located in North America, as well as the customer base in which the Company’s revenue is derived from. The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
QCA and Alt Labs
QCA (Circuit boards and cables) and Alt Labs (Supplements) are contract manufacturers and 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 as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
ElecJet
ElecJet is a manufacturer of electric components, and a research and development company for battery technology and recognizes revenue when the products have been shipped to the customer. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
Identified Technologies
Identified Technologies provides 3D mapping drone software and data for industrial job sites and recognizes revenue when the service has been provided to the customer. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
Direct Tech Sales (“RCA”)
RCA is engaged in the design, manufacture and wholesale distribution of electronics such as televisions, mounting solutions, projectors and screens, audio equipment, digital signage, mobile audio and video systems, and all wire and connecting products throughout the United States of America. RCA recognizes revenue when the products have been shipped to the customer which is also when title transfers. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
MSM, Excel and TDI
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 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 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 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 December 31, 2022 and 2021, accounts receivable included retainage billed under terms of our contracts. These retainage amounts represent amounts which have been contractually invoiced to customers where payments have been partially withheld pending the achievement of certain milestones, satisfaction of other contractual conditions or completion of the project. The Company has recorded a receivable for retainage of approximately $2.0 million and $1.6 million as of December 31, 2022, and 2021, respectively.
The following table presents our revenues disaggregated by type with the sales of goods recognized upon delivery and the sales of services recognized over the time of the contract as described above:
Year ended December 31,
20222021
Sale of goods
Circuit boards and cables$18,780,769 $15,700,902 
Supplements12,889,992 11,674,220 
Electronics41,191,146 1,543,469 
Total sale of goods72,861,907 28,918,591 
Sale of services
Construction contracts30,098,249 22,462,399 
Drone 3D mapping1,602,846 259,823 
Total sale of services31,701,095 22,722,222 
Total revenues$104,563,002 $51,640,813 
Earnings (loss) per share
The Company presents both basic and diluted net income (loss) per share on the face of the consolidated statements of operations. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted per share calculations give effect to all potentially dilutive shares of common stock outstanding during the period, including stock options and warrants, using the treasury-stock method. If antidilutive, the effect of potentially dilutive shares of common stock is ignored. The amount of anti-dilutive shares related to stock options and warrants as of December 31, 2022 and 2021, were 21,664,165 and 7,317,778, respectively. The following table illustrates the computation of basic and diluted earnings per share (“EPS”) inclusive of all classes of common stock as the only difference between the classes of common stock are related to the voting rights (Note 6) for the years ended December 31, 2022 and 2021:
For the Year Ended December 31, 2022
For the Year Ended December 31, 2021
Net lossSharesPer Share AmountNet lossSharesPer Share Amount
Basic EPS
Loss available to stockholders$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
Effect of Dilutive Securities
Stock options and warrants— — — — — — 
Dilute EPS
Loss available to stockholders plus assumed conversions$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
Stock-based compensation
The Company follows the guidelines in ASC 718-10 Compensation-Stock Compensation, which requires companies to measure the cost of employee and non-employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Stock-based compensation expense for stock options is recognized on a straight-line basis over the requisite service period. The Company may issue compensatory shares for services including, but not limited to, executives, management, accounting, operations, corporate communication, financial and administrative consulting services. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model.
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.
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
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.
In June 2016, the FASB issued ASC 326, Financial Instruments - Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The new standard is effective in the first quarter of fiscal 2023 and is expected to have an immaterial impact on the Company's financial statements.
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 March 31, 2023, and December 31, 2022. Significant intercompany balances and transactions have been eliminated.
Use of estimates
The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable. In many instances, the Company could have reasonably used different accounting estimates and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. This applies in particular to useful lives of long-lived assets, reserves for accounts receivable and inventory, valuation allowance for deferred tax assets, fair values assigned to intangible assets acquired, and impairment of long-lived assets. Actual results could differ significantly from our estimates. To the extent that there are material differences between these estimates and actual results, the Company’s future financial statement presentation, financial condition, results of operations and cash flows will be affected.
Cash
Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. As of March 31, 2023, and December 31, 2022, the Company had no cash equivalents.
The FDIC insures up to $250,000 per account with any excess amount in each account being uninsured. Total bank balances were $0.8 million and $3.2 million as of March 31, 2023, and December 31, 2022, respectively. Of this amount, $0.1 million and $2.0 million were uninsured as of March 31, 2023, and December 31, 2022, respectively. All uninsured amounts are held with J.P. Morgan Chase.
Major Customers & Vendors
The Company had no customers which made up over 10% of total Company accounts receivable as of March 31, 2023, or December 31, 2022.
For the three months ended March 31, 2023, the Company had no customers which made up over 10% of total Company revenues. For the three months ended March 31, 2022, the Company had one customer within the A4 Technology - RCA segment, which made up 13% of total Company revenues.
For the three months ended March 31, 2023 and 2022, the Company received 12% and 11%, respectively, of total Company revenues from prime contractors.
For the three months ended March 31, 2023, the Company had no vendors, which made up over 10% of total Company purchases. For the three months ended March 31, 2022, the Company had one vendor within the A4 Technology - RCA segment, which made up 17% of total Company purchases.
Inventory
Inventory for all subsidiaries is valued at weighted average cost. 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-process and finished goods. Inventory at March 31, 2023, and December 31, 2022, consists of:
March 31, 2023December 31, 2022
Raw materials$10,083,241 $9,116,824 
Work in process3,236,331 3,165,876 
Finished goods11,943,087 12,975,669 
Inventory25,262,659 25,258,369 
Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of 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 the three months ended March 31, 2023, there were no events or changes in circumstances that indicated a quantitative impairment analysis was necessary.
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 March 31, 2023, and December 31, 2022, the reporting units with goodwill were QCA, MSM, Excel, Alt Labs, TDI, Identified Technology, ElecJet, and RCA. Consistent with our prior year assessment, the ElecJet reporting unit is considered an at-risk reporting unit. Our methods and assumptions were consistent with those discussed below in the Fair Value Measurement subsection. This reporting unit is primarily considered at-risk as it is a start-up subsidiary with minimal to no revenue to offset its research & development expenses. The DCF model includes revenue growth assumptions of us executing large new customer and/or supplier agreements within the next two years and then steadily increasing revenue at a more normalized rate thereafter. Any failure to execute these customer and/or supplier arrangements would negatively impact the key growth assumptions.
Fair value measurements
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.
We apply the provisions of fair value measurement to various nonrecurring measurements for our financial and nonfinancial assets and liabilities. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, notes payable and lines of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches. For the income approach, we use a discounted cash flow models developed in connection with our third-party valuation specialists that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates; and estimated discount rates. For the market approach, we use analyses based primarily on market comparables. We base these assumptions on historical data and experience, industry projections, and general economic conditions.
The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. As of March 31, 2023, and December 31, 2022, the Company had no financial assets or liabilities that were required to be fair valued on a recurring basis, as all of our financial assets and liabilities were Level 1.
Research and Development
The Company focuses on quality control and development of new products and the improvement of existing products. All costs related to research and development activities are expensed as incurred. During the three months ended March 31, 2023 and 2022, research and development costs totaled $0.1 million and $0.2 million, respectively.
Earnings (loss) per share
The Company presents both basic and diluted net income (loss) per share on the face of the consolidated statements of operations. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted per share calculations give effect to all potentially dilutive shares of common stock outstanding during the period, including stock options and warrants, using the treasury-stock method. If antidilutive, the effect of potentially dilutive shares of common stock is ignored. The amount of anti-dilutive shares related to stock options and warrants as of March 31, 2023 and 2022 was 2,700,473 and 837,472. respectively. The following table illustrates the computation of basic and diluted
earnings per share (“EPS”) inclusive of all classes of common stock as the only difference between the classes of common stock are related to the voting rights for the three months ended March 31, 2023 and 2022:
For the Three Months Ended March 31, 2023
For the Three Months Ended March 31, 2022
Net LossSharesPer Share AmountNet LossSharesPer Share Amount
Basic EPS
Net loss$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Effect of Dilutive Securities
Stock options and warrants— — — — — — 
Dilute EPS
Total
$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Revenue Recognition
The Company recognizes revenue under ASC Topic 606, Revenue from contract with Customers ("Topic 606"). The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
Revenue is recognized under Topic 606, at a point in time and over a period of time, in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
executed contract with the Company's customers that it believes are legally enforceable;
identification of performance obligations in the respective contract;
determination of the transaction price for each performance obligation in the respective contract;
allocation of the transaction price to each performance obligation; and
recognition of revenue only when the Company satisfies each performance obligation.
The following tables presents our revenues disaggregated by type for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31, 2023
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$— $9,320,821 $— $7,555,918 $— $16,876,739 
Sale of services4,146,004 — 2,970,087 — 368,883 7,484,974 
Total revenues
$4,146,004 $9,320,821 $2,970,087 $7,555,918 $368,883 $24,361,713 
Three Months Ended March 31, 2022
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$— $8,648,095 $— $9,793,988 $— $18,442,083 
Sale of services4,056,204 — 2,687,981 — 405,886 7,150,071 
Total revenues
$4,056,204 $8,648,095 $2,687,981 $9,793,988 $405,886 $25,592,154 
Recent Accounting Pronouncements
Effective January 1, 2023, we adopted ASU 2016-13, Credit Losses Topic 326 (the new credit losses standard), using the modified retrospective approach. The comparative periods have not been restated and continue to be
reported under the accounting standard in effect for those periods. The new credit losses standard amends the impairment model to use a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Our adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements for the three months ended March 31, 2023, and we did not recognize a cumulative effect adjustment to retained earnings as of January 1, 2023.
To assist in quantifying the impact on our consolidated financial statements and supplementing our existing disclosures, we identified financial assets measured at an amortized cost basis in our consolidated balance sheet and evaluated the collectability considerations based on an expected credit loss assessment. We perform ongoing credit evaluations of our customers, but generally do not require collateral to support customer receivables. We establish an allowance for doubtful accounts based on various factors including the age of receivables outstanding, historical trends, economic conditions and other information. We also review outstanding balances on an account-specific basis based on the credit risk of the customer. We determined that all of our accounts receivable share similar risk characteristics within our operating segments based on historical data. We monitor our credit exposure on an ongoing basis and assess whether assets in the pool continue to display similar risk characteristics. We actively monitor the credit risk of our specific customers, age of receivables outstanding, recent collection trends and general economic conditions to evaluate the risk of credit loss. The consolidated statement of income for the three months ended March 31, 2023, reflects the measurement of credit losses for newly recognized financial assets as well as any changes to historical financial assets.
Allowance for Doubtful Accounts
Balance as of December 31, 2022$52,531 
Additions charged to expense153,243 
Accounts written-off(18,937)
Balance as of March 31, 2023
$186,837 
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.

v3.23.2
Leases
6 Months Ended
Jun. 30, 2023
Leases [Abstract]  
Leases LeasesThe 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 discounts lease payments based on an estimate of its incremental borrowing rate.
As of December 31, 2022, the future minimum finance and operating lease payments are as follows:
Years Ending December 31,
Finance
Leases
Operating
Leases
2023$1,925,840 $2,287,038 
20241,952,462 2,443,909 
20251,880,402 1,960,387 
20261,867,799 1,805,158 
20271,910,388 1,770,300 
Thereafter14,952,719 13,253,279 
Total payments24,489,610 23,520,071 
Less: imputed interest(9,171,495)(6,938,692)
Total obligation15,318,115 16,581,379 
Less: current portion(725,302)(1,318,885)
Non-current capital leases obligations$14,592,813 $15,262,494 
Finance Leases
As of December 31, 2022, all finance leases in the table above were related to property and equipment, and are included as part of property and equipment, net on the consolidated balance sheet. Depreciation expense associated with the finance leases within property and equipment was $1,251,817 and $1,244,059 for the years ended December 31, 2022 and 2021, respectively. Of this amount, $151,398 and $422,259 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expenses on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021. Interest expense related to the finance leases for the years ended December 31, 2022 and 2021 was $1,255,231 and $1,301,842, respectively, and is recorded within Interest Expense on the Consolidated Statement of Operations. At December 31, 2022, the weighted average remaining lease terms were 11.95 years, and the weighted average discount rate was 8.01%.
Operating Leases
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheet:
Classification on Balance SheetDecember 31,
2022
December 31,
2021
Assets
Operating lease assetsOperating lease right of use assets$16,407,566 $1,460,206 
Total lease assets$16,407,566 $1,460,206 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,318,885 $428,596 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability15,262,494 1,066,562 
Total lease liability$16,581,379 $1,495,158 
On May 3, 2021, the Company entered into a lease agreement for the building on 4740 Cleveland in Ft. Myers, Florida. The lease had a term of 72 months with monthly payments ranging from $40,833 to $49,583 from May 2021 to July 2021 and $58,333 from August 2021 through the end of the term. The Company determined the lease to be an operating lease and recognized a right-of-use asset and operating lease liability of $3,689,634 based on the
present value of the minimum lease payments discounted using an incremental borrowing rate of 3.96%. This lease was terminated on August 27, 2021, when the Company purchased the building.
In December 2021, the Company acquired RCA. As part of this purchase the Company entered into a lease agreement for office and warehouse space under a non-cancellable operating lease. The lease has a term of 89 months with monthly payments ranging from $31,350 to $35,207. The Company determined the lease to be an operating lease and recognized a right-of-use asset of $1,196,764 and operating lease liability of $1,226,128 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 4%.
On June 23, 2022, the Company entered into a sale lease back agreement for the building on 4740 Cleveland in Ft. Myers, Florida. The lease had a term of 180 months with monthly payments ranging from $67,708 to $89,306. The Company determined the lease to be an operating lease and recognized a right-of-use asset and an operating lease liability of $8,725,000 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 7.00%.
On June 26, 2022, the Company amended its lease effective July 1, 2022 for the warehouse in Ann Arbor, Michigan for an additional 12,800 sq ft through July 31, 2025, with total monthly lease payments ranging from $16,000 to $16,800. As a result of this amendment, the Company remeasured the right of use asset and liability and recorded an additional $543,595 in right of use asset on the date of the modification based on the present value of the minimum lease payment discounted using an incremental borrowing rate of 5.13%.
On June 13, 2022, the Company entered into a lease effective October 1, 2022 for a building in San Jose, California through March 1, 2033, with total monthly lease payments ranging from $49,156 to $66,062. The Company determined the lease to be an operating lease and recognized a right-of-use asset of and operating lease liability of $5,506,357 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 4%.
On September 9, 2022, the Company amended its lease effective as of October 1, 2022 for the warehouse in Ft. Myers, Florida through September 30, 2027, with total monthly lease payments ranging from $21,637 to $23,682. As a result of this amendment, the Company remeasured the right of use asset and liability and recorded an additional $1,179,091 in right of use asset on the date of the modification based on the present value of the minimum lease payment discounted using an incremental borrowing rate of 6.25%.
The operating lease expense for the years ended December 31, 2022 and 2021 was $1,006,683 and $386,056, respectively. Of this amount, $329,938 and $0 is recorded in Cost of Revenues on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, respectively. The remaining $676,745 and $386,056 is recorded within General & Administrative expenses on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, respectively. The cash paid under operating leases during the years ended December 31, 2022 and 2021 was $1,087,951 and $402,688, respectively. As of December 31, 2022, the weighted average remaining lease terms were 11.83 years and the weighted average discount rate was 6%.
LeasesThe 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 discounts lease payments based on an estimate of its incremental borrowing rate.
As of March 31, 2023, the future minimum finance and operating lease payments were as follows:
Twelve Months Ending March 31,
Finance
Leases
Operating
Leases
2024$1,931,757 $2,398,681 
20251,962,353 2,423,929 
20261,852,006 1,823,638 
20271,880,265 1,814,303 
20281,923,136 1,708,631 
Thereafter14,368,333 12,855,124 
Total payments23,917,850 23,024,306 
Less: imputed interest(8,778,767)(6,698,331)
Total obligation15,139,083 16,325,975 
Less: current portion(743,157)(1,484,846)
Non-current financing leases obligations$14,395,926 $14,841,129 
Finance Leases
As of March 31, 2023, all finance leases in the table above were related to property and equipment. Depreciation expense associated with the finance leases within Property and Equipment was $312,954 and $312,954 for the three months ended March 31, 2023 and 2022, respectively. Of this amount $44,503 and $0 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expenses on the Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. Interest expense on finance leases for the three months ended March 31, 2023, and 2022 was $305,262 and $317,905, respectively, and is recorded in Interest Expense on the Consolidated Statements of Operations. At March 31, 2023, the weighted average remaining lease terms were 11.7 years, and the weighted average discount rate was 8.01%.
Operating Leases
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of March 31, 2023, and December 31, 2022:
March 31,
2023
December 31,
2022
Assets 
Operating lease assetsOperating lease right of use assets$15,949,731 $16,407,566 
Total lease assets$15,949,731 $16,407,566 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,484,846 $1,318,885 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability14,841,129 15,262,494 
Total lease liability$16,325,975 $16,581,379 
The lease expense for the three months ended March 31, 2023 and 2022, was $598,590 and $126,561, respectively. Of this amount $216,754 and $0 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expense on the Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. The cash paid under operating leases during the three months ended March 31, 2023 and 2022, was $540,833 and $124,654, respectively. At March 31, 2023, the weighted average remaining lease terms were 11.7 years, and the weighted average discount rate was 6.01%.
Leases LeasesThe 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 discounts lease payments based on an estimate of its incremental borrowing rate.
As of December 31, 2022, the future minimum finance and operating lease payments are as follows:
Years Ending December 31,
Finance
Leases
Operating
Leases
2023$1,925,840 $2,287,038 
20241,952,462 2,443,909 
20251,880,402 1,960,387 
20261,867,799 1,805,158 
20271,910,388 1,770,300 
Thereafter14,952,719 13,253,279 
Total payments24,489,610 23,520,071 
Less: imputed interest(9,171,495)(6,938,692)
Total obligation15,318,115 16,581,379 
Less: current portion(725,302)(1,318,885)
Non-current capital leases obligations$14,592,813 $15,262,494 
Finance Leases
As of December 31, 2022, all finance leases in the table above were related to property and equipment, and are included as part of property and equipment, net on the consolidated balance sheet. Depreciation expense associated with the finance leases within property and equipment was $1,251,817 and $1,244,059 for the years ended December 31, 2022 and 2021, respectively. Of this amount, $151,398 and $422,259 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expenses on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021. Interest expense related to the finance leases for the years ended December 31, 2022 and 2021 was $1,255,231 and $1,301,842, respectively, and is recorded within Interest Expense on the Consolidated Statement of Operations. At December 31, 2022, the weighted average remaining lease terms were 11.95 years, and the weighted average discount rate was 8.01%.
Operating Leases
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheet:
Classification on Balance SheetDecember 31,
2022
December 31,
2021
Assets
Operating lease assetsOperating lease right of use assets$16,407,566 $1,460,206 
Total lease assets$16,407,566 $1,460,206 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,318,885 $428,596 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability15,262,494 1,066,562 
Total lease liability$16,581,379 $1,495,158 
On May 3, 2021, the Company entered into a lease agreement for the building on 4740 Cleveland in Ft. Myers, Florida. The lease had a term of 72 months with monthly payments ranging from $40,833 to $49,583 from May 2021 to July 2021 and $58,333 from August 2021 through the end of the term. The Company determined the lease to be an operating lease and recognized a right-of-use asset and operating lease liability of $3,689,634 based on the
present value of the minimum lease payments discounted using an incremental borrowing rate of 3.96%. This lease was terminated on August 27, 2021, when the Company purchased the building.
In December 2021, the Company acquired RCA. As part of this purchase the Company entered into a lease agreement for office and warehouse space under a non-cancellable operating lease. The lease has a term of 89 months with monthly payments ranging from $31,350 to $35,207. The Company determined the lease to be an operating lease and recognized a right-of-use asset of $1,196,764 and operating lease liability of $1,226,128 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 4%.
On June 23, 2022, the Company entered into a sale lease back agreement for the building on 4740 Cleveland in Ft. Myers, Florida. The lease had a term of 180 months with monthly payments ranging from $67,708 to $89,306. The Company determined the lease to be an operating lease and recognized a right-of-use asset and an operating lease liability of $8,725,000 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 7.00%.
On June 26, 2022, the Company amended its lease effective July 1, 2022 for the warehouse in Ann Arbor, Michigan for an additional 12,800 sq ft through July 31, 2025, with total monthly lease payments ranging from $16,000 to $16,800. As a result of this amendment, the Company remeasured the right of use asset and liability and recorded an additional $543,595 in right of use asset on the date of the modification based on the present value of the minimum lease payment discounted using an incremental borrowing rate of 5.13%.
On June 13, 2022, the Company entered into a lease effective October 1, 2022 for a building in San Jose, California through March 1, 2033, with total monthly lease payments ranging from $49,156 to $66,062. The Company determined the lease to be an operating lease and recognized a right-of-use asset of and operating lease liability of $5,506,357 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 4%.
On September 9, 2022, the Company amended its lease effective as of October 1, 2022 for the warehouse in Ft. Myers, Florida through September 30, 2027, with total monthly lease payments ranging from $21,637 to $23,682. As a result of this amendment, the Company remeasured the right of use asset and liability and recorded an additional $1,179,091 in right of use asset on the date of the modification based on the present value of the minimum lease payment discounted using an incremental borrowing rate of 6.25%.
The operating lease expense for the years ended December 31, 2022 and 2021 was $1,006,683 and $386,056, respectively. Of this amount, $329,938 and $0 is recorded in Cost of Revenues on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, respectively. The remaining $676,745 and $386,056 is recorded within General & Administrative expenses on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, respectively. The cash paid under operating leases during the years ended December 31, 2022 and 2021 was $1,087,951 and $402,688, respectively. As of December 31, 2022, the weighted average remaining lease terms were 11.83 years and the weighted average discount rate was 6%.
LeasesThe 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 discounts lease payments based on an estimate of its incremental borrowing rate.
As of March 31, 2023, the future minimum finance and operating lease payments were as follows:
Twelve Months Ending March 31,
Finance
Leases
Operating
Leases
2024$1,931,757 $2,398,681 
20251,962,353 2,423,929 
20261,852,006 1,823,638 
20271,880,265 1,814,303 
20281,923,136 1,708,631 
Thereafter14,368,333 12,855,124 
Total payments23,917,850 23,024,306 
Less: imputed interest(8,778,767)(6,698,331)
Total obligation15,139,083 16,325,975 
Less: current portion(743,157)(1,484,846)
Non-current financing leases obligations$14,395,926 $14,841,129 
Finance Leases
As of March 31, 2023, all finance leases in the table above were related to property and equipment. Depreciation expense associated with the finance leases within Property and Equipment was $312,954 and $312,954 for the three months ended March 31, 2023 and 2022, respectively. Of this amount $44,503 and $0 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expenses on the Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. Interest expense on finance leases for the three months ended March 31, 2023, and 2022 was $305,262 and $317,905, respectively, and is recorded in Interest Expense on the Consolidated Statements of Operations. At March 31, 2023, the weighted average remaining lease terms were 11.7 years, and the weighted average discount rate was 8.01%.
Operating Leases
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of March 31, 2023, and December 31, 2022:
March 31,
2023
December 31,
2022
Assets 
Operating lease assetsOperating lease right of use assets$15,949,731 $16,407,566 
Total lease assets$15,949,731 $16,407,566 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,484,846 $1,318,885 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability14,841,129 15,262,494 
Total lease liability$16,325,975 $16,581,379 
The lease expense for the three months ended March 31, 2023 and 2022, was $598,590 and $126,561, respectively. Of this amount $216,754 and $0 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expense on the Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. The cash paid under operating leases during the three months ended March 31, 2023 and 2022, was $540,833 and $124,654, respectively. At March 31, 2023, the weighted average remaining lease terms were 11.7 years, and the weighted average discount rate was 6.01%.

v3.23.2
Debt
6 Months Ended
Jun. 30, 2023
Debt Disclosure [Abstract]  
Debt Debt
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. In August 2020, the company filed a lawsuit against Alan Martin regarding his note payable. The balance as of December 31, 2022, and 2021, was $2,857,500, and accrued interest of $1,710,577 and $1,170,861, respectively, which are reflective in the current liabilities. The default rate is 10% and the daily late charge is $575. (See a description of the Company’s ongoing legal proceedings relating to this transaction in Note 11, Commitments and Contingencies, below.)
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. In May 2020, the Company amended the three supplemental notes of $116,667 each with the sellers of Morris. The notes were due January 1, 2020. Each of the new notes as of the date of amendment had accrued interest of $2,703. This was added to the note resulting in the principal amount of 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 $10,000 with one final payment of $13,882 through January 2021. The amended notes have an interest rate of 6%. As of December 31, 2022, the outstanding balance on these notes and supplemental notes were paid in full.
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. On April 8, 2021, the Company entered into a settlement agreement with the seller wherein the outstanding balance on the first note amounting to $1,883,418 including accrued interest and net other costs was settled in full through a payment of approximately $887,000 and the exchange of 1,617,067 shares of the Company’s Class C common shares held by the seller for the same number of shares of the Company’s Class A common stock. The Company recognized a gain on extinguishment of debt totaling $803,079 during the year ended December 31, 2021, as a result of the settlement of the note.
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. The ending balance for this loan as of December 31, 2022 and 2021, was $2,062,318. (See a description of the Company’s ongoing legal proceedings relating to this transaction in Note 11, Commitments and Contingencies, below.)
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 balance on this note as of December 31, 2022 and 2021, was $23,405 and $52,504, respectively.
In connection with the RCA acquisition in December 2021, the Company issued two subordinated secured promissory notes for an aggregate of $2,000,000. The notes are amortized over 10 years, bear interest at 3.75% per annum and require monthly payment of at least $19,590. After three years, the unpaid principal amount on the notes will be immediately due.
In April and May 2020, the Company received seven loans under the Paycheck Protection Program of the U.S. Coronavirus Aid, Relief and Economic Security (“CARES”) Act totaling $3,896,108. During the year ended December 31, 2021, the Company also acquired four loans with a book value totaling $1,799,725 due to acquisitions, and fair value of $65,000. The loans have terms of 24 months and accrue interest at 1% per annum. The Company paid $88,160 for the loan assumed in connection with the IA acquisition, and the remaining $356,690 was forgiven. The remaining ten loans were forgiven as provided by the CARES Act during the year ended December 31, 2021. The Company recognized a gain on forgiveness of debt of $0 and $3,896,108 for the years ended December 31, 2022 and December 31, 2021, respectively. The Company also assumed an Economic Injury Disaster Loan (EIDL) of $65,000 in connection with the Vayu acquisition, which was still outstanding as of December 31, 2022.
On August 27, 2021 the Company entered into $4.7 million agreement for the purchase of a building located at 4740 Cleveland in Ft. Myers, Florida. The loan bears interest at a rate of 3.95% per annum for a term of 10-years and requires monthly payments of $24,722. The loan is secured by the building and a guarantee by the Company. On June 23, 2022, the Company sold the building at 4740 S. Cleveland Ave. Fort Myers, Florida, for $13,200,000. The Company determined that it had transferred control of the building to the buyer, has derecognized the asset, and recognized a gain on the sale of $5,822,450 and paid off the outstanding mortgage of $4,642,043. Under ASC 842, Leases, the Company simultaneously entered into a sale leaseback transaction where the building was then leased back (See Note 3).
In January 2022, Alt Labs entered into a note payable for $500,000 with an interest rate of 3.85% for 60 monthly payments of $9,186. The outstanding balance on this note as of December 31, 2022, was $414,498.
In May 2022, Morris entered into an equipment finance note for $61,000 with an interest rate of 10% for 60 monthly payments of $1,314. The outstanding balance on this note as of December 31, 2022, was $53,595.
In January 2022, Morris entered into an equipment finance note for $89,153 with an interest rate of 5.86% for 60 monthly payments of $1,722. The outstanding balance on this note as of December 31, 2022, was $74,644.
In March 2022, Morris entered into an equipment finance note for $93,433 with an interest rate of 5.86% for 60 monthly payments of $1,804. The outstanding balance on this note as of December 31, 2022, was $79,653.
In May 2021, Morris entered into a revolving line of credit totaling $2.5 million with a variable interest rate based on the current WSJ Prime rate, which was 7.50% per annum as of December 31, 2022. The business assets of Morris are pledged as collateral on this line of credit. The term end date for this line was October 2022, but has been extended through May 2023. The total line of credit used as of December 31, 2022 and December 31, 2021, was $2.49 million and $1.73 million respectively, with approximately $7 thousand available to be drawn on as of December 31, 2022.
In September 2021, QCA entered into a revolving line of credit totaling $5.5 million that includes a capital expenditure line of credit $0.5 million, with a variable interest rate based on the current WSJ Prime rate plus 2.5%. As of December 31, 2022, the interest rate was 10.00%. AR, inventory, and equipment are pledged as collateral on this line of credit. The term end date on this line of credit is September 2023. The line of credit used as of December 31, 2022 and December 31, 2021 was $5.0 million and $2.0 million, respectively, with approximately $51 thousand available to be drawn on as of December 31, 2022.
In April 2022, Alt Labs entered into three revolving lines of credit totaling $5.0 million with a variable interest rate based on the current WSJ Prime rate plus 2.5%. As of December 31, 2022, the interest rate was 10.00%. AR, inventory, and equipment are pledged as collateral on these lines of credit. The term end date for two of the three lines of credit is March 2024, while the term date of the third line of credit is March 2026. The total lines of credit used as of December 31, 2022 was $1.84 million, with approximately $17 thousand available to be drawn on as of December 31, 2022. Alt Labs had an existing line of credit totaling $750 thousand as of December 31, 2021. This was paid out and closed as part of opening the new lines of credit in 2022.
In September 2022, RCA entered into a revolving line of credit totaling $20.0 million with an interest rate of 1.75% plus the secured overnight financing rate (SOFR). AR, inventory, and equipment are pledged as collateral on these lines of credit. The term end date for this line of credit is September 2027. The total lines of credit used as of December 31, 2022 was $5.54 million, with approximately $3.80 million available to be drawn on as of December 31, 2022. RCA had an existing line of credit totaling $10.0 million, with a used total of $5.64 million as of December 31, 2021. The balance of the existing line of credit was paid off and closed as part of the opening of the new line of credit in September 2022.
The Company is required to maintain covenants including financial ratios as a condition of the line of credit agreements. As of the date of this Report, the Company was not in compliance with these covenants as the 10-K report was not filed within 90 days from the year ended December 31, 2022. However, the Company received waivers extended through May 5th, 2023. As such, the Company will be in compliance with the covenants as of the date of this report.
The outstanding balances for the loans as of December 31, 2022 and 2021 were as follows:
December 31,
2022
December 31,
2021
Lines of credit, current portion$7,426,814 $4,473,489 
Equipment loans, current portion68,410 61,640 
Term notes, current portion3,132,726 5,628,884 
Total current10,627,950 10,164,013 
Line of credit, net of current portion7,215,520 5,640,051 
Long-term portion of equipment loans and term notes4,266,350 8,426,105 
Total notes payable$22,109,820 $24,230,169 
Future scheduled maturities of outstanding debt are as follows:
Years Ending December 31,
2023$10,627,950 
20245,104,159 
2025155,254 
2026734,607 
20275,422,850 
Thereafter65,000 
Total$22,109,820 
Debt
The outstanding balances for the loans as of March 31, 2023, and December 31, 2022, were as follows:
March 31,
2023
December 31,
2022
Lines of credit, current portion$8,970,460 $7,426,814 
Equipment loans, current portion82,787 68,410 
Related Party term notes, current portion535,000 — 
Term notes, current portion5,915,560 3,132,726 
Total current 15,503,807 10,627,950 
Lines of credit, net of current portion3,928,105 7,215,520 
Long-term portion of equipment loans and term notes2,229,684 4,266,350 
Total notes payable and line of Credit$21,661,596 $22,109,820 
Future scheduled maturities of outstanding debt are as follows:
Twelve Months Ending March 31,
2024$15,503,807 
20251,785,069 
2026709,653 
20273,562,900 
202826,035 
Thereafter74,132 
Total$21,661,596 
In August 2020, the Company filed a lawsuit against Alan Martin regarding his note payable. As of March 31, 2023 and 2022, the note had a balance of $2.9 million, and accrued interest of $1.8 million and $1.2 million, respectively, which are reflective in current liabilities. The default rate is 10% and the daily late charge is $575 (See a description of the Company’s ongoing legal proceedings relating to this transaction in Note 7, Commitments and Contingencies, below).
During January and February 2023, the Company issued a total of $1.3 million in six-month note payables ranging in size from $10,000 to $200,000 to executive officers and various investors with an annual interest rate of 30% to be used for general corporate purposes. Of this amount, $0.5 million was issued to related parties.
During 2023, the Company had four revolving lines of credit in the aggregate of $33.0 million, including one capital expenditures line of credit of $0.1 million. The revolving lines of credit used as of March 31, 2023, totaled $12.9 million with interest rates ranging from WSJ prime plus 2.50% - 4.25% and terms ranging from one to five years. Accounts receivables, inventory, and property and equipment are pledged as collateral on the various lines of credit. As of March 31, 2023, the Company had $3.8 million in additional funds available to borrow. The Company is required to maintain covenants including financial ratios as a condition of the line of credit agreements. As of the date of this Report, the Company was not in compliance with these covenants. However, the Company received a forbearance agreement and waivers from the banking institutions regarding these failed covenants. As such, the Company was in compliance with the covenants as of the date of this report.

v3.23.2
Preferred Stock Subject to Redemption
6 Months Ended
Jun. 30, 2023
Equity [Abstract]  
Preferred Stock Subject to Redemption Preferred Stock Subject to Redemption
Series C Preferred Stock
The Company designated 2,028,572 shares of Series C Preferred Stock with a stated value of $3.50 per share. No dividends will accrue on the Series C Preferred Stock. If dividends are declared on the Company’s Class A, Class B, or Class C Common Stock, the holders of the Series C Preferred Stock will participate in such dividends on a per share basis, pari passu with the Classes of Common Stock.
Voting Rights - The Series C Preferred Stock will vote together with the Class A Common Stock on a one-vote-for-one-Preferred-share basis. As long as any shares of Series C Preferred Stock are outstanding, the Company may not, without the affirmative vote or written consent of the holders of a majority of the then outstanding shares of the Series C Preferred Stock, (a) alter or change the powers, preferences or rights given to the Series C Preferred Stock or alter or amend the Certificate of Designation, (b) amend its Certificate of Incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Series C Preferred Stock, or (c) enter into any agreement or arrangement with respect to any of the foregoing.
Liquidation - Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a "Liquidation"), the holders of the Series C Preferred Stock shall participate on a per share basis with the holders of the Class A, Class B, and Class C Common Stock of the Company, and shall be entitled to share equally, on a per share basis, all assets of the Company of whatever kind available for distribution to the holders of all classes of the Common Stock. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each record holder of Series C Preferred Stock.
Conversion - The Series C Preferred Stock shall be convertible automatically into shares of the Company's Class A Common Stock (the “Automatic Conversion”) as follows: 
Each share of Series C Preferred Stock will automatically convert into shares of the Company’s Class A Common Stock on the earlier to occur of (a) the fifth day after the twenty-four month anniversary of the original issue date or (b) the fifth day after the date on which the Company’s Class A Common Stock first
trades on a national securities exchange (including but not limited to NASDAQ, NYSE, or NYSE American but excluding OTCQX Market) (such date, the “Automatic Conversion Date”).
The number of shares of the Company’s Class A Common Stock into which the Series C Preferred Stock shall be converted shall be determined by multiplying the number of shares of Series C Preferred Stock to be converted by the $3.50 stated value, and then dividing that product by the Conversion Price. The Conversion Price shall be equal to the Variable Weighted Average Price (“VWAP”) of the five Trading Days prior to the Automatic Conversion Date. “VWAP” shall be defined as the volume weighted average price of the Company’s Class A Common Stock on the OTC Markets or other stock exchange or trading medium where such shares are traded as reported by Bloomberg, L.P. using the VWAP function. If for any reason, VWAP cannot be thus determined, “VWAP” shall mean the average closing or last sale prices over the five Trading Days prior to the Automatic Conversion Date of the Company’s Class A Common Stock on the OTC Markets or such other exchange or trading medium.
Restrictions on Resales of Class C Common Stock - The sale of shares of the Company’s Class A Common Stock issued at the time of conversion by any holder into the market or to any private purchaser shall be limited to not more than twenty-five percent (25%) of all conversion shares received by such holder at the time of the automatic conversion in any given 120-day period.
Company Redemption Rights - At any time on or prior to the Automatic Conversion Date, the Company shall have the right to redeem all (but not less than all) shares of the Series C Preferred Stock issued and outstanding at any time after the original issue date, upon three (3) business days’ notice, at a redemption price per share of Series C Preferred Stock then issued and outstanding (the “Corporation Redemption Price”), equal to the stated value of $3.50 per share.
During the year ended December 31, 2020, the Company issued 1,714,286 shares of Series C Preferred Stock in connection with the acquisition of assets of IA that were valued at $5,848,013. The difference in stated value will be accreted over a 24 month period or upon conversion from Series C Preferred Stock to Class A Common stock. As of December 31, 2022, and 2021, 1,714,286 and 1,704,137, respectively, of these shares had been converted to Class A common stock. Prior to conversion the Company recognized accretion to interest expense in the amount of $0 and $69,661 for the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2022 and 2021, 0 and 10,149 shares of Series C Preferred Stock were outstanding, respectively.
Series D Preferred Stock
The Company designated 1,628,572 shares of Series D Preferred Stock with a stated value of $3.50 per share. No dividends will accrue on the Series D Preferred Stock. If dividends are declared on the Company’s Class A, Class B, or Class C Common Stock, the holders of the Series D Preferred Stock will participate in such dividends on a per share basis, pari passu with the Classes of Common Stock.
Voting Rights - The Series D Preferred Stock will vote together with the Class A Common Stock on a one-vote-for-one-Preferred-share basis. As long as any shares of Series D Preferred Stock are outstanding, the Company may not, without the affirmative vote or written consent of the holders of a majority of the then outstanding shares of the Series D Preferred Stock, (a) alter or change the powers, preferences or rights given to the Series D Preferred Stock or alter or amend the Certificate of Designation, (b) amend its Certificate of Incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Series D Preferred Stock, or (c) enter into any agreement or arrangement with respect to any of the foregoing.
Liquidation - Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a "Liquidation"), the holders of the Series D Preferred Stock shall participate on a per share basis with the holders of the Class A, Class B, and Class C Common Stock of the Company, and shall be entitled to share equally, on a per share basis, all assets of the Company of whatever kind available for distribution to the holders of all classes of the Common Stock. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each record holder of Series D Preferred Stock.
Conversion - The Series D Preferred Stock shall be convertible automatically into shares of the Company's Class A Common Stock (the “Automatic Conversion”) as follows:
Each share of Series D Preferred Stock will automatically convert into shares of the Company’s Class A Common Stock on the earlier to occur of (a) the fifth day after the twenty-four month anniversary of the original issue date or (b) the fifth day after the date on which the Company’s Class A Common Stock first trades on a national securities exchange (including but not limited to NASDAQ, NYSE, or NYSE American but excluding OTCQX Market) (such date, the “Automatic Conversion Date”).
The number of shares of the Company’s Class A Common Stock into which the Series D Preferred Stock shall be converted shall be determined by multiplying the number of shares of Series D Preferred Stock to be converted by the $3.50 stated value, and then dividing that product by the Conversion Price. The Conversion Price shall be equal to the Variable Weighted Average Price (“VWAP”) of the five Trading Days prior to the Automatic Conversion Date. “VWAP” shall be defined as the volume weighted average price of the Company’s Class A Common Stock on the OTC Markets or other stock exchange or trading medium where such shares are traded as reported by Bloomberg, L.P. using the VWAP function. If for any reason, VWAP cannot be thus determined, “VWAP” shall mean the average closing or last sale prices over the five Trading Days prior to the Automatic Conversion Date of the Company’s Class A Common Stock on the OTC Markets or such other exchange or trading medium.
Restrictions on Resales of Class A Common Stock - The sale of shares of the Company’s Class A Common Stock issued at the time of conversion by any holder into the market or to any private purchaser shall be limited to not more than twenty-five percent (25%) of all conversion shares received by such holder at the time of the automatic conversion in any given 90-day period.
Company Redemption Rights - At any time on or prior to the Automatic Conversion Date, the Company shall have the right to redeem all (but not less than all) shares of the Series D Preferred Stock issued and outstanding at any time after the original issue date, upon three (3) business days’ notice, at a redemption price per share of Series D Preferred Stock then issued and outstanding (the “Corporation Redemption Price”), equal to the stated value of $3.50 per share.
Registration Rights - The shares issued on conversion of the Series D Preferred Stock have piggyback registration rights beginning on that date which his six months after the date on which the Company’s Class A Common Stock trades on a national securities exchange, and are subject to standard underwriter holdback limitations.
During the year ended December 31, 2021, the Company issued 1,432,224 shares of Series D Preferred Stock in connection with the acquisition of assets of Vayu that were valued at $6,653,309. The difference in stated value will be accreted over a 24-month period or upon conversion from Series D Preferred Stock to Class A Common stock. As of December 31, 2022 and 2021, 1,432,224 and 1,353,570, respectively, of these shares had been converted to Class A common stock. Prior to conversion the Company recognized accretion to interest income in the amount of $0 and $615,170 for the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2022 and 2021, 0 and 78,674 shares of Series D Preferred Stock were outstanding, respectively.
Stockholders' Equity
Preferred Stock
The Company is authorized to issue 5,000,000 shares of $0.0001 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 December 31, 2022 and 2021, 5 and 5 shares of Series B Preferred Stock were outstanding and were issued to certain members of the Board of Directors for services rendered.
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. Other than the voting rights, the Class A and Class B common stock are identical. Any holder of Class C common stock may convert 25% of his or her shares at any time after the 3rd to 6th anniversary into shares of Class A common stock on a share-for-share basis. Other than the voting rights the Class A and Class C common stock are identical.
The Company had the following transactions in its common stock during the year ended December 31, 2022:
In January 2022, the Company issued 72,152 shares of Class A common stock for no additional consideration upon conversion of 10,149 shares of Series C Preferred Stock and 78,674 of Series D Preferred Stock.
In January 2022, the Company amended the Corporation's Amended and Restated Certificate of Incorporation increasing the authorized capital stock from 195,000,000 to 295,000,000.
In March 2022, the Company issued 39,386 shares of Class A common stock for services with a value of $99,252.
In April 2022, the Company issued 171,850 shares of Class A common stock at a value of $132,325 as employee compensation.
During May and June 2022, the Company issued 76,119 shares of Class A common stock for cash of $55,144 in connection with a registered at-the-market offering (the "ATM Offering").
In July 2022, the Company sold 14,492,754 shares of Class A common stock and 14,492,754 warrants to certain investors, under a registered direct offering, for net proceeds of $9,175,000. The warrants have an exercise price of $0.69 per share and a term of 5 years.
In July 2022, the Company issued 60,600 shares of Class A common stock for cash of $42,318 in connection with its ATM offering.
In August 2022, certain investors exercised 1,449,276 warrants at an exercise price of $0.69, for net proceeds of $1,000,000.
In September 2022, certain shareholders converted 37,500 shares of Class C common stock for 37,500 shares of Class A common stock.
In October 2022, certain shareholders converted 201,806 shares of Class C common stock for 201,806 shares of Class A common stock.
In November 2022, certain shareholders converted 22,662 shares of Class C common stock for 22,662 shares of Class A common stock.
The Company had the following transactions in its common stock during the year ended December 31, 2021:
On February 11, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors to purchase 8,333,333 shares of the Company’s Class A common stock for aggregate gross proceeds of approximately $50 million. A.G.P./Alliance Global Partners served as the placement agent and received a cash fee of 7% of the aggregate gross proceeds and warrants to purchase shares of the Company’s Class A Common Stock equal to 5% of the number of shares sold in the offering with an exercise price of $6.60 per share and are not exercisable until August 16, 2021. Net proceeds from the sale of shares amounted to approximately $45 million.
In February 2021, the Company issued 1,524,064 shares of Class A common stock to an investor for cash for total proceeds of approximately $9.3 million.
On March 17, 2021, the Company repurchased 45,000 shares of Class C common stock for $185,850.
On April 30, 2021, the Company issued 1,617,067 shares of Class A common stock for no additional consideration upon conversion of that number of shares of Class C common stock by the holder of the Class C common stock.
On May 5, 2021, the Company issued 281,223 shares of Class A common stock that were valued at $1,102,394 in connection with the acquisition of TDI.
On May 10, 2021, the Company issued 361,787 shares of Class A common stock that were valued at $1,432,677 in connection with the acquisition of Alt Labs.
On May 17, 2021, the Company issued 350,000 shares of Class A common stock for no additional consideration upon conversion of that number of shares of Class B common stock by the holder of the Class B common stock.
On October 20, 2021, the Company issued 888,881 shares of Class A common stock that were valued at $3,617,746 in connection with the acquisition of Identified Technology.
On November 9, 2021, the Company issued 2,409,248 shares of Class A common stock for no additional consideration upon conversion of 1,704,137 shares of Series D Preferred Stock and 1,353,570 shares of Series C Preferred Stock.
On November 15, 2021 the Company issued 125,000 shares of Class A common stock for no additional consideration upon conversion of that number of shares of Class B common stock by the holder of the Class B common stock .
On November 26, 2021, the Company closed on a registered direct offering where it sold to certain investors a total of 8,571,430 shares of the Company’s Class A common stock and 4,285,715 warrant to purchase shares of Class A common stock for net proceeds of $22,189,152.
On November 29, 2021, the Company issued 1,803,279 shares of Class A common stock that were valued at $4,562,996 in connection with the ElecJet acquisition.
On November 29, 2021, the Company granted 983,636 contingent shares of Class A common stock that were valued at $2,488,599 in connection with the ElecJet acquisition. These contingent shares represent equity compensation for post-acquisition services and are accounted for under ASC 718. Of this amount, 655,758 of the contingent shares valued at $1,659,063 are performance based and management determined the performance conditions were deemed not probable and as such, no expense was recognized for the years ended December 31, 2022 and 2021. The remaining 327,878 shares are a time-based award and is recognized based on the grant-date fair value of the shares of $829,536 over the vesting period of 3-years. As such, the Company recognized $0 and $299,555 of stock based compensation expense related to this award for the years ended December 31, 2021 and 2022, respectively.
On December 9, 2021, in connection with the acquisition of DTI Services Limited Liability Company, the Company issued 1,587,301 shares of its Class A Common Stock that were valued at $3,682,539.
On December 20, 2021, the Company issued 100,000 shares of Class A common stock in connection with the HWT legal proceedings.
On December 29, 2021, the Company issued 99,018 shares of Class A common stock to management in connection with the acquisition of DTI Services Limited Liability Company.
During the year ended December 31, 2021 , the Company issued 7,384,018 shares of Class A common stock for the conversion of total debt and accrued liabilities totaling $1,886,898.
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 years ended December 31, 2022 and 2021:
OptionsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
1,790,000 $0.19 7.09$6,176,855 
Granted— 
Forfeited— 
Exercised— 
Outstanding at December 31, 2021
1,790,000 $0.19 6.09$3,098,055 
Granted2,084,620 $0.77 
Forfeited(781,712)$0.32 
Exercised— $— 
Outstanding at December 31, 2022
3,092,908 $0.55 7.94$463,494 
Vested and expected to vest at December 31, 2022
3,092,909 $0.55 7.94$463,494 
Exercisable at December 31, 2022
1,084,500 $0.14 5.37$463,494 
The following table summarizes information about options outstanding and exercisable as of December 31, 2022:
Options OutstandingOptions Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$0.05 891,500 5.38$0.05 891,500 $0.05 
0.10 85,000 5.280.10 85,000 0.10 
0.13 — 4.580.13 — 0.13 
0.77 2,008,409 9.330.77 — 0.77 
0.90 108,000 4.270.90 108,000 0.90 
3,092,909 1,084,500 
During the years ended December 31, 2022 and 2021, stock option expense amounted to $473,159 and $36,538, respectively. Unrecognized stock option expense as of December 31, 2022 amounted to $1,053,547, which will be recognized over a period extending through December 2023.
During the year ended December 31, 2022, the Company issued 2,084,620 options in connection with the Company's 2021 Employee Equity Incentive Plan (the "Plan"). The options have an exercise price of $0.77, vest annually over a three year vesting period and expire on April 29, 2032.
The fair value of the 2,084,620 options issued in connection with the Plan is $1,534,401, and was determined using the Black-Scholes option pricing model with the following assumptions:
Stock price$0.77 
Risk-free interest rate2.90 %
Expected life of the options6.25 years
Expected volatility158 %
Expected dividend yield%
Warrants
The following summarizes the warrant activity for the years ended December 31, 2022, and 2021:
WarrantsWeighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
275,000 $1.01 0.23$723,250 
Granted5,527,778 3.32
Forfeited(275,000)1.01
Exercised— — 
Outstanding at December 31, 2021
5,527,778 $3.32 4.62$— 
Granted14,492,754 0.69
Forfeited— — 
Exercised(1,449,276)0.69 
Outstanding at December 31, 2022
18,571,256 $1.47 4.31$— 
Vested and expected to vest at December 31, 2022
18,571,256 $1.47 4.31$— 
Exercisable at December 31, 2022
18,571,256 $1.47 4.31$— 
The following table summarizes information about warrants outstanding and exercisable as of December 31, 2022:
Warrants OutstandingWarrants Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$6.60 416,667 2.13$6.60 416,667 $6.60 
2.52 396,825 1.942.52 396,825 2.52 
3.10 4,285,715 3.93.10 4,285,715 3.1 
3.08 428,571 3.93.08 428,571 3.08 
0.6913,043,478 4.60.6913,043,478 0.69 
18,571,256 18,571,256 
During the year ended December 31, 2021, the Company issued 416,667 warrants to a placement agent in connection with sale of its common stock. The warrants have an exercise price of $6.60, were exercisable as of August 16, 2021 and expire on February 16, 2025. The Company issued another 428,571 warrants to a placement agent in connection with the sale of its common stock. The warrants have an exercise price of $3.08, were
exercisable as of May 26, 2021 and expire November 22, 2026. The Company issued another 396,825 warrants in connection to the RCA acquisition. The warrants have an exercise price of $2.52, were exercisable as of December 9, 2021 and expire December 9, 2024. During July 2022, the Company issued another 14,492,754 warrants to certain investors in connection with the sale of its common stock. The warrants have an exercise price of 0.69, were exercisable as of as of July 13, 2022, and expire July 13, 2027.
The fair value of the 416,667, 428,571, and the 396,825 warrants issued to the placement agent in connection with a registered direct offering, and to the RCA sellers in connection with the DTI/RCA acquisition (discussed below in Note 7) during the year ended December 31, 2021, are $2,498,637, $902,414, and $668,863 respectively and was determined using the Black-Scholes option pricing model. The fair value of the 14,492,754 warrants issued to the placement agent during the year ended December 31, 2022, are $7,083,038, and was determined using the Black-Scholes option pricing model. All of these warrants were determined using the following assumptions:
Stock price
$0.62 - 7.03
Risk-free interest rate
0.01 - 1.02%
Expected life of the options
1.5-5 years
Expected volatility
157-347%
Expected dividend yield%
Stockholders' EquityOn May 12, 2023, a Certificate of Amendment was filed to effect a one-for-eight (1-for-8) reverse split (the “Reverse Split”) of the shares of the Company’s the Class A, Class B, and Class C Common Stock, and to decrease the number of shares of Class A Common Stock from 295,000,000 shares to 200,000,000 shares (the “Class A Common Stock Decrease”). The Reverse Split and the Class A Common Stock Decrease became effective on May 12, 2023. As a result of the Reverse Split, every eight shares of the Company’s issued and outstanding Class A
Common Stock automatically converted into one share of Class A Common Stock, without any change in the par value per share, and began trading on a post-split basis under the Company’s existing trading symbol, “ALPP,” when the market opened on May 15, 2023. Additionally, every eight shares of the Company’s issued and outstanding Class B Common Stock automatically converted into one share of Class B Common Stock, without any change in the par value per share, and every eight shares of the Company’s issued and outstanding Class C Common Stock automatically converted into one share of Class C Common Stock, without any change in the par value per share. The Reverse Split affected all holders of Class A, Class B, and Class C Common Stock uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares. A total of 180,037,350 shares of Class A Common Stock were issued and outstanding immediately prior to the Reverse Split, and approximately 22,504,669 shares of common stock were issued and outstanding immediately after the Reverse Split. No fractional shares will be outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock will automatically be entitled to receive an additional fraction of a share of common stock to round up to the next whole share. In addition, effective as of the same time as the Reverse Split, proportionate adjustments were made to all then-outstanding options and warrants with respect to the number of shares of Class A Common Stock subject to such options or warrants and the exercise prices thereof. The impact of this change in capital structure has been retrospectively applied to all periods presented herein.
Common Stock
The Company had the following transactions in its common stock during the three months ended March 31, 2023:
In January 2023, certain shareholders converted 1,428 shares of Class C common stock into 1,428 shares of Class A common stock.
Series B Preferred Stock
During February 2023, the Company identified that it had inappropriately awarded a Series B Preferred Share to an executive officer who is not also a board member. As the Series B Preferred Shares can only be held by members of the Board, the share issuance was rescinded.
Stock Options
The following summarizes the stock option activity for the three months ended March 31, 2023:
OptionsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2022
386,751 $4.39 7.94$463,495 
Granted— — 
Forfeited(7,689)6.16 
Exercised— — 
Outstanding at March 31, 2023
379,062 $4.35 7.67$444,942 
Vested and expected to vest at March 31, 2023
379,062 $4.35 7.67$444,942 
Exercisable at March 31, 2023
135,567 $1.11 5.12$444,942 
The following table summarizes information about options outstanding and exercisable as of March 31, 2023:
Options OutstandingOptions Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$0.05 111,438 5.26$0.40 111,438 $0.40 
0.10 10,625 5.030.80 10,625 0.80 
0.77 243,495 9.086.16 — — 
0.90 13,504 4.027.20 13,504 7.20 
379,062 135,567 
During the three months ended March 31, 2023 and 2022, stock option expense amounted to $0.2 million and $0.2 million, respectively. Unrecognized stock option expense as of March 31, 2023, amounted to $0.9 million, which will be recognized over a period extending through April 2025.
Warrants
The following summarizes the warrants activity for the three months ended March 31, 2023:
WarrantsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2022
2,321,411 $11.78 4.31$— 
Granted— — 0
Forfeited— — 
Exercised— — 
Outstanding at March 31, 2023
2,321,411 $11.78 4.02$— 
Vested and expected to vest at March 31, 2023
2,321,411 $11.78 4.02$— 
Exercisable at March 31, 2023
2,321,411 $11.78 4.02$— 
The following table summarizes information about warrants outstanding and exercisable as of March 31, 2023:
Warrants OutstandingWarrants Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$52.80 52,084 1.89$52.80 52,084 $52.80 
20.16 49,604 1.7020.16 49,604 20.16
24.80 535,716 3.6624.80 535,716 24.80
24.64 53,572 3.6524.64 53,572 24.64
5.52 1,630,435 4.29$5.52 1,630,435 5.52
 2,321,411 2,321,411 

v3.23.2
Stockholders' Equity
6 Months Ended
Jun. 30, 2023
Equity [Abstract]  
Stockholders' Equity Preferred Stock Subject to Redemption
Series C Preferred Stock
The Company designated 2,028,572 shares of Series C Preferred Stock with a stated value of $3.50 per share. No dividends will accrue on the Series C Preferred Stock. If dividends are declared on the Company’s Class A, Class B, or Class C Common Stock, the holders of the Series C Preferred Stock will participate in such dividends on a per share basis, pari passu with the Classes of Common Stock.
Voting Rights - The Series C Preferred Stock will vote together with the Class A Common Stock on a one-vote-for-one-Preferred-share basis. As long as any shares of Series C Preferred Stock are outstanding, the Company may not, without the affirmative vote or written consent of the holders of a majority of the then outstanding shares of the Series C Preferred Stock, (a) alter or change the powers, preferences or rights given to the Series C Preferred Stock or alter or amend the Certificate of Designation, (b) amend its Certificate of Incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Series C Preferred Stock, or (c) enter into any agreement or arrangement with respect to any of the foregoing.
Liquidation - Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a "Liquidation"), the holders of the Series C Preferred Stock shall participate on a per share basis with the holders of the Class A, Class B, and Class C Common Stock of the Company, and shall be entitled to share equally, on a per share basis, all assets of the Company of whatever kind available for distribution to the holders of all classes of the Common Stock. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each record holder of Series C Preferred Stock.
Conversion - The Series C Preferred Stock shall be convertible automatically into shares of the Company's Class A Common Stock (the “Automatic Conversion”) as follows: 
Each share of Series C Preferred Stock will automatically convert into shares of the Company’s Class A Common Stock on the earlier to occur of (a) the fifth day after the twenty-four month anniversary of the original issue date or (b) the fifth day after the date on which the Company’s Class A Common Stock first
trades on a national securities exchange (including but not limited to NASDAQ, NYSE, or NYSE American but excluding OTCQX Market) (such date, the “Automatic Conversion Date”).
The number of shares of the Company’s Class A Common Stock into which the Series C Preferred Stock shall be converted shall be determined by multiplying the number of shares of Series C Preferred Stock to be converted by the $3.50 stated value, and then dividing that product by the Conversion Price. The Conversion Price shall be equal to the Variable Weighted Average Price (“VWAP”) of the five Trading Days prior to the Automatic Conversion Date. “VWAP” shall be defined as the volume weighted average price of the Company’s Class A Common Stock on the OTC Markets or other stock exchange or trading medium where such shares are traded as reported by Bloomberg, L.P. using the VWAP function. If for any reason, VWAP cannot be thus determined, “VWAP” shall mean the average closing or last sale prices over the five Trading Days prior to the Automatic Conversion Date of the Company’s Class A Common Stock on the OTC Markets or such other exchange or trading medium.
Restrictions on Resales of Class C Common Stock - The sale of shares of the Company’s Class A Common Stock issued at the time of conversion by any holder into the market or to any private purchaser shall be limited to not more than twenty-five percent (25%) of all conversion shares received by such holder at the time of the automatic conversion in any given 120-day period.
Company Redemption Rights - At any time on or prior to the Automatic Conversion Date, the Company shall have the right to redeem all (but not less than all) shares of the Series C Preferred Stock issued and outstanding at any time after the original issue date, upon three (3) business days’ notice, at a redemption price per share of Series C Preferred Stock then issued and outstanding (the “Corporation Redemption Price”), equal to the stated value of $3.50 per share.
During the year ended December 31, 2020, the Company issued 1,714,286 shares of Series C Preferred Stock in connection with the acquisition of assets of IA that were valued at $5,848,013. The difference in stated value will be accreted over a 24 month period or upon conversion from Series C Preferred Stock to Class A Common stock. As of December 31, 2022, and 2021, 1,714,286 and 1,704,137, respectively, of these shares had been converted to Class A common stock. Prior to conversion the Company recognized accretion to interest expense in the amount of $0 and $69,661 for the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2022 and 2021, 0 and 10,149 shares of Series C Preferred Stock were outstanding, respectively.
Series D Preferred Stock
The Company designated 1,628,572 shares of Series D Preferred Stock with a stated value of $3.50 per share. No dividends will accrue on the Series D Preferred Stock. If dividends are declared on the Company’s Class A, Class B, or Class C Common Stock, the holders of the Series D Preferred Stock will participate in such dividends on a per share basis, pari passu with the Classes of Common Stock.
Voting Rights - The Series D Preferred Stock will vote together with the Class A Common Stock on a one-vote-for-one-Preferred-share basis. As long as any shares of Series D Preferred Stock are outstanding, the Company may not, without the affirmative vote or written consent of the holders of a majority of the then outstanding shares of the Series D Preferred Stock, (a) alter or change the powers, preferences or rights given to the Series D Preferred Stock or alter or amend the Certificate of Designation, (b) amend its Certificate of Incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Series D Preferred Stock, or (c) enter into any agreement or arrangement with respect to any of the foregoing.
Liquidation - Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a "Liquidation"), the holders of the Series D Preferred Stock shall participate on a per share basis with the holders of the Class A, Class B, and Class C Common Stock of the Company, and shall be entitled to share equally, on a per share basis, all assets of the Company of whatever kind available for distribution to the holders of all classes of the Common Stock. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each record holder of Series D Preferred Stock.
Conversion - The Series D Preferred Stock shall be convertible automatically into shares of the Company's Class A Common Stock (the “Automatic Conversion”) as follows:
Each share of Series D Preferred Stock will automatically convert into shares of the Company’s Class A Common Stock on the earlier to occur of (a) the fifth day after the twenty-four month anniversary of the original issue date or (b) the fifth day after the date on which the Company’s Class A Common Stock first trades on a national securities exchange (including but not limited to NASDAQ, NYSE, or NYSE American but excluding OTCQX Market) (such date, the “Automatic Conversion Date”).
The number of shares of the Company’s Class A Common Stock into which the Series D Preferred Stock shall be converted shall be determined by multiplying the number of shares of Series D Preferred Stock to be converted by the $3.50 stated value, and then dividing that product by the Conversion Price. The Conversion Price shall be equal to the Variable Weighted Average Price (“VWAP”) of the five Trading Days prior to the Automatic Conversion Date. “VWAP” shall be defined as the volume weighted average price of the Company’s Class A Common Stock on the OTC Markets or other stock exchange or trading medium where such shares are traded as reported by Bloomberg, L.P. using the VWAP function. If for any reason, VWAP cannot be thus determined, “VWAP” shall mean the average closing or last sale prices over the five Trading Days prior to the Automatic Conversion Date of the Company’s Class A Common Stock on the OTC Markets or such other exchange or trading medium.
Restrictions on Resales of Class A Common Stock - The sale of shares of the Company’s Class A Common Stock issued at the time of conversion by any holder into the market or to any private purchaser shall be limited to not more than twenty-five percent (25%) of all conversion shares received by such holder at the time of the automatic conversion in any given 90-day period.
Company Redemption Rights - At any time on or prior to the Automatic Conversion Date, the Company shall have the right to redeem all (but not less than all) shares of the Series D Preferred Stock issued and outstanding at any time after the original issue date, upon three (3) business days’ notice, at a redemption price per share of Series D Preferred Stock then issued and outstanding (the “Corporation Redemption Price”), equal to the stated value of $3.50 per share.
Registration Rights - The shares issued on conversion of the Series D Preferred Stock have piggyback registration rights beginning on that date which his six months after the date on which the Company’s Class A Common Stock trades on a national securities exchange, and are subject to standard underwriter holdback limitations.
During the year ended December 31, 2021, the Company issued 1,432,224 shares of Series D Preferred Stock in connection with the acquisition of assets of Vayu that were valued at $6,653,309. The difference in stated value will be accreted over a 24-month period or upon conversion from Series D Preferred Stock to Class A Common stock. As of December 31, 2022 and 2021, 1,432,224 and 1,353,570, respectively, of these shares had been converted to Class A common stock. Prior to conversion the Company recognized accretion to interest income in the amount of $0 and $615,170 for the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2022 and 2021, 0 and 78,674 shares of Series D Preferred Stock were outstanding, respectively.
Stockholders' Equity
Preferred Stock
The Company is authorized to issue 5,000,000 shares of $0.0001 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 December 31, 2022 and 2021, 5 and 5 shares of Series B Preferred Stock were outstanding and were issued to certain members of the Board of Directors for services rendered.
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. Other than the voting rights, the Class A and Class B common stock are identical. Any holder of Class C common stock may convert 25% of his or her shares at any time after the 3rd to 6th anniversary into shares of Class A common stock on a share-for-share basis. Other than the voting rights the Class A and Class C common stock are identical.
The Company had the following transactions in its common stock during the year ended December 31, 2022:
In January 2022, the Company issued 72,152 shares of Class A common stock for no additional consideration upon conversion of 10,149 shares of Series C Preferred Stock and 78,674 of Series D Preferred Stock.
In January 2022, the Company amended the Corporation's Amended and Restated Certificate of Incorporation increasing the authorized capital stock from 195,000,000 to 295,000,000.
In March 2022, the Company issued 39,386 shares of Class A common stock for services with a value of $99,252.
In April 2022, the Company issued 171,850 shares of Class A common stock at a value of $132,325 as employee compensation.
During May and June 2022, the Company issued 76,119 shares of Class A common stock for cash of $55,144 in connection with a registered at-the-market offering (the "ATM Offering").
In July 2022, the Company sold 14,492,754 shares of Class A common stock and 14,492,754 warrants to certain investors, under a registered direct offering, for net proceeds of $9,175,000. The warrants have an exercise price of $0.69 per share and a term of 5 years.
In July 2022, the Company issued 60,600 shares of Class A common stock for cash of $42,318 in connection with its ATM offering.
In August 2022, certain investors exercised 1,449,276 warrants at an exercise price of $0.69, for net proceeds of $1,000,000.
In September 2022, certain shareholders converted 37,500 shares of Class C common stock for 37,500 shares of Class A common stock.
In October 2022, certain shareholders converted 201,806 shares of Class C common stock for 201,806 shares of Class A common stock.
In November 2022, certain shareholders converted 22,662 shares of Class C common stock for 22,662 shares of Class A common stock.
The Company had the following transactions in its common stock during the year ended December 31, 2021:
On February 11, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors to purchase 8,333,333 shares of the Company’s Class A common stock for aggregate gross proceeds of approximately $50 million. A.G.P./Alliance Global Partners served as the placement agent and received a cash fee of 7% of the aggregate gross proceeds and warrants to purchase shares of the Company’s Class A Common Stock equal to 5% of the number of shares sold in the offering with an exercise price of $6.60 per share and are not exercisable until August 16, 2021. Net proceeds from the sale of shares amounted to approximately $45 million.
In February 2021, the Company issued 1,524,064 shares of Class A common stock to an investor for cash for total proceeds of approximately $9.3 million.
On March 17, 2021, the Company repurchased 45,000 shares of Class C common stock for $185,850.
On April 30, 2021, the Company issued 1,617,067 shares of Class A common stock for no additional consideration upon conversion of that number of shares of Class C common stock by the holder of the Class C common stock.
On May 5, 2021, the Company issued 281,223 shares of Class A common stock that were valued at $1,102,394 in connection with the acquisition of TDI.
On May 10, 2021, the Company issued 361,787 shares of Class A common stock that were valued at $1,432,677 in connection with the acquisition of Alt Labs.
On May 17, 2021, the Company issued 350,000 shares of Class A common stock for no additional consideration upon conversion of that number of shares of Class B common stock by the holder of the Class B common stock.
On October 20, 2021, the Company issued 888,881 shares of Class A common stock that were valued at $3,617,746 in connection with the acquisition of Identified Technology.
On November 9, 2021, the Company issued 2,409,248 shares of Class A common stock for no additional consideration upon conversion of 1,704,137 shares of Series D Preferred Stock and 1,353,570 shares of Series C Preferred Stock.
On November 15, 2021 the Company issued 125,000 shares of Class A common stock for no additional consideration upon conversion of that number of shares of Class B common stock by the holder of the Class B common stock .
On November 26, 2021, the Company closed on a registered direct offering where it sold to certain investors a total of 8,571,430 shares of the Company’s Class A common stock and 4,285,715 warrant to purchase shares of Class A common stock for net proceeds of $22,189,152.
On November 29, 2021, the Company issued 1,803,279 shares of Class A common stock that were valued at $4,562,996 in connection with the ElecJet acquisition.
On November 29, 2021, the Company granted 983,636 contingent shares of Class A common stock that were valued at $2,488,599 in connection with the ElecJet acquisition. These contingent shares represent equity compensation for post-acquisition services and are accounted for under ASC 718. Of this amount, 655,758 of the contingent shares valued at $1,659,063 are performance based and management determined the performance conditions were deemed not probable and as such, no expense was recognized for the years ended December 31, 2022 and 2021. The remaining 327,878 shares are a time-based award and is recognized based on the grant-date fair value of the shares of $829,536 over the vesting period of 3-years. As such, the Company recognized $0 and $299,555 of stock based compensation expense related to this award for the years ended December 31, 2021 and 2022, respectively.
On December 9, 2021, in connection with the acquisition of DTI Services Limited Liability Company, the Company issued 1,587,301 shares of its Class A Common Stock that were valued at $3,682,539.
On December 20, 2021, the Company issued 100,000 shares of Class A common stock in connection with the HWT legal proceedings.
On December 29, 2021, the Company issued 99,018 shares of Class A common stock to management in connection with the acquisition of DTI Services Limited Liability Company.
During the year ended December 31, 2021 , the Company issued 7,384,018 shares of Class A common stock for the conversion of total debt and accrued liabilities totaling $1,886,898.
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 years ended December 31, 2022 and 2021:
OptionsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
1,790,000 $0.19 7.09$6,176,855 
Granted— 
Forfeited— 
Exercised— 
Outstanding at December 31, 2021
1,790,000 $0.19 6.09$3,098,055 
Granted2,084,620 $0.77 
Forfeited(781,712)$0.32 
Exercised— $— 
Outstanding at December 31, 2022
3,092,908 $0.55 7.94$463,494 
Vested and expected to vest at December 31, 2022
3,092,909 $0.55 7.94$463,494 
Exercisable at December 31, 2022
1,084,500 $0.14 5.37$463,494 
The following table summarizes information about options outstanding and exercisable as of December 31, 2022:
Options OutstandingOptions Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$0.05 891,500 5.38$0.05 891,500 $0.05 
0.10 85,000 5.280.10 85,000 0.10 
0.13 — 4.580.13 — 0.13 
0.77 2,008,409 9.330.77 — 0.77 
0.90 108,000 4.270.90 108,000 0.90 
3,092,909 1,084,500 
During the years ended December 31, 2022 and 2021, stock option expense amounted to $473,159 and $36,538, respectively. Unrecognized stock option expense as of December 31, 2022 amounted to $1,053,547, which will be recognized over a period extending through December 2023.
During the year ended December 31, 2022, the Company issued 2,084,620 options in connection with the Company's 2021 Employee Equity Incentive Plan (the "Plan"). The options have an exercise price of $0.77, vest annually over a three year vesting period and expire on April 29, 2032.
The fair value of the 2,084,620 options issued in connection with the Plan is $1,534,401, and was determined using the Black-Scholes option pricing model with the following assumptions:
Stock price$0.77 
Risk-free interest rate2.90 %
Expected life of the options6.25 years
Expected volatility158 %
Expected dividend yield%
Warrants
The following summarizes the warrant activity for the years ended December 31, 2022, and 2021:
WarrantsWeighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
275,000 $1.01 0.23$723,250 
Granted5,527,778 3.32
Forfeited(275,000)1.01
Exercised— — 
Outstanding at December 31, 2021
5,527,778 $3.32 4.62$— 
Granted14,492,754 0.69
Forfeited— — 
Exercised(1,449,276)0.69 
Outstanding at December 31, 2022
18,571,256 $1.47 4.31$— 
Vested and expected to vest at December 31, 2022
18,571,256 $1.47 4.31$— 
Exercisable at December 31, 2022
18,571,256 $1.47 4.31$— 
The following table summarizes information about warrants outstanding and exercisable as of December 31, 2022:
Warrants OutstandingWarrants Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$6.60 416,667 2.13$6.60 416,667 $6.60 
2.52 396,825 1.942.52 396,825 2.52 
3.10 4,285,715 3.93.10 4,285,715 3.1 
3.08 428,571 3.93.08 428,571 3.08 
0.6913,043,478 4.60.6913,043,478 0.69 
18,571,256 18,571,256 
During the year ended December 31, 2021, the Company issued 416,667 warrants to a placement agent in connection with sale of its common stock. The warrants have an exercise price of $6.60, were exercisable as of August 16, 2021 and expire on February 16, 2025. The Company issued another 428,571 warrants to a placement agent in connection with the sale of its common stock. The warrants have an exercise price of $3.08, were
exercisable as of May 26, 2021 and expire November 22, 2026. The Company issued another 396,825 warrants in connection to the RCA acquisition. The warrants have an exercise price of $2.52, were exercisable as of December 9, 2021 and expire December 9, 2024. During July 2022, the Company issued another 14,492,754 warrants to certain investors in connection with the sale of its common stock. The warrants have an exercise price of 0.69, were exercisable as of as of July 13, 2022, and expire July 13, 2027.
The fair value of the 416,667, 428,571, and the 396,825 warrants issued to the placement agent in connection with a registered direct offering, and to the RCA sellers in connection with the DTI/RCA acquisition (discussed below in Note 7) during the year ended December 31, 2021, are $2,498,637, $902,414, and $668,863 respectively and was determined using the Black-Scholes option pricing model. The fair value of the 14,492,754 warrants issued to the placement agent during the year ended December 31, 2022, are $7,083,038, and was determined using the Black-Scholes option pricing model. All of these warrants were determined using the following assumptions:
Stock price
$0.62 - 7.03
Risk-free interest rate
0.01 - 1.02%
Expected life of the options
1.5-5 years
Expected volatility
157-347%
Expected dividend yield%
Stockholders' EquityOn May 12, 2023, a Certificate of Amendment was filed to effect a one-for-eight (1-for-8) reverse split (the “Reverse Split”) of the shares of the Company’s the Class A, Class B, and Class C Common Stock, and to decrease the number of shares of Class A Common Stock from 295,000,000 shares to 200,000,000 shares (the “Class A Common Stock Decrease”). The Reverse Split and the Class A Common Stock Decrease became effective on May 12, 2023. As a result of the Reverse Split, every eight shares of the Company’s issued and outstanding Class A
Common Stock automatically converted into one share of Class A Common Stock, without any change in the par value per share, and began trading on a post-split basis under the Company’s existing trading symbol, “ALPP,” when the market opened on May 15, 2023. Additionally, every eight shares of the Company’s issued and outstanding Class B Common Stock automatically converted into one share of Class B Common Stock, without any change in the par value per share, and every eight shares of the Company’s issued and outstanding Class C Common Stock automatically converted into one share of Class C Common Stock, without any change in the par value per share. The Reverse Split affected all holders of Class A, Class B, and Class C Common Stock uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares. A total of 180,037,350 shares of Class A Common Stock were issued and outstanding immediately prior to the Reverse Split, and approximately 22,504,669 shares of common stock were issued and outstanding immediately after the Reverse Split. No fractional shares will be outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock will automatically be entitled to receive an additional fraction of a share of common stock to round up to the next whole share. In addition, effective as of the same time as the Reverse Split, proportionate adjustments were made to all then-outstanding options and warrants with respect to the number of shares of Class A Common Stock subject to such options or warrants and the exercise prices thereof. The impact of this change in capital structure has been retrospectively applied to all periods presented herein.
Common Stock
The Company had the following transactions in its common stock during the three months ended March 31, 2023:
In January 2023, certain shareholders converted 1,428 shares of Class C common stock into 1,428 shares of Class A common stock.
Series B Preferred Stock
During February 2023, the Company identified that it had inappropriately awarded a Series B Preferred Share to an executive officer who is not also a board member. As the Series B Preferred Shares can only be held by members of the Board, the share issuance was rescinded.
Stock Options
The following summarizes the stock option activity for the three months ended March 31, 2023:
OptionsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2022
386,751 $4.39 7.94$463,495 
Granted— — 
Forfeited(7,689)6.16 
Exercised— — 
Outstanding at March 31, 2023
379,062 $4.35 7.67$444,942 
Vested and expected to vest at March 31, 2023
379,062 $4.35 7.67$444,942 
Exercisable at March 31, 2023
135,567 $1.11 5.12$444,942 
The following table summarizes information about options outstanding and exercisable as of March 31, 2023:
Options OutstandingOptions Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$0.05 111,438 5.26$0.40 111,438 $0.40 
0.10 10,625 5.030.80 10,625 0.80 
0.77 243,495 9.086.16 — — 
0.90 13,504 4.027.20 13,504 7.20 
379,062 135,567 
During the three months ended March 31, 2023 and 2022, stock option expense amounted to $0.2 million and $0.2 million, respectively. Unrecognized stock option expense as of March 31, 2023, amounted to $0.9 million, which will be recognized over a period extending through April 2025.
Warrants
The following summarizes the warrants activity for the three months ended March 31, 2023:
WarrantsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2022
2,321,411 $11.78 4.31$— 
Granted— — 0
Forfeited— — 
Exercised— — 
Outstanding at March 31, 2023
2,321,411 $11.78 4.02$— 
Vested and expected to vest at March 31, 2023
2,321,411 $11.78 4.02$— 
Exercisable at March 31, 2023
2,321,411 $11.78 4.02$— 
The following table summarizes information about warrants outstanding and exercisable as of March 31, 2023:
Warrants OutstandingWarrants Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$52.80 52,084 1.89$52.80 52,084 $52.80 
20.16 49,604 1.7020.16 49,604 20.16
24.80 535,716 3.6624.80 535,716 24.80
24.64 53,572 3.6524.64 53,572 24.64
5.52 1,630,435 4.29$5.52 1,630,435 5.52
 2,321,411 2,321,411 

v3.23.2
Business Combinations
6 Months Ended
Jun. 30, 2023
Business Combination and Asset Acquisition [Abstract]  
Business Combinations Business Combinations
or the various acquisitions noted below that occurred during the year ended December 31, 2021, there were minimal amounts of transaction costs incurred by the Company ranging from $0-$40,000 that are deemed immaterial. Any transactions costs associated with each acquisition below was expensed as incurred, and are recorded within General & Administrative expenses on the Consolidated Statements of Operations.
Vayu (US)
Effective February 8, 2021, the Company purchased Vayu Inc to add to its A4 Aerospace services portfolio of companies. The purchase agreement provides for the Company to purchase all the outstanding shares of Vayu and its assets. Under the provision of ASC 805 Business Combinations, the Company determined that the acquisition of Vayu was an asset acquisition as more than 95% was concentrated in a single asset or a group of assets in Intellectual Property. As such, the Company accounted for this acquisition as an asset acquisition in accordance with ASC 805-10-20. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the fair value of the Series D preferred stock issued, including direct acquisition costs. The cost is allocated to the group of assets acquired based on their relative fair values. The assets acquired and liabilities assumed were as follows at the acquisition date:
Purchase Allocation
Cash$81,442 
Property and equipment56,011 
Intellectual property8,406,743 
Non-compete agreement100,819 
Deferred tax liability(1,362,667)
Accrued expenses and other current liabilities(564,039)
SBA loan (PPP funds)(65,000)
$6,653,309 
The purchase price was paid as follows:
Series D Preferred Stock (1,432,244 shares)
$6,653,309 
$6,653,309 
TDI
On May 5 2021, the Company purchased Thermal Dynamics, Inc, (“TDI”), to add to its A4 Defense services portfolio of companies. Under the provision of ASC 805 Business Combinations, the acquisition is considered an acquisition of a business since the Company is acquiring the outstanding capital of TDI and continuing the business of TDI with defined inputs and substantive processes that contribute to the ability to create outputs. A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Accounts receivable$1,408,682 
Property and equipment111,789 
Customer list3,840,000 
Non-compete agreement120,000 
Goodwill6,426,786 
Other asset91,000 
Accounts payable(786,151)
Accrued expenses and other current liabilities(53,857)
Contract liabilities(3,637,122)
Notes payable(64,733)
$7,456,394 
The purchase price was paid as follows:
Class A Common Stock (281,223 shares)
$1,102,394 
Cash6,354,000 
$7,456,394 
Alt Labs
On May 10, 2021, the Company closed on the acquisition of Alternative Laboratories, LLC (Alt Labs) to add to its A4 Manufacturing services portfolio. Under the provision of ASC 805 Business Combinations, the acquisition is considered an acquisition of a business since the Company is acquiring the outstanding capital of Alt Labs and
continuing the business of Alt Labs with defined inputs and substantive processes that contribute to the ability to create outputs. A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Accounts receivable$397,441 
Inventory2,621,653 
Property and equipment1,739,441 
Customer list1,250,000 
Proprietary technology3,670,000 
Non-compete agreement20,000 
Goodwill4,410,564 
Other assets390,502 
Accounts payable(397,441)
Accrued expenses and other current liabilities(411,830)
Contract liabilities(1,754,290)
Notes payable(33,363)
$11,902,677 
The purchase price was paid as follows:
Class A Common Stock (361,847 shares)
$1,432,677 
Cash10,470,000 
$11,902,677 
On May 4, 2021, the Company also entered into an agreement to acquire the 100% membership interest in 4740 Cleveland LLC (“Cleveland”), a Florida limited liability company that is the owner of the building currently being leased by Alt Labs, for a total purchase price of $7,000,000. The Company closed on the purchase of the building in August 2021.
Identified Technologies
On October 20, 2021, the Company entered into a Stock Purchase Agreement with Identified Technologies Corporation (IDT) to add to its A4 Aerospace services portfolio of companies. Under the provision of ASC 805 Business Combinations, the acquisition is considered an acquisition of a business since the Company is acquiring the outstanding capital of IDT and continuing the business of IDT with defined inputs and substantive processes that contribute to the ability to create outputs. A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Accounts receivable$90,858 
Other asset27,469 
Proprietary technology1,650,000 
Tradename210,000 
Goodwill1,913,310 
Non-compete agreement90,000 
Accrued expenses and other current liabilities(363,856)
$3,617,781 
The purchase price was paid as follows:
Cash$35 
Class A Common Stock (888,881 shares)
3,617,746 
$3,617,781 
ElecJet
On November 29, 2021, the Company acquired ElecJet Corp (ElecJet) to add to its A4 Technology portfolio of companies. Under the provision of ASC 805 Business Combinations, the acquisition is considered an acquisition of a business since the Company is acquiring the outstanding capital of Elecjet and continuing the business of ElecJet with defined inputs and substantive processes that contribute to the ability to create outputs. As part of the acquisition there was a contingent royalty agreement based on potential future graphene batteries. More detail of this agreement can be found in Note 11. It was determined that this contingent agreement had a FMV of $0 at the date of acquisition. A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Cash$27,466 
Accounts receivable30,000 
Inventory95,000 
Proprietary technology 5,890,000 
Non-compete agreement200,000 
Goodwill6,496,343 
Deferred tax liability(1,562,074)
Accrued expenses and other current liabilities(113,742)
$11,062,993 
The purchase price was paid as follows:
Cash$6,500,000 
Class A Common Stock (1,803,279)
4,562,993 
$11,062,993 
DTI Services (doing business as RCA Commercial Electronics)
On December 13, 2021, the Company purchased DTI Services (RCA), to add to its technology portfolio of companies. Under the provision of ASC 805 Business Combinations, the acquisition is considered an acquisition of a business since the Company is acquiring the outstanding capital of RCA and continuing the business of RCA with
defined inputs and substantive processes that contribute to the ability to create outputs. A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Accounts receivable$3,409,230 
Other current assets1,259,556 
Inventory12,477,872 
Property and equipment761,370 
Customer list6,300,000 
Trademark620,000 
Non-compete agreement690,000 
Goodwill1,355,728 
ROU asset1,196,764 
Accounts payable(951,302)
Accrued expenses and other current liabilities(677,720)
Customer deposits(153,201)
Operating lease liability(1,226,128)
Line of credit(4,710,768)
$20,351,401 
The purchase price was paid as follows:
Cash$14,000,000 
Class A Common Stock (1,587,301 shares)
3,682,538 
Warrants (396,825 shares)
668,863 
Seller notes2,000,000 
$20,351,401 
For tax purposes, the Goodwill associated with the business combinations of TDI, Alt Labs, and RCA described above will be deductible under IRC section 197 as the transactions were treated as an asset purchase. The Goodwill associated with the business combinations of Identified Technology and ElecJet described above is not deductible for tax purposes.
The following are the unaudited pro forma results of operations for the years ended December 31, 2022 and 2021, as if Excel, IA, Vayu, TDI, Alt Labs, Identified Technology, ElecJet, and RCA had been acquired on January 1, 2021. 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)
Years Ended December 31,
20222021
Sales$104,563,002 $98,321,144 
Cost of goods sold82,848,600 75,523,745 
Gross profit21,714,402 22,797,399 
Operating expenses32,470,186 38,643,670 
Loss from operations(10,755,784)(15,846,271)
Net loss from continuing operations(12,875,313)(12,144,338)
Loss per share(0.07)(0.06)

v3.23.2
Equity Investments
6 Months Ended
Jun. 30, 2023
Investments, Debt and Equity Securities [Abstract]  
Equity Investments Equity Investments
AmplifeiIntl LLC
On September 15, 2021, A4 Manufacturing, Inc. entered into a Membership Interest Purchase Agreement acquiring approximately a 9% membership interest in AmplifeiIntl LLC (also doing business as Happinss) (“Amplifei”). The membership interest is non-voting and the Company does not have the ability to exercise significant influence over operating and financial activities. The equity investment is being valued using cost as there is no market for the membership units, and accordingly, no quoted market price is available. The investment is tested for impairment, at least annually, and more frequently upon the occurrences of certain events. As of December 31, 2021, the Company determined there was an impairment on this investment and recognized a loss on impairment for the entire value of $1,350,000.
The membership interest was paid for as follows:
Accounts receivable owed from Amplifei$1,000,000 
Cash350,000 
Total$1,350,000 

v3.23.2
Income Taxes
6 Months Ended
Jun. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the Company's income tax provision are as follows:
Year Ended December 31, 2022Year Ended December 31, 2021
Current expense (benefit)
Federal$— $— 
State139,020 — 
139,020 — 
Deferred benefit
Federal$(650,283)$(1,616,916)
State(222,731)(326,825)
(873,014)(1,943,741)
Provision for income tax benefit$(733,994)$(1,943,741)
A reconciliation of the provision for income taxes with the expected provision for income taxes computed by applying the federal statutory income tax rate of 21% to the net loss before provision for income taxes is as follows:
Year Ended December 31, 2022Year Ended December 31, 2021
AmountPercentageAmountPercentage
Pre-tax book loss$(13,609,307)$(21,426,879)
Federal income tax at statutory rate(2,857,954)21.0 %(4,499,644)21.0 %
State income tax benefit(530,084)3.9 %(163,677)0.8 %
Change in valuation allowance2,760,687 (20.3)%3,559,163 (16.6)%
Permanent items21,281 (0.2)%(839,583)3.9 %
Other(127,924)1.4 %— — %
Provision for income tax benefit$(733,994)5.4 %$(1,943,741)9.1 %
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's net deferred income taxes are as follows:
Year Ended December 31, 2022Year Ended December 31, 2021
Deferred tax asset:
Accrued expenses and other$696,419 $347,645 
Lease Liability8,176,101 — 
Loss carryforwards14,295,781 13,124,197 
Stock based compensation211,499 90,293 
Research and experimental expenditures202,199 — 
Inventory625,937 — 
Interest634,445 615,260 
Total deferred tax asset24,842,381 14,177,395 
Valuation allowance(13,492,773)(9,887,550)
Net deferred tax assets11,349,608 4,289,845 
Deferred tax liabilities:
Fixed assets(3,266,395)(365,922)
Intangible assets and goodwill(4,865,970)(5,785,088)
ROU asset(4,205,393)— 
Total deferred tax liabilities(12,337,758)(6,151,010)
Net non-current deferred tax liability$(988,150)$(1,861,165)
Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the lack of sustained profitability in recent years. Such objective evidence limits the ability to consider other subjective evidence, such as the Company's projections for future growth.
On the basis of this evaluation, as of December 31, 2022 and 2021, a valuation allowance of $13.5 million and $9.9 million, respectively, has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted based on changes in objective and subjective evidence in future years. If and when the Company determines the valuation allowance should be released (i.e., reduced), the adjustment would result in a tax benefit reported in that period’s consolidated statement of operations, the effect of which would be an increase in reported net income. The amount of any such tax benefit associated with release of the Company's valuation allowance in a particular reporting period may be material.
The Company has gross federal and state net operating loss carryforwards of $71.0 million and $20.1 million, respectively, at December 31, 2022. At December 31, 2022, the Company has approximately $11.3 million of federal net operating losses available to offset future taxable income for 20 years and will begin to expire in 2036. The remaining $59.7 million of federal net operating losses are carried forward indefinitely to offset future taxable income up to an 80% limitation of taxable income in the year of use. The state net operating losses begin to expire in 2024. The Company has a gross interest limitation carryforward of $2.5 million under Section 163(j) for federal tax purposes at December 31, 2022. The Section 163(j) interest may be carried forward indefinitely.
The future tax benefits from NOLs and built-in losses would be materially reduced or potentially eliminated if we experience an “ownership change” as defined under IRC §382. The Company has identified ownership shifts on
August 23, 2014, April 29, 2015, February 4, 2016 and July 1, 2019, which immaterially impacted the Company. The Company does not believe an ownership change has occurred in the current year.
With exceptions due to the generation and utilization of net operating losses or credits, as of December 31, 2022, Alpine 4 Holdings and Subsidiaries are no longer subject to federal or state examinations by taxing authorities for tax years before 2019 and 2018, respectively.
Significant judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. Although the Company believes that it has appropriately reserved for its uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different than expectations. The Company will adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, the refinement of an estimate, the closing of a statutory audit period or changes in applicable tax law. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences would impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to the reserves that are considered appropriate, as well as related net interest.
The Company's policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties at December 31, 2022 or 2021, and has not recognized interest or penalties during the years ended December 31, 2022 and 2021 since there was no reduction of income taxes paid due to uncertain tax positions.
The following table summarizes the activity related to the Company's gross unrecognized tax liabilities:
December 31, 2022December 31, 2021
Unrecognized tax liabilities, beginning of the year$1,169,028 $— 
Increase related to current year tax positions480,911 1,169,028 
Unrecognized tax liabilities, end of year$1,649,939 $1,169,028 
Included in the balance of unrecognized tax liabilities as of December 31, 2022 are $0.6 million of tax liabilities that, if recognized, would affect the ETR. Also included in the balance of unrecognized tax liabilities as of December 31, 2022 are $1.0 million of tax liabilities that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes.

v3.23.2
Industry Segments
6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
Industry Segments Industry Segments
The Company discloses segment information that is consistent with the way in which management operates and views its business. Effective during the quarter ended September 30, 2022, the Company increased its reportable segments to eight segments. All segments and the subsidiaries within each segment are geographically located in North America. The financial results are logical to review in this manner for comparison, trend, deviations, etc. purposes.
Management excludes the following when reviewing the profit/loss by segment.
Intercompany Sales/COGS
Management fees to the parent Company
Income tax benefit/expense
There has not been any change to the measurement method in how management reviews the profit/loss by segment.
The reporting segments and their business activity are as follows:
A4 Construction Services Morris Sheet Metal (“MSM”) provides commercial construction services primarily as a sheet metal contractor.
A4 Construction Services Excel Construction (“Excel”) provides commercial construction services primarily as a sheet metal contractor.
A4 Manufacturing Quality Circuit Assembly (QCA) is a contract manufacturer within the technology industry.
A4 Manufacturing Alternative Labs (“Alt Labs”) is a contract manufacturer within the dietary & nutraceutical supplements industry.
A4 Defense Thermal Dynamics does contracting for the US Government particularity for the US Defense Department and US Department of State.
A4 Technologies RCA Commercial Electronics (“RCA”) is a B2B commercial electronics manufacturer.
A4 Technologies ElecJet is a battery research & development company.
A4 Aerospace Vayu is a drone aircraft manufacturer.
A4 All Other includes the QCA-Central, Identified Technologies and Corporate operating segments.
The Company’s reportable segments for the years ended December 31, 2022 and 2021:
Years Ended December 31,
20222021
Revenue
A4 Construction Services - MSM$18,290,019 $16,191,284 
A4 Construction Services - Excel1,761,572 1,803,739 
A4 Manufacturing - QCA16,763,989 14,258,084 
A4 Manufacturing - Alt Labs12,889,992 11,674,220 
A4 Defense - TDI10,046,658 4,467,376 
A4 Technologies - RCA40,092,612 1,454,451 
A4 Technologies - ElecJet1,098,534 89,018 
A4 Aerospace - Vayu81,100 — 
All Other3,538,526 1,702,641 
$104,563,002 $51,640,813 
Gross profit
A4 Construction Services - MSM$1,374,517 $(385,266)
A4 Construction Services - Excel3,681 (92,765)
A4 Manufacturing - QCA3,258,082 2,763,213 
A4 Manufacturing - Alt Labs2,343,368 3,749,878 
A4 Defense - TDI3,082,844 1,073,636 
A4 Technologies - RCA10,687,202 379,740 
A4 Technologies - ElecJet(236,636)76,818 
A4 Aerospace - Vayu13,087 — 
All Other1,188,257 132,744 
$21,714,402 $7,697,998 
Income (loss) from operations
A4 Construction Services - MSM$(883,922)$(4,247,240)
A4 Construction Services - Excel(973,934)(1,969,535)
A4 Manufacturing - QCA702,875 1,426,141 
A4 Manufacturing - Alt Labs2,284,308 (3,027,203)
A4 Defense - TDI1,072,306 (282,882)
A4 Technologies - RCA2,525,619 (100,328)
A4 Technologies - ElecJet(1,107,254)(62,163)
A4 Aerospace - Vayu(3,336,279)(4,875,829)
All Other(11,039,503)(8,983,320)
$(10,755,784)$(22,122,359)
Depreciation and amortization
A4 Construction Services - MSM$684,563 $846,808 
A4 Construction Services - Excel267,966 291,556 
A4 Manufacturing - QCA417,172 377,868 
A4 Manufacturing - Alt Labs983,931 611,079 
A4 Defense - TDI288,950 191,740 
A4 Technologies - RCA979,206 49,299 
A4 Technologies - ElecJet414,333 33,833 
A4 Aerospace - Vayu1,025,412 1,093,995 
All Other1,113,005 658,181 
$6,174,538 $4,154,359 
Interest Expenses
A4 Construction Services - MSM$421,287 $706,607 
A4 Construction Services - Excel245,855 291,263 
A4 Manufacturing - QCA262,551 230,044 
A4 Manufacturing - Alt Labs351,503 72,060 
A4 Defense - TDI11,975 825 
A4 Technologies - RCA159,878 15,347 
A4 Technologies - ElecJet— — 
A4 Aerospace - Vayu10,677 
All Other1,660,406 1,973,078 
$3,124,132 $3,289,233 
Net income (loss)
A4 Construction Services - MSM$(1,246,295)$(1,481,382)
A4 Construction Services - Excel(1,219,789)(1,899,512)
A4 Manufacturing - QCA367,760 1,774,139 
A4 Manufacturing - Alt Labs2,054,958 (2,643,752)
A4 Defense - TDI1,060,331 (270,289)
A4 Technologies - RCA2,365,741 (115,675)
A4 Technologies - ElecJet(1,110,727)(62,163)
A4 Aerospace - Vayu(3,346,956)(4,852,182)
All Other(11,800,336)(9,932,322)
$(12,875,313)$(19,483,138)
As of
December 31, 2022
As of
December 31, 2021
Total Assets
A4 Construction Services - MSM$11,309,049 $10,935,355 
A4 Construction Services - Excel3,359,818 3,050,206 
A4 Manufacturing - QCA20,988,492 11,869,711 
A4 Manufacturing - Alt Labs26,636,905 23,173,298 
A4 Defense - TDI13,497,381 11,982,580 
A4 Technologies - RCA27,191,977 28,174,091 
A4 Technologies - ElecJet12,897,440 12,904,267 
A4 Aerospace - Vayu14,632,530 14,702,838 
All Other$15,118,622 $17,831,504 
$145,632,214 $134,623,850 
Goodwill
A4 Construction Services - MSM$113,592 $113,592 
A4 Construction Services - Excel— — 
A4 Manufacturing - QCA1,963,761 1,963,761 
A4 Manufacturing - Alt Labs4,410,564 4,410,564 
A4 Defense - TDI6,426,786 6,426,786 
A4 Technologies - RCA1,355,728 1,355,728 
A4 Technologies - ElecJet6,496,343 6,496,343 
A4 Aerospace - Vayu— — 
All Other1,913,310 1,913,310 
$22,680,084 $22,680,084 
Accounts receivable, net
A4 Construction Services - MSM$5,188,521 $3,906,271 
A4 Construction Services - Excel288,243 286,972 
A4 Manufacturing - QCA3,867,141 2,339,597 
A4 Manufacturing - Alt Labs1,833,502 406,333 
A4 Defense - TDI1,905,314 1,371,184 
A4 Technologies - RCA3,232,559 2,961,201 
A4 Technologies - ElecJet12,888 37,744 
A4 Aerospace - Vayu— — 
All Other811,776 565,874 
$17,139,944 $11,875,176 
Segment ReportingThe Company discloses segment information that is consistent with the way in which management operates and views its business. Effective during the quarter ended September 30, 2022, the Company increased its reportable
segments to eight segments. All segments and the subsidiaries within each segment are geographically located in North America. The financial results are logical to review in this manner for comparison, trend, deviations, etc. purposes.
Management excludes the following when reviewing the profit/loss by segment.
Intercompany Sales/COGS
Management fees to the parent Company
Income tax benefit/expense
There has not been any change to the measurement method in how management reviews the profit/loss by segment.
The operating segments and their business activity are as follows:
A4 Construction Services - Morris Sheet Metal (“MSM”) provides commercial construction services primarily as a sheet metal contractor.
A4 Construction Services - Excel Construction (“Excel”) provides commercial construction services primarily as a sheet metal contractor.
A4 Manufacturing - Quality Circuit Assembly ("QCA") is a contract manufacturer within the technology industry.
A4 Manufacturing - Alternative Labs (“Alt Labs”) is a contract manufacturer within the dietary & nutraceutical supplements industry.
A4 Defense - Thermal Dynamics does contracting for the US Government particularly for the US Defense Department and US Department of State.
A4 Technologies - RCA Commercial Electronics (“RCA”) is a business-to-business ("B2B") commercial electronics manufacturer.
A4 Technologies - ElecJet is a battery research and development company.
A4 Aerospace - Vayu is a drone aircraft manufacturer.
A4 All Other includes the QCA-Central, Identified Technologies and Corporate.
Three Months Ended March 31,
20232022
Revenue
A4 Construction Services - MSM$3,813,140 $3,767,390 
A4 Construction Services - Excel332,864 288,814 
A4 Manufacturing - QCA4,191,643 4,318,860 
A4 Manufacturing - Alt Labs4,226,914 3,824,138 
A4 Defense - TDI2,970,087 2,687,981 
A4 Technologies - RCA7,453,423 9,237,259 
A4 Technologies - ElecJet102,495 556,729 
A4 Aerospace - Vayu— 25,000 
All Other1,271,147 $885,983 
$24,361,713 $25,592,154 
Gross profit
A4 Construction Services - MSM$231,888 $463,806 
A4 Construction Services - Excel(150,008)(98,974)
A4 Manufacturing - QCA897,715 1,027,184 
A4 Manufacturing - Alt Labs948,752 901,479 
A4 Defense - TDI616,582 843,189 
A4 Technologies - RCA2,374,178 2,184,328 
A4 Technologies - ElecJet(73,809)(62,029)
A4 Aerospace - Vayu(2,410)25,000 
All Other373,568 $353,474 
$5,216,456 $5,637,457 
Income (loss) from operations
A4 Construction Services - MSM$(404,413)$(315,698)
A4 Construction Services - Excel(432,081)(319,990)
A4 Manufacturing - QCA19,097 414,448 
A4 Manufacturing - Alt Labs(559,125)(987,483)
A4 Defense - TDI181,534 423,140 
A4 Technologies - RCA475,864 566,290 
A4 Technologies - ElecJet(245,421)(304,346)
A4 Aerospace - Vayu(820,967)(806,897)
All Other(3,354,961)(2,425,619)
$(5,140,473)$(3,756,155)
Depreciation and amortization
A4 Construction Services - MSM$174,298 $166,404 
A4 Construction Services - Excel67,525 — 
A4 Manufacturing - QCA116,879 100,479 
A4 Manufacturing - Alt Labs208,554 307,035 
A4 Defense - TDI72,433 72,090 
A4 Technologies - RCA244,804 170,046 
A4 Technologies - ElecJet105,666 101,500 
A4 Aerospace - Vayu258,911 274,669 
All Other278,713 277,441 
$1,527,783 $1,469,664 
Interest expense
A4 Construction Services - MSM$113,710 $103,025 
A4 Construction Services - Excel60,570 61,985 
A4 Manufacturing - QCA163,645 36,289 
A4 Manufacturing - Alt Labs64,680 57,116 
A4 Defense - TDI17,347 — 
A4 Technologies - RCA85,956 54,817 
A4 Technologies - ElecJet— — 
A4 Aerospace - Vayu5,958 — 
All Other487,004 295,729 
$998,870 $608,961 
Net income (loss)
A4 Construction Services - MSM$(480,600)$(362,367)
A4 Construction Services - Excel(492,651)(381,975)
A4 Manufacturing - QCA(144,187)373,867 
A4 Manufacturing - Alt Labs(658,756)(1,111,462)
A4 Defense - TDI164,187 423,140 
A4 Technologies - RCA389,908 511,473 
A4 Technologies - ElecJet(245,421)(304,346)
A4 Aerospace - Vayu(826,925)(806,897)
All Other(3,474,698)(2,340,993)
$(5,769,143)$(3,999,560)
The Company’s reportable segments as of March 31, 2023, and December 31, 2022, were as follows:
As of
March 31, 2023
As of
December 31, 2022
Total assets
A4 Construction Services - MSM$10,699,259 $11,309,049 
A4 Construction Services - Excel3,390,848 3,359,818 
A4 Manufacturing - QCA21,046,251 20,988,492 
A4 Manufacturing - Alt Labs27,083,918 26,636,905 
A4 Defense - TDI13,748,110 13,497,381 
A4 Technologies - RCA23,339,534 27,191,977 
A4 Technologies - ElecJet12,972,480 12,897,440 
A4 Aerospace - Vayu13,594,000 14,632,530 
All Other16,070,325 15,118,622 
$141,944,725 $145,632,214 
Goodwill
A4 Construction Services - MSM$113,592 $113,592 
A4 Construction Services - Excel— — 
A4 Manufacturing - QCA1,963,761 1,963,761 
A4 Manufacturing - Alt Labs4,410,564 4,410,564 
A4 Defense - TDI6,426,786 6,426,786 
A4 Technologies - RCA1,355,728 1,355,728 
A4 Technologies - ElecJet6,496,343 6,496,343 
A4 Aerospace - Vayu— — 
All Other1,913,310 1,913,310 
$22,680,084 $22,680,084 
Accounts receivable, net
A4 Construction Services - MSM$3,790,520 $5,188,521 
A4 Construction Services - Excel222,895 288,243 
A4 Manufacturing - QCA3,397,802 3,867,141 
A4 Manufacturing - Alt Labs1,994,703 1,833,502 
A4 Defense - TDI2,367,869 1,905,314 
A4 Technologies - RCA2,845,356 3,232,559 
A4 Technologies - ElecJet22,959 12,888 
A4 Aerospace - Vayu(491)— 
All Other898,915 811,776 
$15,540,528 $17,139,944 

v3.23.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Licensing Agreement
DTI has entered into licensing agreements with RCA Trademark Management for the licensing rights to the respective trademarks in the United States of America and Canada.
The RCA licensing agreement was amended with Technicolor, S.A., as licensor, and expires December 31, 2024. DTI agrees to pay a royalty fee of 2.50% on net sales of the licensed products with a minimum annual
payment of $420,000 for the years ended 2020 and 2021, $440,000 for the year ended 2022, $460,000 for the year ended 2023, and $480,000 for the year ended 2024.
Warranty Service Agreement
DTI entered into a warranty service agreement to provide certain warranty services for a lighting supplier through December 31, 2024, except for one class of customer through 2030. In exchange for these services DTI receives annual payments as follows:
Years Ending December 31,
2023$66,626 
202459,964 
Total$126,590 
Royalty Agreement
On November 28, 2021, the Company entered into a Royalty Agreement with the sellers of ElecJet. Upon closing the Company desires to build its initial factory (“Factory”) to manufacture graphene batteries in the territory of the United States. The Company agrees to pay the sellers 1.5% of net sales for batteries produced by the Factory. Royalty payments shall continue to be paid for a period of ten years from the starting date, or until the total of the royalty payments equals $50 million, whichever occurs first.
Legal Proceedings
From time to time, the Company may become involved in lawsuits and other legal proceedings that arise in the course of business. Litigation is subject to inherent uncertainties, and it is not possible to predict the outcome of litigation with total confidence. As of the date of this Report, the Company was not aware of any legal proceedings or potential claims against it whose outcome would be likely, individually or in the aggregate, to have a material adverse effect on the Company’s business, financial condition, operating results, or cash flows.
In August 2020, in a matter relating to the Company’s subsidiary Horizon Well Testing, LLC (“Horizon”), the Company filed a lawsuit in the United States District Court, District of Arizona (Case No.2:20-cv-01679-DJH), against Alan Martin, the seller of Horizon dba Venture West Energy Services, LLC (“VWES”). The Company brought suit in 2020 seeking to avoid the claimed liability due from the Company to Alan Martin, for the Company’s 2017 purchase of Mr. Martin’s business, Horizon. On summary judgment, the court found that the Company’s claim was barred by a time-limiting clause for indemnification claims. The Company disagrees with the court’s ruling and intends to appeal. Before the Company can file its appeal of the summary judgment order, the court must resolve Mr. Martin’s counterclaim in which Mr. Martin claims that Mr. Martin remains unpaid on the promissory note, as modified, under which the Company purchased the Horizon. The note balance is alleged to have a principal sum due of $3.3 million, plus interest at 8% accruing from 2019 to present, plus late fees accruing at $575 per day (Note 4). The Company continues to dispute the amount claimed due. As well, the Company’s legal position remains that the indebtedness should be discharged due to material misrepresentations by Mr. Martin in the original transaction.
In August 2021, in a matter relating to the Company’s subsidiary Horizon Well Testing, LLC (“Horizon”), Rob Porter filed a lawsuit in the District Court of Oklahoma County, State of Oklahoma (CJ-2021-3421), alleging unjust enrichment and breach of contract with respect to shares of Company that Mr. Porter claims was owed under his employment contract with the Company as President of Horizon. In October 2021, the Company filed its answer denying such claims. In October 2021, the Company also filed counterclaims against Mr. Porter for conversion and breach of fiduciary duties. The Company believes this is a frivolous lawsuit and as such, no accrual has been recorded as of December 31, 2022 and 2021. As of the date of this Report, a pre-trial scheduling conference is scheduled for June 21, 2023, and the Company is participating in discovery.
In October 2021, in a matter relating to the Company’s subsidiary Horizon Well Testing, LLC (“Horizon”), the Company received three complaints in the District Court of Oklahoma Country State of Oklahoma from former VWES employees Bruce Morse (CJ-2021-4316), Brian Hobbs (CJ-2021-4315), Thomas Karraker (CJ-2021-4314)
for unjust enrichment, and breach of contract with respect to their employment contracts with Horizon. On January 19, 2022, the Company filed answers to all three lawsuits that denied these claims. The Company believes these are frivolous lawsuits. In July 2022, the Company and Mr. Morse settled his claims against the Company. The settlement included the cash payment of $24,375 for Mr. Morse's claimed 37,500 shares of Class A Common stock, and subsequently Mr. Morse’s case has been dismissed. Subsequently, Mr. Hobbs and Mr. Karraker have also expressed interest in settling claims on similar terms, and negotiations are ongoing as of the date of this Report. As no formal settlement offer has been extended, no accrual has been recorded as of December 31, 2022 and 2021.
In November 2022, the Company received a complaint filed by Mr. Mark Bell in the district court of Idaho (CV42-22-4066) with regard to the Company’s February 2020 purchase of Excel Fabrication LLC (“Excel”) from Mr. Bell, over the Company’s refusal to continue paying on a $2,300,000 note comprising part of the purchase consideration (Note 4). In December 2022 the Company counter-sued Mr. Bell for breach of contract, fraud, and misrepresentation in the February 2020 sale of Excel to the Company. The case is set for trial in June of 2024.
In December 2022, the Company’s subsidiary Excel Fabrication LLC (“Excel”) received a demand for binding arbitration (AAA Case No. 01-22-0004-9935) by Starr Corporation of Idaho, a contractor for whom Excel Fabrication LLC was performing as sub-contractor and who stopped its work for Starr Corporation pursuant to its claimed contract right of termination due to failure of Starr Corporation to make payment within the contracted period for payment for work satisfactorily performed. Starr Corporation claims that Excel’s termination was wrongful, and seeks approximately $500,000, reflecting its costs in having to complete work that was called for under the contract. Excel is seeking a determination that its termination was rightful under the terms of the contract between the parties, and in addition seeks payment on its unpaid billing submittals and additional costs. Arbitration hearings are scheduled to commence in April 2024.

v3.23.2
Subsequent Events
6 Months Ended
Jun. 30, 2023
Subsequent Events [Abstract]  
Subsequent Events Subsequent Events
In January 2023, the Company made a $250,000 investment for a 10% equity interest in a battery materials company, which includes a seat on its board, and participation rights in future funding rounds.
In February 2023, the Company learned that a complaint the State of New York brought against Vayu in 2019 (prior to the Company’s ownership of Vayu) seeking a refund for two returned airframes, a case which had originally been dismissed for lack of jurisdiction, had become revived by virtue of New York’s highest court ruling (State of New York v Vayu, APL-2021-00148) that the State’s long arm statute applied to the 2016 transaction between Vayu and the State University of New York at Stonybrook. Total damages sought by the State of New York are less than $100,000, including interest and costs. The company is currently considering its options for reaching a settlement with the State of New York, and for the possibility of seeking redress from the previous owners of Vayu.
In April 2023, a certain investor converted 1.3 million shares of Class B common stock and 1 share of Class B preferred stock for 1,300,001 shares of Class A common stock.
Subsequent Events
In April 2023, a shareholder converted 1,300,000 shares of Class B common stock and 1 share of Series B preferred stock into 1,300,001 shares of Class A common stock.
On May 12, 2023, a Certificate of Amendment was filed to effect a one-for-eight (1-for-8) reverse split (the “Reverse Split”) of the shares of the Company’s the Class A, Class B, and Class C Common Stock, and to decrease the number of shares of Class A Common Stock from 295,000,000 shares to 200,000,000 shares (the “Class A Common Stock Decrease”). The Reverse Split and the Class A Common Stock Decrease became effective on May 12, 2023. As a result of the Reverse Split, every eight shares of the Company’s issued and outstanding Class A Common Stock automatically converted into one share of Class A Common Stock, without any change in the par value per share, and began trading on a post-split basis under the Company’s existing trading symbol, “ALPP,” when the market opened on May 15, 2023. Additionally, every eight shares of the Company’s issued and outstanding Class B Common Stock automatically converted into one share of Class B Common Stock, without any change in the par value per share, and every eight shares of the Company’s issued and outstanding Class C Common Stock automatically converted into one share of Class C Common Stock, without any change in the par value per
share. The Reverse Split affected all holders of Class A, Class B, and Class C Common Stock uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares. A total of 180,037,350 shares of Class A Common Stock were issued and outstanding immediately prior to the Reverse Split, and approximately 22,504,669 shares of common stock were issued and outstanding immediately after the Reverse Split. No fractional shares will be outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock will automatically be entitled to receive an additional fraction of a share of common stock to round up to the next whole share. In addition, effective as of the same time as the Reverse Split, proportionate adjustments were made to all then-outstanding options and warrants with respect to the number of shares of Class A Common Stock subject to such options or warrants and the exercise prices thereof.
In May 2023, Mr. Kevin Thomas, who sold Alternative Laboratories, LLC to the Company in May of 2021, sued the Company in the State circuit court for Collier County Florida (Case Number 23-CA-1981), alleging that the Company failed to deliver shares in the Company as promised by the terms of the purchase agreement, and additionally claims that with respect to an amount of $610,000 in Employee Retention Credits received by the Company, that portion representing the credit attributed to the 1st quarterly period of 2021 and the part of the 2nd quarterly period of 2021 prior to the May 4th, 2021 date of sale, should be remitted to him rather than retained by the Company. The Company believes that Mr. Thomas’ complaint is wholly without merit, and the Company is in the process of answering the complaint and considering possible motions and counterclaims.
In May 2023, the RCA licensing agreement was amended and extended with a new expiration date of December 31, 2027 except for the agreement relating to Computer Monitors & Outdoor Televisions which expires on December 31, 2025. DTI Services LLC agreed to pay the following royalty fees ranging from 2.50% - 3.50% of net sales based on product type with a total minimum annual payment of $550,000 for the year ended 2023, and $600,000 for the year ended 2024, $620,000 for the year ended 2025, $660,000 for the year ended 2026, and $700,000 for the year ended 2027.
In May 2023, the Company issued a nine-month $0.2 million note payable to an outside investor with an annual interest rate of 15%, with the proceeds to be used for general corporate purposes.
In May 2023, the Company issued a one-year $0.4 million convertible note payable to an outside investor with an annual interest rate of 12% with the proceeds to be used for general corporate purposes. In connection with this convertible note payable, the Company issued 13,750 restricted shares of Class A Common Stock to the investor as additional consideration for the purchase of the note and 196,250 restricted shares of Class A Common Stock, which shall be returned to the Company if timely repayments are made against the note.
Morris had a revolving line of credit totaling $2.5 million that was scheduled to expire on May 31, 2023. In June 2023, Morris entered into a Forbearance agreement with its banking partner that extended the maturity of the line of credit to July 21, 2023.
In June 2023, Quality Circuit Assembly entered into the third amendment on its loan and security agreement that increased the maximum limit to $7 million from $5 million.

v3.23.2
Organization and Basis of Presentation
6 Months Ended
Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Basis of Presentation Organization and Basis of Presentation
Alpine 4 Holdings, Inc. (together with its subsidiaries, the “Company,” “we,” or “our”), 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. On March 2, 2021, the Company changed its name from Alpine 4 Technologies Ltd. to Alpine 4 Holdings, Inc.
Effective April 1, 2016, the Company purchased all of the outstanding capital stock of Quality Circuit Assembly, Inc., a California corporation (“QCA”).
Effective January 1, 2019, the Company purchased all of the outstanding capital stock of Morris Sheet Metal Corp., an Indiana corporation (“MSM”), 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” or “MSM”).
Effective November 6, 2019, the Company purchased all of the outstanding capital stock and units of Deluxe Sheet Metal, Inc., an Indiana corporation, and DSM Holding, LLC, an Indiana limited liability company, and purchased certain real estate from Lonewolf Enterprises, LLC, an Indiana limited liability company (collectively “Deluxe”).
Effective February 21, 2020, the Company purchased all of the outstanding units of Excel Fabrication, LLC., an Idaho limited liability company (“Excel”).
Effective December 15, 2020, the Company purchased the assets of Impossible Aerospace Corporation, a Delaware corporation (“IA”).
Effective February 8, 2021, the Company purchased the assets of Vayu (US), Inc., a Delaware corporation (“Vayu”).
On May 5, 2021, the Company acquired all of the outstanding shares of stock of Thermal Dynamics, Inc., a Delaware corporation (“TDI”).
On May 10, 2021, the Company acquired all of the outstanding membership interests of KAI Enterprises, LLC, a Florida limited liability company, the sole asset of which was all of the outstanding membership interests of Alternative Laboratories, LLC, a Delaware limited liability company (“Alt Labs”).
On October 20, 2021, the Company acquired 100% of the outstanding shares of Identified Technologies Corporation, a Delaware corporation (“Identified Technologies”).
On November 29, 2021, the Company, and a newly formed and wholly owned subsidiary of the Company named ALPP Acquisition Corporation 3, Inc. (“AC3”), entered into a merger agreement with ElecJet Corp., (“ElecJet”) and the three ElecJet shareholders. Pursuant to the agreement, AC3 merged with and into ElecJet with ElecJet being the surviving entity following the merger.
On December 9, 2021, the Company, and A4 Technologies, Inc., a wholly owned subsidiary of the Company (“A4 Technologies”), entered into a Membership Interest Purchase Agreement with DTI Services Limited Liability Company (doing business as RCA Commercial Electronics), (“DTI”), Direct Tech Sales LLC, (also having an assumed business name of RCA Commercial Electronics), (“Direct Tech”), PMI Group, LLC, (“PMI”), Continu.Us, LLC, (“Continu.Us”), Solas Ray, LLC, (“Solas”), and the individual owners of the interests of the various entities. DTI, Direct Tech, PMI, Continu.Us, and Solas were each referred to in the Membership Interest Purchase Agreement collectively as “RCA.” Pursuant to the MIPA, the Company acquired all of the outstanding membership interests of RCA.
In Q1 2022, the Company formed Global Autonomous Corporation (“GAC”) with several key employees and consultants. The Company owns 71.43% of the outstanding shares of stock of GAC, which has remained consistent throughout the year. There was no assignment of assets or other financial activity on the entity during the current year.
As of the date of this Report, the Company was a holding company owning, directly or indirectly, fourteen companies:
A4 Corporate Services, LLC;
ALTIA, LLC;
Quality Circuit Assembly, Inc.;
Morris Sheet Metal, Corp;
JTD Spiral, Inc.;
Excel Construction Services, LLC;
SPECTRUMebos, Inc.;
Vayu (US)
Thermal Dynamics International, Inc.;
Alternative Laboratories, LLC.;
Identified Technologies, Corp.;
ElecJet Corp.;
DTI Services Limited Liability Company (doing business as RCA Commercial Electronics); and
Global Autonomous Corporation,
Basis of presentation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).
Liquidity
The Company’s financial statements are prepared in accordance with U.S. GAAP applicable to a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued.
In accordance with Financial Accounting Standards Board (the “FASB”), Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our
ability to continue as a going concern within one year after the date that the financial statements are issued (further detail in the going concern sub-section below).
As shown in the accompanying consolidated financial statements, the Company has incurred significant recurring losses and negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. While the Company experienced a loss for the year ended December 31, 2022, of $12.9 million, and had a negative cash flow used in operations of $19.6 million, this was an improvement over the same period last year, for the year ended December 31, 2021, when there was a net loss of $19.5 million had a negative cash flow used in operations of $25.4 million.
As of December 31, 2022, the Company has positive working capital of approximately $15.6 million. The Company has also secured bank financing totaling $33.0 million ($33.0 million in Lines of Credit including $0.5 million in capital expenditures lines of credit availability) of which $3.8 million was available and unused at December 31, 2022. There are two lines of credit that are set to mature during 2023. These two line of credits total $8.0 million, of which $7.5 million was used as of December 31, 2022, and are shown as a current liability on the consolidated balance sheet.
The Company plans to continue to generate additional revenue (and improve cash flows from operations) partly from the acquisitions of the six operating companies, which closed in 2021, combined with improved gross profit performance from the existing operating companies. The Company also plans to continue to raise funds through debt financing and the sale of shares through its planned at-the-market offering.
Going Concern
The accompanying financial statements have been prepared on a going concern basis. While the working capital deficiency of prior years has improved, and working capital of the Company is currently positive, continued operating losses causes doubt as to the ability of the Company to continue. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's plan of operations, and its ultimate transition to profitable operations are necessary for the Company to continue. The uncertainty that exists with these factors raises substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
In order to mitigate the risk related to the going concern uncertainty, the Company has a three-fold plan to resolve these risks. First, the operating subsidiaries of QCA, TDI, IDT and RCA plan to expand their revenues and profits yielding increased cash flow in those operating segments. This plan will allow for an increased level of cash flow to the Company. Second, the Company has expanded its credit facilities at the subsidiary level over the past 12 months to allow for greater borrowing accessibility if needed for the expansion of product lines and sales opportunities and plans to extend or refinance any lines of credit coming due over the next 12 months in order to provide additional financing. Finally, operating companies hard hit by the supply-chain related price increases such as MSM, Alt Labs, and Excel Construction have begun to experience an easing in the procurement and cost overruns of limited product supply. This subsequently has added to increased cash flow to those entities and less reliance on the Company to fund those activities. Although this plan is in place to mitigate the risk related to the going concern uncertainty, substantial doubt remains due to uncertainty around the growth projections and lack of control of many of the factors included in the Company’s plan.
Organization and Basis of Presentation
The unaudited consolidated financial statements were prepared by Alpine 4 Holdings, Inc. (‘we,” “our,” or 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 consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on May 5, 2023. The results for the three months ended March 31, 2023, are not necessarily indicative of the results to be expected for the year ending December 31, 2023.
The Company was incorporated under the laws of the State of Delaware in April 2014. We are a publicly traded conglomerate that acquires businesses that fit into our disruptive DSF business model of Drivers, Stabilizers, and Facilitators.
As of the date of this Report, the Company was a holding company owning, directly or indirectly, fourteen companies:
A4 Corporate Services, LLC;
ALTIA, LLC;
Quality Circuit Assembly, Inc. ("QCA");
Morris Sheet Metal, Corporation ("MSM");
JTD Spiral, Inc.;
Excel Construction Services, LLC ("Excel");
SPECTRUMebos, Inc.;
Vayu Aerospace Corporation;
Thermal Dynamics International, Inc. ("TDI");
Alternative Laboratories, LLC. ("Alt Labs");
Identified Technologies, Corporation ("IDT");
ElecJet Corporation.;
DTI Services LLC (doing business as RCA Commercial Electronics ("RCA")); and
Global Autonomous Corporation ("GAC").
In February 2023, the Company made a $0.3 million investment for a 10% equity interest in a battery materials company, which includes a seat on its board of directors, and participation rights in future funding rounds. The investment is accounted for as an equity method investment as the board representation allows us to have significant influence over the operating and financial policies of the battery materials company. The investment is presented in other non-current assets on the consolidated balance sheet with the value of the investment being adjusted in arrears on a quarterly basis based on its financial performance.
Basis of presentation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).
Liquidity
The Company’s financial statements are prepared in accordance with U.S. GAAP applicable to a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued. In accordance with Financial Accounting Standards Board (the “FASB”), Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued (further detail in the Going Concern sub-section below).
As shown in the accompanying consolidated financial statements, the Company has incurred significant recurring losses and negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Although the Company has experienced net losses of $5.8 million and $4.0 million for the three months ended March 31, 2023 and 2022, respectively, net cash flows used in operations has improved to nearly breakeven for the three months ended March 31, 2023, from $5.9 million for the three months ended March 31, 2022.
As of March 31, 2023, the Company had positive working capital of approximately $4.0 million, which was a decrease of $11.5 million compared to December 31, 2022. The Company has bank financing totaling $33.0 million ($33.0 million in lines of credit including $0.1 million in capital expenditures lines of credit availability) of which approximately $3.8 million was available and unused as of March 31, 2023. There are three lines of credit that are set to mature during the next twelve months. These three lines of credits total $11.7 million, of which $9.0 million was used as of March 31, 2023, and are shown as a Current Liability on the Consolidated Balance Sheet.
The Company plans to continue to generate additional revenue, improve cash flows from operations, and improve gross profit performance across all of its subsidiaries. The Company also may raise funds through debt financing, securing additional lines of credit, and the sale of shares in public or private offerings.
Going Concern
The accompanying financial statements have been prepared on a going concern basis. While the working capital deficiency of prior years has improved, and working capital of the Company is currently positive, continued operating losses causes doubt as to the ability of the Company to continue. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's plan of operations, and its ultimate transition to profitable operations are necessary for the Company to continue. The uncertainty that exists with these factors raises substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
In order to mitigate the risk related to the going concern uncertainty, the Company has a three-fold plan to resolve these risks. First, the operating subsidiaries of QCA, QCA-C, IDT, TDI, and RCA plan to expand their revenues and profits yielding increased cash flow in those operating segments. This plan will allow for an increased level of cash flow to the Company. Second, the Company has expanded its credit facilities at the subsidiary level over the past twelve months to allow for greater borrowing accessibility if needed for the expansion of product lines and sales opportunities and plans to extend or refinance any lines of credit coming due over the next twelve months in order to provide additional financing. Finally, operating companies hard hit by the supply-chain related price increases such as MSM, Alt Labs, and Excel Construction have begun to experience an easing in the procurement and cost overruns of limited product supply. This subsequently has added to increased cash flow to those entities and less reliance on the Company to fund those activities. Although this plan is in place to mitigate the risk related to the going concern uncertainty, substantial doubt remains due to uncertainty around the growth projections and lack of control of many of the factors included in the Company’s plan.
Entity level risks
Our operations and performance may depend on global, regional, economic and geopolitical conditions. Russia’s invasion and military attacks on Ukraine have triggered significant sanctions from North American and European leaders. As of the date of this Report, those events were continuing to escalate and create increasingly volatile global economic conditions. Resulting changes in North American trade policy could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a “trade war.” A trade war could result in increased costs for raw materials that we use in our manufacturing and could otherwise limit our ability to sell our products abroad. These increased costs would have a negative effect on our financial condition and profitability. Furthermore, the military conflict between Russia and Ukraine is increasing supply interruptions and further hindering our ability to find the materials we need to make our products. If the conflict between Russia and Ukraine continues for a long period of time, or if other countries become further involved in the conflict, we could face significant adverse effects to our business and financial condition. The Company is not able to fully quantify the impact that these factors will have on the Company’s financial results during 2023 and beyond.

v3.23.2
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies 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 December 31, 2022 and 2021. Significant intercompany balances and transactions have been eliminated.
Use of estimates
The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable. In many instances, the Company could have reasonably used different accounting estimates and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. This applies in particular to useful lives of long-lived assets, reserves for accounts receivable and inventory, valuation allowance for deferred tax assets, fair values assigned to intangible assets acquired, and impairment of long-lived assets. Actual results could differ significantly from our estimates. To the extent that there are material differences between these estimates and actual results, the Company’s future financial statement presentation, financial condition, results of operations and cash flows will be affected.
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 December 31, 2022, and 2021, the Company had no cash equivalents.
The FDIC insures up to $250,000 per account with any excess amount in each account being uninsured. Total bank balances were approximately $3.2 million and $3.5 million, respectively as of December 31, 2022 and December 31, 2021. Of this amount, approximately $2.0 million and $2.0 million, respectively, were uninsured. All uninsured amounts are held with J.P. Morgan Chase.
Major Customers
The Company had no customers that made up over 10% of accounts receivable as of December 31, 2022, and 2021.
For the year ended December 31, 2022, the Company had one customer that made up 14% of total Company revenues within the A4 Technology - RCA segment. This customer had an accounts receivable balance of $1.2 million as December 31, 2022. For the year ended December 31, 2021, the Company had two customers that each made up 11% of total Company revenues with the A4 Manufacturing - QCA segment and A4 Manufacturing - Alt Labs segment. The customer within A4 Manufacturing - QCA segment had an accounts receivable balance of $1.0 million as of December 31, 2021. The customer within A4 Manufacturing - Alt Labs segment had an accounts receivable balance of $0, as of December 31, 2021, as the account receivable related to this customer was written off as bad debt expense noted in the section below.
For the year ended December 31, 2022, the Company had 9% of total revenues made up of government contracts.
Major Vendors
For the year ended December 31, 2022, there was one vendor that made up 14% of total Company purchases within the A4 Technology - RCA segment.. For the year ended December 31, 2021, there were no vendors that made up at least 10% of total purchases within the Company.
Accounts Receivable, net
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 December 31, 2022 and 2021, allowance for bad debt was $52,531 and $199,936, respectively. During the years ended December 31, 2022 and 2021, the Company wrote off $202,761 and $3,028,757, respectively to bad debts expense.
Inventory
Inventory for all subsidiaries is valued at weighted average. 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-process and finished goods. Inventory as of December 31, 2022 and 2021 consisted of:
December 31,
2022
December 31,
2021
Raw materials$9,116,824 $8,253,104 
Work in process3,165,876 2,480,979 
Finished goods12,975,669 13,685,571 
Inventory$25,258,369 $24,419,654 
Property and Equipment, net
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 five years to 39 years as follows:
Automobiles and trucks
5 to 7 years
Machinery and equipment10 years
Office furniture and fixtures5 years
Buildings and improvements39 years
Maintenance and repair costs are expensed as incurred. Significant improvements are capitalized and depreciated over the estimated life of the asset.
Property and equipment consisted of the following as of December 31, 2022 and 2021:
December 31,
2022
December 31,
2021
Automobiles and trucks$1,056,551 $1,251,187 
Machinery and equipment9,864,846 8,876,402 
Office furniture and fixtures186,464 167,581 
Buildings and improvements16,696,926 23,630,250 
Total Property and equipment27,804,787 33,925,420 
Less: Accumulated depreciation(8,301,302)(5,823,949)
Property and equipment, net$19,503,485 $28,101,471 
Included in Buildings and improvements in the above table are two buildings of $9,000,000 and $2,000,000 related to sale leaseback transactions. (See Note 3)
The Company recorded depreciation expense of $3,026,483 and $2,396,966 in 2022 and 2021, respectively.
Purchased Intangibles and Other Long-Lived Assets, net
The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between one and seventeen years as follows:
Software5 years
Non-compete agreements
1-15 years
Customer list
3-16 years
Patents, trademarks, and licenses
3-17 years
Proprietary technology15 years
Intangible assets consisted of the following as of December 31, 2022 and 2021:
CostWeighted Average Amortization PeriodDecember 31,
2022
December 31,
2021
Software2.0 years$128,474 $128,474 
Non-compete agreement6.3 years1,426,276 1,378,772 
Customer list11.9 years13,011,187 13,011,187 
Patents, trademarks, and licenses13.9 years7,127,408 7,174,912 
Proprietary technology13.5 years19,866,743 19,616,743 
12.9 years41,560,088 41,310,088 
Accumulated amortization
Software$(77,084)$(64,757)
Non-compete agreement(478,510)(210,465)
Customer list(1,711,327)(1,112,797)
Patents, trademarks, and licenses(962,258)(8,444)
Proprietary technology(2,048,300)(732,961)
(5,277,479)(2,129,424)
Intangibles assets, net$36,282,609 $39,180,664 
Expected amortization expense of intangible assets over the next 5 years and thereafter is as follows:
Years Ending December 31,
2023$3,152,048 
20243,152,048 
20252,919,686 
20262,900,686 
20272,762,686 
Thereafter21,395,455 
Total$36,282,609 
The Company recorded amortization expense of $3,148,055 and $1,757,393 in 2022 and 2021, respectively.
Other Long-Term Assets
Other long-term assets consisted of the following as of December 31, 2022 and 2021:
December 31,
2022
December 31,
2021
Deposits$578,545 $149,517 
Other1,277,060 207,601 
$1,855,605 $357,118 
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 the third quarter of 2022, there was a triggering event related to the customer list for Alt Labs which required an analysis to be performed. This analysis was performed in conjunction with a third-party valuation expert. As a result of the analysis, it was determined that the value of the estimated future cash flows were greater than the carrying value of the reporting unit's assets. No impairment was recognized during the year ended December 31, 2022.
During the year ended December 31, 2021, due to the significant impact of COVID-19, the Company determined that the customer list for Excel was impaired and took a charge to earnings of $359,890.
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 December 31, 2022 and 2021, the reporting units with goodwill were QCA, Morris, Alt Labs, TDI, Identified Technology, ElecJet, and RCA.
During the year ended December 31, 2021, the Company determined that the goodwill for Excel was impaired and took a charge to earnings of $7,629. During the 2022 fourth quarter, we conducted our annual goodwill impairment test and no impairment charges were recorded. The estimated fair values of all our reporting units exceeded their carrying amounts. Based on the analysis, the ElecJet reporting unit is considered an at-risk reporting unit. Our methods and assumptions were consistent with those discussed below in the Fair Value Measurement subsection. This reporting unit is primarily considered at-risk as it is a start-up subsidiary with minimal to no revenue to offset its research & development expenses. The DCF model includes revenue growth assumptions of us executing large new customer and/or supplier agreements within the next two years and then steadily increasing revenue at a more normalized rate thereafter. If we fail to execute these customer and/or supplier arrangements, this would negatively impact the key growth assumptions.
Leases
The Company accounts for its leases under ASC 842, Leases (“ASC 842”). Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease
term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. The Company excludes short-term leases having initial terms of 12 months or less as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.
Fair Value Measurement
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.
We apply the provisions of fair value measurement to various nonrecurring measurements for our financial and nonfinancial assets and liabilities. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, convertible notes, notes payable and lines of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches. For the income approach, we use a discounted cash flow models developed in connection with our third-party valuation specialists that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates; and estimated discount rates. For the market approach, we use analyses based primarily on market comparables. We base these assumptions on historical data and experience, industry projections, and general economic conditions.
The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. As of December 31, 2022 and 2021, the Company had no financial assets or liabilities that were required to be fair valued on a recurring basis as all of our financial assets and liabilities were Level 1.
Equity Investments
The Company’s equity investments consisted of investment in one private company in which the Company does not have the ability to exercise significant influence over their operating and financial activities. This investment is carried at cost as there is no market for the membership units, accordingly, no quoted market price is available. The investment is tested for impairment, at least annually, and more frequently upon the occurrences of certain events. As of December 31, 2021, in accordance with the ASC 321 guidelines, the Company recognized a loss on impairment for the entire value of $1,350,000. The current book value for this investment as of December 31, 2022 is $0.
Research and Development
The Company focuses on quality control and development of new products and the improvement of existing products. All costs related to research and development activities are expensed as incurred. During the years ended December 31, 2022 and 2021, research and development cost totaled $876,542 and $1,464,918, respectively.
Revenue Recognition
The Company recognizes revenue under ASC Topic 606, Revenue from contract with Customers ("Topic 606"). The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
Revenue is recognized under Topic 606, at a point in time and over a period of time, in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
executed 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 Company’s subsidiaries are all located in North America, as well as the customer base in which the Company’s revenue is derived from. The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
QCA and Alt Labs
QCA (Circuit boards and cables) and Alt Labs (Supplements) are contract manufacturers and 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 as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
ElecJet
ElecJet is a manufacturer of electric components, and a research and development company for battery technology and recognizes revenue when the products have been shipped to the customer. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
Identified Technologies
Identified Technologies provides 3D mapping drone software and data for industrial job sites and recognizes revenue when the service has been provided to the customer. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
Direct Tech Sales (“RCA”)
RCA is engaged in the design, manufacture and wholesale distribution of electronics such as televisions, mounting solutions, projectors and screens, audio equipment, digital signage, mobile audio and video systems, and all wire and connecting products throughout the United States of America. RCA recognizes revenue when the products have been shipped to the customer which is also when title transfers. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
MSM, Excel and TDI
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 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 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 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 December 31, 2022 and 2021, accounts receivable included retainage billed under terms of our contracts. These retainage amounts represent amounts which have been contractually invoiced to customers where payments have been partially withheld pending the achievement of certain milestones, satisfaction of other contractual conditions or completion of the project. The Company has recorded a receivable for retainage of approximately $2.0 million and $1.6 million as of December 31, 2022, and 2021, respectively.
The following table presents our revenues disaggregated by type with the sales of goods recognized upon delivery and the sales of services recognized over the time of the contract as described above:
Year ended December 31,
20222021
Sale of goods
Circuit boards and cables$18,780,769 $15,700,902 
Supplements12,889,992 11,674,220 
Electronics41,191,146 1,543,469 
Total sale of goods72,861,907 28,918,591 
Sale of services
Construction contracts30,098,249 22,462,399 
Drone 3D mapping1,602,846 259,823 
Total sale of services31,701,095 22,722,222 
Total revenues$104,563,002 $51,640,813 
Earnings (loss) per share
The Company presents both basic and diluted net income (loss) per share on the face of the consolidated statements of operations. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted per share calculations give effect to all potentially dilutive shares of common stock outstanding during the period, including stock options and warrants, using the treasury-stock method. If antidilutive, the effect of potentially dilutive shares of common stock is ignored. The amount of anti-dilutive shares related to stock options and warrants as of December 31, 2022 and 2021, were 21,664,165 and 7,317,778, respectively. The following table illustrates the computation of basic and diluted earnings per share (“EPS”) inclusive of all classes of common stock as the only difference between the classes of common stock are related to the voting rights (Note 6) for the years ended December 31, 2022 and 2021:
For the Year Ended December 31, 2022
For the Year Ended December 31, 2021
Net lossSharesPer Share AmountNet lossSharesPer Share Amount
Basic EPS
Loss available to stockholders$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
Effect of Dilutive Securities
Stock options and warrants— — — — — — 
Dilute EPS
Loss available to stockholders plus assumed conversions$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
Stock-based compensation
The Company follows the guidelines in ASC 718-10 Compensation-Stock Compensation, which requires companies to measure the cost of employee and non-employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Stock-based compensation expense for stock options is recognized on a straight-line basis over the requisite service period. The Company may issue compensatory shares for services including, but not limited to, executives, management, accounting, operations, corporate communication, financial and administrative consulting services. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model.
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.
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
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.
In June 2016, the FASB issued ASC 326, Financial Instruments - Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The new standard is effective in the first quarter of fiscal 2023 and is expected to have an immaterial impact on the Company's financial statements.
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 March 31, 2023, and December 31, 2022. Significant intercompany balances and transactions have been eliminated.
Use of estimates
The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable. In many instances, the Company could have reasonably used different accounting estimates and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. This applies in particular to useful lives of long-lived assets, reserves for accounts receivable and inventory, valuation allowance for deferred tax assets, fair values assigned to intangible assets acquired, and impairment of long-lived assets. Actual results could differ significantly from our estimates. To the extent that there are material differences between these estimates and actual results, the Company’s future financial statement presentation, financial condition, results of operations and cash flows will be affected.
Cash
Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. As of March 31, 2023, and December 31, 2022, the Company had no cash equivalents.
The FDIC insures up to $250,000 per account with any excess amount in each account being uninsured. Total bank balances were $0.8 million and $3.2 million as of March 31, 2023, and December 31, 2022, respectively. Of this amount, $0.1 million and $2.0 million were uninsured as of March 31, 2023, and December 31, 2022, respectively. All uninsured amounts are held with J.P. Morgan Chase.
Major Customers & Vendors
The Company had no customers which made up over 10% of total Company accounts receivable as of March 31, 2023, or December 31, 2022.
For the three months ended March 31, 2023, the Company had no customers which made up over 10% of total Company revenues. For the three months ended March 31, 2022, the Company had one customer within the A4 Technology - RCA segment, which made up 13% of total Company revenues.
For the three months ended March 31, 2023 and 2022, the Company received 12% and 11%, respectively, of total Company revenues from prime contractors.
For the three months ended March 31, 2023, the Company had no vendors, which made up over 10% of total Company purchases. For the three months ended March 31, 2022, the Company had one vendor within the A4 Technology - RCA segment, which made up 17% of total Company purchases.
Inventory
Inventory for all subsidiaries is valued at weighted average cost. 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-process and finished goods. Inventory at March 31, 2023, and December 31, 2022, consists of:
March 31, 2023December 31, 2022
Raw materials$10,083,241 $9,116,824 
Work in process3,236,331 3,165,876 
Finished goods11,943,087 12,975,669 
Inventory25,262,659 25,258,369 
Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of 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 the three months ended March 31, 2023, there were no events or changes in circumstances that indicated a quantitative impairment analysis was necessary.
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 March 31, 2023, and December 31, 2022, the reporting units with goodwill were QCA, MSM, Excel, Alt Labs, TDI, Identified Technology, ElecJet, and RCA. Consistent with our prior year assessment, the ElecJet reporting unit is considered an at-risk reporting unit. Our methods and assumptions were consistent with those discussed below in the Fair Value Measurement subsection. This reporting unit is primarily considered at-risk as it is a start-up subsidiary with minimal to no revenue to offset its research & development expenses. The DCF model includes revenue growth assumptions of us executing large new customer and/or supplier agreements within the next two years and then steadily increasing revenue at a more normalized rate thereafter. Any failure to execute these customer and/or supplier arrangements would negatively impact the key growth assumptions.
Fair value measurements
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.
We apply the provisions of fair value measurement to various nonrecurring measurements for our financial and nonfinancial assets and liabilities. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, notes payable and lines of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches. For the income approach, we use a discounted cash flow models developed in connection with our third-party valuation specialists that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates; and estimated discount rates. For the market approach, we use analyses based primarily on market comparables. We base these assumptions on historical data and experience, industry projections, and general economic conditions.
The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. As of March 31, 2023, and December 31, 2022, the Company had no financial assets or liabilities that were required to be fair valued on a recurring basis, as all of our financial assets and liabilities were Level 1.
Research and Development
The Company focuses on quality control and development of new products and the improvement of existing products. All costs related to research and development activities are expensed as incurred. During the three months ended March 31, 2023 and 2022, research and development costs totaled $0.1 million and $0.2 million, respectively.
Earnings (loss) per share
The Company presents both basic and diluted net income (loss) per share on the face of the consolidated statements of operations. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted per share calculations give effect to all potentially dilutive shares of common stock outstanding during the period, including stock options and warrants, using the treasury-stock method. If antidilutive, the effect of potentially dilutive shares of common stock is ignored. The amount of anti-dilutive shares related to stock options and warrants as of March 31, 2023 and 2022 was 2,700,473 and 837,472. respectively. The following table illustrates the computation of basic and diluted
earnings per share (“EPS”) inclusive of all classes of common stock as the only difference between the classes of common stock are related to the voting rights for the three months ended March 31, 2023 and 2022:
For the Three Months Ended March 31, 2023
For the Three Months Ended March 31, 2022
Net LossSharesPer Share AmountNet LossSharesPer Share Amount
Basic EPS
Net loss$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Effect of Dilutive Securities
Stock options and warrants— — — — — — 
Dilute EPS
Total
$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Revenue Recognition
The Company recognizes revenue under ASC Topic 606, Revenue from contract with Customers ("Topic 606"). The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
Revenue is recognized under Topic 606, at a point in time and over a period of time, in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
executed contract with the Company's customers that it believes are legally enforceable;
identification of performance obligations in the respective contract;
determination of the transaction price for each performance obligation in the respective contract;
allocation of the transaction price to each performance obligation; and
recognition of revenue only when the Company satisfies each performance obligation.
The following tables presents our revenues disaggregated by type for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31, 2023
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$— $9,320,821 $— $7,555,918 $— $16,876,739 
Sale of services4,146,004 — 2,970,087 — 368,883 7,484,974 
Total revenues
$4,146,004 $9,320,821 $2,970,087 $7,555,918 $368,883 $24,361,713 
Three Months Ended March 31, 2022
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$— $8,648,095 $— $9,793,988 $— $18,442,083 
Sale of services4,056,204 — 2,687,981 — 405,886 7,150,071 
Total revenues
$4,056,204 $8,648,095 $2,687,981 $9,793,988 $405,886 $25,592,154 
Recent Accounting Pronouncements
Effective January 1, 2023, we adopted ASU 2016-13, Credit Losses Topic 326 (the new credit losses standard), using the modified retrospective approach. The comparative periods have not been restated and continue to be
reported under the accounting standard in effect for those periods. The new credit losses standard amends the impairment model to use a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Our adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements for the three months ended March 31, 2023, and we did not recognize a cumulative effect adjustment to retained earnings as of January 1, 2023.
To assist in quantifying the impact on our consolidated financial statements and supplementing our existing disclosures, we identified financial assets measured at an amortized cost basis in our consolidated balance sheet and evaluated the collectability considerations based on an expected credit loss assessment. We perform ongoing credit evaluations of our customers, but generally do not require collateral to support customer receivables. We establish an allowance for doubtful accounts based on various factors including the age of receivables outstanding, historical trends, economic conditions and other information. We also review outstanding balances on an account-specific basis based on the credit risk of the customer. We determined that all of our accounts receivable share similar risk characteristics within our operating segments based on historical data. We monitor our credit exposure on an ongoing basis and assess whether assets in the pool continue to display similar risk characteristics. We actively monitor the credit risk of our specific customers, age of receivables outstanding, recent collection trends and general economic conditions to evaluate the risk of credit loss. The consolidated statement of income for the three months ended March 31, 2023, reflects the measurement of credit losses for newly recognized financial assets as well as any changes to historical financial assets.
Allowance for Doubtful Accounts
Balance as of December 31, 2022$52,531 
Additions charged to expense153,243 
Accounts written-off(18,937)
Balance as of March 31, 2023
$186,837 
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.

v3.23.2
Leases
6 Months Ended
Jun. 30, 2023
Leases [Abstract]  
Leases LeasesThe 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 discounts lease payments based on an estimate of its incremental borrowing rate.
As of December 31, 2022, the future minimum finance and operating lease payments are as follows:
Years Ending December 31,
Finance
Leases
Operating
Leases
2023$1,925,840 $2,287,038 
20241,952,462 2,443,909 
20251,880,402 1,960,387 
20261,867,799 1,805,158 
20271,910,388 1,770,300 
Thereafter14,952,719 13,253,279 
Total payments24,489,610 23,520,071 
Less: imputed interest(9,171,495)(6,938,692)
Total obligation15,318,115 16,581,379 
Less: current portion(725,302)(1,318,885)
Non-current capital leases obligations$14,592,813 $15,262,494 
Finance Leases
As of December 31, 2022, all finance leases in the table above were related to property and equipment, and are included as part of property and equipment, net on the consolidated balance sheet. Depreciation expense associated with the finance leases within property and equipment was $1,251,817 and $1,244,059 for the years ended December 31, 2022 and 2021, respectively. Of this amount, $151,398 and $422,259 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expenses on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021. Interest expense related to the finance leases for the years ended December 31, 2022 and 2021 was $1,255,231 and $1,301,842, respectively, and is recorded within Interest Expense on the Consolidated Statement of Operations. At December 31, 2022, the weighted average remaining lease terms were 11.95 years, and the weighted average discount rate was 8.01%.
Operating Leases
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheet:
Classification on Balance SheetDecember 31,
2022
December 31,
2021
Assets
Operating lease assetsOperating lease right of use assets$16,407,566 $1,460,206 
Total lease assets$16,407,566 $1,460,206 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,318,885 $428,596 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability15,262,494 1,066,562 
Total lease liability$16,581,379 $1,495,158 
On May 3, 2021, the Company entered into a lease agreement for the building on 4740 Cleveland in Ft. Myers, Florida. The lease had a term of 72 months with monthly payments ranging from $40,833 to $49,583 from May 2021 to July 2021 and $58,333 from August 2021 through the end of the term. The Company determined the lease to be an operating lease and recognized a right-of-use asset and operating lease liability of $3,689,634 based on the
present value of the minimum lease payments discounted using an incremental borrowing rate of 3.96%. This lease was terminated on August 27, 2021, when the Company purchased the building.
In December 2021, the Company acquired RCA. As part of this purchase the Company entered into a lease agreement for office and warehouse space under a non-cancellable operating lease. The lease has a term of 89 months with monthly payments ranging from $31,350 to $35,207. The Company determined the lease to be an operating lease and recognized a right-of-use asset of $1,196,764 and operating lease liability of $1,226,128 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 4%.
On June 23, 2022, the Company entered into a sale lease back agreement for the building on 4740 Cleveland in Ft. Myers, Florida. The lease had a term of 180 months with monthly payments ranging from $67,708 to $89,306. The Company determined the lease to be an operating lease and recognized a right-of-use asset and an operating lease liability of $8,725,000 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 7.00%.
On June 26, 2022, the Company amended its lease effective July 1, 2022 for the warehouse in Ann Arbor, Michigan for an additional 12,800 sq ft through July 31, 2025, with total monthly lease payments ranging from $16,000 to $16,800. As a result of this amendment, the Company remeasured the right of use asset and liability and recorded an additional $543,595 in right of use asset on the date of the modification based on the present value of the minimum lease payment discounted using an incremental borrowing rate of 5.13%.
On June 13, 2022, the Company entered into a lease effective October 1, 2022 for a building in San Jose, California through March 1, 2033, with total monthly lease payments ranging from $49,156 to $66,062. The Company determined the lease to be an operating lease and recognized a right-of-use asset of and operating lease liability of $5,506,357 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 4%.
On September 9, 2022, the Company amended its lease effective as of October 1, 2022 for the warehouse in Ft. Myers, Florida through September 30, 2027, with total monthly lease payments ranging from $21,637 to $23,682. As a result of this amendment, the Company remeasured the right of use asset and liability and recorded an additional $1,179,091 in right of use asset on the date of the modification based on the present value of the minimum lease payment discounted using an incremental borrowing rate of 6.25%.
The operating lease expense for the years ended December 31, 2022 and 2021 was $1,006,683 and $386,056, respectively. Of this amount, $329,938 and $0 is recorded in Cost of Revenues on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, respectively. The remaining $676,745 and $386,056 is recorded within General & Administrative expenses on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, respectively. The cash paid under operating leases during the years ended December 31, 2022 and 2021 was $1,087,951 and $402,688, respectively. As of December 31, 2022, the weighted average remaining lease terms were 11.83 years and the weighted average discount rate was 6%.
LeasesThe 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 discounts lease payments based on an estimate of its incremental borrowing rate.
As of March 31, 2023, the future minimum finance and operating lease payments were as follows:
Twelve Months Ending March 31,
Finance
Leases
Operating
Leases
2024$1,931,757 $2,398,681 
20251,962,353 2,423,929 
20261,852,006 1,823,638 
20271,880,265 1,814,303 
20281,923,136 1,708,631 
Thereafter14,368,333 12,855,124 
Total payments23,917,850 23,024,306 
Less: imputed interest(8,778,767)(6,698,331)
Total obligation15,139,083 16,325,975 
Less: current portion(743,157)(1,484,846)
Non-current financing leases obligations$14,395,926 $14,841,129 
Finance Leases
As of March 31, 2023, all finance leases in the table above were related to property and equipment. Depreciation expense associated with the finance leases within Property and Equipment was $312,954 and $312,954 for the three months ended March 31, 2023 and 2022, respectively. Of this amount $44,503 and $0 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expenses on the Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. Interest expense on finance leases for the three months ended March 31, 2023, and 2022 was $305,262 and $317,905, respectively, and is recorded in Interest Expense on the Consolidated Statements of Operations. At March 31, 2023, the weighted average remaining lease terms were 11.7 years, and the weighted average discount rate was 8.01%.
Operating Leases
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of March 31, 2023, and December 31, 2022:
March 31,
2023
December 31,
2022
Assets 
Operating lease assetsOperating lease right of use assets$15,949,731 $16,407,566 
Total lease assets$15,949,731 $16,407,566 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,484,846 $1,318,885 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability14,841,129 15,262,494 
Total lease liability$16,325,975 $16,581,379 
The lease expense for the three months ended March 31, 2023 and 2022, was $598,590 and $126,561, respectively. Of this amount $216,754 and $0 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expense on the Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. The cash paid under operating leases during the three months ended March 31, 2023 and 2022, was $540,833 and $124,654, respectively. At March 31, 2023, the weighted average remaining lease terms were 11.7 years, and the weighted average discount rate was 6.01%.
Leases LeasesThe 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 discounts lease payments based on an estimate of its incremental borrowing rate.
As of December 31, 2022, the future minimum finance and operating lease payments are as follows:
Years Ending December 31,
Finance
Leases
Operating
Leases
2023$1,925,840 $2,287,038 
20241,952,462 2,443,909 
20251,880,402 1,960,387 
20261,867,799 1,805,158 
20271,910,388 1,770,300 
Thereafter14,952,719 13,253,279 
Total payments24,489,610 23,520,071 
Less: imputed interest(9,171,495)(6,938,692)
Total obligation15,318,115 16,581,379 
Less: current portion(725,302)(1,318,885)
Non-current capital leases obligations$14,592,813 $15,262,494 
Finance Leases
As of December 31, 2022, all finance leases in the table above were related to property and equipment, and are included as part of property and equipment, net on the consolidated balance sheet. Depreciation expense associated with the finance leases within property and equipment was $1,251,817 and $1,244,059 for the years ended December 31, 2022 and 2021, respectively. Of this amount, $151,398 and $422,259 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expenses on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021. Interest expense related to the finance leases for the years ended December 31, 2022 and 2021 was $1,255,231 and $1,301,842, respectively, and is recorded within Interest Expense on the Consolidated Statement of Operations. At December 31, 2022, the weighted average remaining lease terms were 11.95 years, and the weighted average discount rate was 8.01%.
Operating Leases
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheet:
Classification on Balance SheetDecember 31,
2022
December 31,
2021
Assets
Operating lease assetsOperating lease right of use assets$16,407,566 $1,460,206 
Total lease assets$16,407,566 $1,460,206 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,318,885 $428,596 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability15,262,494 1,066,562 
Total lease liability$16,581,379 $1,495,158 
On May 3, 2021, the Company entered into a lease agreement for the building on 4740 Cleveland in Ft. Myers, Florida. The lease had a term of 72 months with monthly payments ranging from $40,833 to $49,583 from May 2021 to July 2021 and $58,333 from August 2021 through the end of the term. The Company determined the lease to be an operating lease and recognized a right-of-use asset and operating lease liability of $3,689,634 based on the
present value of the minimum lease payments discounted using an incremental borrowing rate of 3.96%. This lease was terminated on August 27, 2021, when the Company purchased the building.
In December 2021, the Company acquired RCA. As part of this purchase the Company entered into a lease agreement for office and warehouse space under a non-cancellable operating lease. The lease has a term of 89 months with monthly payments ranging from $31,350 to $35,207. The Company determined the lease to be an operating lease and recognized a right-of-use asset of $1,196,764 and operating lease liability of $1,226,128 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 4%.
On June 23, 2022, the Company entered into a sale lease back agreement for the building on 4740 Cleveland in Ft. Myers, Florida. The lease had a term of 180 months with monthly payments ranging from $67,708 to $89,306. The Company determined the lease to be an operating lease and recognized a right-of-use asset and an operating lease liability of $8,725,000 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 7.00%.
On June 26, 2022, the Company amended its lease effective July 1, 2022 for the warehouse in Ann Arbor, Michigan for an additional 12,800 sq ft through July 31, 2025, with total monthly lease payments ranging from $16,000 to $16,800. As a result of this amendment, the Company remeasured the right of use asset and liability and recorded an additional $543,595 in right of use asset on the date of the modification based on the present value of the minimum lease payment discounted using an incremental borrowing rate of 5.13%.
On June 13, 2022, the Company entered into a lease effective October 1, 2022 for a building in San Jose, California through March 1, 2033, with total monthly lease payments ranging from $49,156 to $66,062. The Company determined the lease to be an operating lease and recognized a right-of-use asset of and operating lease liability of $5,506,357 based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 4%.
On September 9, 2022, the Company amended its lease effective as of October 1, 2022 for the warehouse in Ft. Myers, Florida through September 30, 2027, with total monthly lease payments ranging from $21,637 to $23,682. As a result of this amendment, the Company remeasured the right of use asset and liability and recorded an additional $1,179,091 in right of use asset on the date of the modification based on the present value of the minimum lease payment discounted using an incremental borrowing rate of 6.25%.
The operating lease expense for the years ended December 31, 2022 and 2021 was $1,006,683 and $386,056, respectively. Of this amount, $329,938 and $0 is recorded in Cost of Revenues on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, respectively. The remaining $676,745 and $386,056 is recorded within General & Administrative expenses on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, respectively. The cash paid under operating leases during the years ended December 31, 2022 and 2021 was $1,087,951 and $402,688, respectively. As of December 31, 2022, the weighted average remaining lease terms were 11.83 years and the weighted average discount rate was 6%.
LeasesThe 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 discounts lease payments based on an estimate of its incremental borrowing rate.
As of March 31, 2023, the future minimum finance and operating lease payments were as follows:
Twelve Months Ending March 31,
Finance
Leases
Operating
Leases
2024$1,931,757 $2,398,681 
20251,962,353 2,423,929 
20261,852,006 1,823,638 
20271,880,265 1,814,303 
20281,923,136 1,708,631 
Thereafter14,368,333 12,855,124 
Total payments23,917,850 23,024,306 
Less: imputed interest(8,778,767)(6,698,331)
Total obligation15,139,083 16,325,975 
Less: current portion(743,157)(1,484,846)
Non-current financing leases obligations$14,395,926 $14,841,129 
Finance Leases
As of March 31, 2023, all finance leases in the table above were related to property and equipment. Depreciation expense associated with the finance leases within Property and Equipment was $312,954 and $312,954 for the three months ended March 31, 2023 and 2022, respectively. Of this amount $44,503 and $0 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expenses on the Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. Interest expense on finance leases for the three months ended March 31, 2023, and 2022 was $305,262 and $317,905, respectively, and is recorded in Interest Expense on the Consolidated Statements of Operations. At March 31, 2023, the weighted average remaining lease terms were 11.7 years, and the weighted average discount rate was 8.01%.
Operating Leases
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of March 31, 2023, and December 31, 2022:
March 31,
2023
December 31,
2022
Assets 
Operating lease assetsOperating lease right of use assets$15,949,731 $16,407,566 
Total lease assets$15,949,731 $16,407,566 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,484,846 $1,318,885 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability14,841,129 15,262,494 
Total lease liability$16,325,975 $16,581,379 
The lease expense for the three months ended March 31, 2023 and 2022, was $598,590 and $126,561, respectively. Of this amount $216,754 and $0 is recorded within Cost of Revenues with the remainder recorded in General & Administrative expense on the Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. The cash paid under operating leases during the three months ended March 31, 2023 and 2022, was $540,833 and $124,654, respectively. At March 31, 2023, the weighted average remaining lease terms were 11.7 years, and the weighted average discount rate was 6.01%.

v3.23.2
Debt
6 Months Ended
Jun. 30, 2023
Debt Disclosure [Abstract]  
Debt Debt
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. In August 2020, the company filed a lawsuit against Alan Martin regarding his note payable. The balance as of December 31, 2022, and 2021, was $2,857,500, and accrued interest of $1,710,577 and $1,170,861, respectively, which are reflective in the current liabilities. The default rate is 10% and the daily late charge is $575. (See a description of the Company’s ongoing legal proceedings relating to this transaction in Note 11, Commitments and Contingencies, below.)
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. In May 2020, the Company amended the three supplemental notes of $116,667 each with the sellers of Morris. The notes were due January 1, 2020. Each of the new notes as of the date of amendment had accrued interest of $2,703. This was added to the note resulting in the principal amount of 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 $10,000 with one final payment of $13,882 through January 2021. The amended notes have an interest rate of 6%. As of December 31, 2022, the outstanding balance on these notes and supplemental notes were paid in full.
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. On April 8, 2021, the Company entered into a settlement agreement with the seller wherein the outstanding balance on the first note amounting to $1,883,418 including accrued interest and net other costs was settled in full through a payment of approximately $887,000 and the exchange of 1,617,067 shares of the Company’s Class C common shares held by the seller for the same number of shares of the Company’s Class A common stock. The Company recognized a gain on extinguishment of debt totaling $803,079 during the year ended December 31, 2021, as a result of the settlement of the note.
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. The ending balance for this loan as of December 31, 2022 and 2021, was $2,062,318. (See a description of the Company’s ongoing legal proceedings relating to this transaction in Note 11, Commitments and Contingencies, below.)
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 balance on this note as of December 31, 2022 and 2021, was $23,405 and $52,504, respectively.
In connection with the RCA acquisition in December 2021, the Company issued two subordinated secured promissory notes for an aggregate of $2,000,000. The notes are amortized over 10 years, bear interest at 3.75% per annum and require monthly payment of at least $19,590. After three years, the unpaid principal amount on the notes will be immediately due.
In April and May 2020, the Company received seven loans under the Paycheck Protection Program of the U.S. Coronavirus Aid, Relief and Economic Security (“CARES”) Act totaling $3,896,108. During the year ended December 31, 2021, the Company also acquired four loans with a book value totaling $1,799,725 due to acquisitions, and fair value of $65,000. The loans have terms of 24 months and accrue interest at 1% per annum. The Company paid $88,160 for the loan assumed in connection with the IA acquisition, and the remaining $356,690 was forgiven. The remaining ten loans were forgiven as provided by the CARES Act during the year ended December 31, 2021. The Company recognized a gain on forgiveness of debt of $0 and $3,896,108 for the years ended December 31, 2022 and December 31, 2021, respectively. The Company also assumed an Economic Injury Disaster Loan (EIDL) of $65,000 in connection with the Vayu acquisition, which was still outstanding as of December 31, 2022.
On August 27, 2021 the Company entered into $4.7 million agreement for the purchase of a building located at 4740 Cleveland in Ft. Myers, Florida. The loan bears interest at a rate of 3.95% per annum for a term of 10-years and requires monthly payments of $24,722. The loan is secured by the building and a guarantee by the Company. On June 23, 2022, the Company sold the building at 4740 S. Cleveland Ave. Fort Myers, Florida, for $13,200,000. The Company determined that it had transferred control of the building to the buyer, has derecognized the asset, and recognized a gain on the sale of $5,822,450 and paid off the outstanding mortgage of $4,642,043. Under ASC 842, Leases, the Company simultaneously entered into a sale leaseback transaction where the building was then leased back (See Note 3).
In January 2022, Alt Labs entered into a note payable for $500,000 with an interest rate of 3.85% for 60 monthly payments of $9,186. The outstanding balance on this note as of December 31, 2022, was $414,498.
In May 2022, Morris entered into an equipment finance note for $61,000 with an interest rate of 10% for 60 monthly payments of $1,314. The outstanding balance on this note as of December 31, 2022, was $53,595.
In January 2022, Morris entered into an equipment finance note for $89,153 with an interest rate of 5.86% for 60 monthly payments of $1,722. The outstanding balance on this note as of December 31, 2022, was $74,644.
In March 2022, Morris entered into an equipment finance note for $93,433 with an interest rate of 5.86% for 60 monthly payments of $1,804. The outstanding balance on this note as of December 31, 2022, was $79,653.
In May 2021, Morris entered into a revolving line of credit totaling $2.5 million with a variable interest rate based on the current WSJ Prime rate, which was 7.50% per annum as of December 31, 2022. The business assets of Morris are pledged as collateral on this line of credit. The term end date for this line was October 2022, but has been extended through May 2023. The total line of credit used as of December 31, 2022 and December 31, 2021, was $2.49 million and $1.73 million respectively, with approximately $7 thousand available to be drawn on as of December 31, 2022.
In September 2021, QCA entered into a revolving line of credit totaling $5.5 million that includes a capital expenditure line of credit $0.5 million, with a variable interest rate based on the current WSJ Prime rate plus 2.5%. As of December 31, 2022, the interest rate was 10.00%. AR, inventory, and equipment are pledged as collateral on this line of credit. The term end date on this line of credit is September 2023. The line of credit used as of December 31, 2022 and December 31, 2021 was $5.0 million and $2.0 million, respectively, with approximately $51 thousand available to be drawn on as of December 31, 2022.
In April 2022, Alt Labs entered into three revolving lines of credit totaling $5.0 million with a variable interest rate based on the current WSJ Prime rate plus 2.5%. As of December 31, 2022, the interest rate was 10.00%. AR, inventory, and equipment are pledged as collateral on these lines of credit. The term end date for two of the three lines of credit is March 2024, while the term date of the third line of credit is March 2026. The total lines of credit used as of December 31, 2022 was $1.84 million, with approximately $17 thousand available to be drawn on as of December 31, 2022. Alt Labs had an existing line of credit totaling $750 thousand as of December 31, 2021. This was paid out and closed as part of opening the new lines of credit in 2022.
In September 2022, RCA entered into a revolving line of credit totaling $20.0 million with an interest rate of 1.75% plus the secured overnight financing rate (SOFR). AR, inventory, and equipment are pledged as collateral on these lines of credit. The term end date for this line of credit is September 2027. The total lines of credit used as of December 31, 2022 was $5.54 million, with approximately $3.80 million available to be drawn on as of December 31, 2022. RCA had an existing line of credit totaling $10.0 million, with a used total of $5.64 million as of December 31, 2021. The balance of the existing line of credit was paid off and closed as part of the opening of the new line of credit in September 2022.
The Company is required to maintain covenants including financial ratios as a condition of the line of credit agreements. As of the date of this Report, the Company was not in compliance with these covenants as the 10-K report was not filed within 90 days from the year ended December 31, 2022. However, the Company received waivers extended through May 5th, 2023. As such, the Company will be in compliance with the covenants as of the date of this report.
The outstanding balances for the loans as of December 31, 2022 and 2021 were as follows:
December 31,
2022
December 31,
2021
Lines of credit, current portion$7,426,814 $4,473,489 
Equipment loans, current portion68,410 61,640 
Term notes, current portion3,132,726 5,628,884 
Total current10,627,950 10,164,013 
Line of credit, net of current portion7,215,520 5,640,051 
Long-term portion of equipment loans and term notes4,266,350 8,426,105 
Total notes payable$22,109,820 $24,230,169 
Future scheduled maturities of outstanding debt are as follows:
Years Ending December 31,
2023$10,627,950 
20245,104,159 
2025155,254 
2026734,607 
20275,422,850 
Thereafter65,000 
Total$22,109,820 
Debt
The outstanding balances for the loans as of March 31, 2023, and December 31, 2022, were as follows:
March 31,
2023
December 31,
2022
Lines of credit, current portion$8,970,460 $7,426,814 
Equipment loans, current portion82,787 68,410 
Related Party term notes, current portion535,000 — 
Term notes, current portion5,915,560 3,132,726 
Total current 15,503,807 10,627,950 
Lines of credit, net of current portion3,928,105 7,215,520 
Long-term portion of equipment loans and term notes2,229,684 4,266,350 
Total notes payable and line of Credit$21,661,596 $22,109,820 
Future scheduled maturities of outstanding debt are as follows:
Twelve Months Ending March 31,
2024$15,503,807 
20251,785,069 
2026709,653 
20273,562,900 
202826,035 
Thereafter74,132 
Total$21,661,596 
In August 2020, the Company filed a lawsuit against Alan Martin regarding his note payable. As of March 31, 2023 and 2022, the note had a balance of $2.9 million, and accrued interest of $1.8 million and $1.2 million, respectively, which are reflective in current liabilities. The default rate is 10% and the daily late charge is $575 (See a description of the Company’s ongoing legal proceedings relating to this transaction in Note 7, Commitments and Contingencies, below).
During January and February 2023, the Company issued a total of $1.3 million in six-month note payables ranging in size from $10,000 to $200,000 to executive officers and various investors with an annual interest rate of 30% to be used for general corporate purposes. Of this amount, $0.5 million was issued to related parties.
During 2023, the Company had four revolving lines of credit in the aggregate of $33.0 million, including one capital expenditures line of credit of $0.1 million. The revolving lines of credit used as of March 31, 2023, totaled $12.9 million with interest rates ranging from WSJ prime plus 2.50% - 4.25% and terms ranging from one to five years. Accounts receivables, inventory, and property and equipment are pledged as collateral on the various lines of credit. As of March 31, 2023, the Company had $3.8 million in additional funds available to borrow. The Company is required to maintain covenants including financial ratios as a condition of the line of credit agreements. As of the date of this Report, the Company was not in compliance with these covenants. However, the Company received a forbearance agreement and waivers from the banking institutions regarding these failed covenants. As such, the Company was in compliance with the covenants as of the date of this report.

v3.23.2
Stockholders' Equity
6 Months Ended
Jun. 30, 2023
Equity [Abstract]  
Preferred Stock Subject to Redemption Preferred Stock Subject to Redemption
Series C Preferred Stock
The Company designated 2,028,572 shares of Series C Preferred Stock with a stated value of $3.50 per share. No dividends will accrue on the Series C Preferred Stock. If dividends are declared on the Company’s Class A, Class B, or Class C Common Stock, the holders of the Series C Preferred Stock will participate in such dividends on a per share basis, pari passu with the Classes of Common Stock.
Voting Rights - The Series C Preferred Stock will vote together with the Class A Common Stock on a one-vote-for-one-Preferred-share basis. As long as any shares of Series C Preferred Stock are outstanding, the Company may not, without the affirmative vote or written consent of the holders of a majority of the then outstanding shares of the Series C Preferred Stock, (a) alter or change the powers, preferences or rights given to the Series C Preferred Stock or alter or amend the Certificate of Designation, (b) amend its Certificate of Incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Series C Preferred Stock, or (c) enter into any agreement or arrangement with respect to any of the foregoing.
Liquidation - Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a "Liquidation"), the holders of the Series C Preferred Stock shall participate on a per share basis with the holders of the Class A, Class B, and Class C Common Stock of the Company, and shall be entitled to share equally, on a per share basis, all assets of the Company of whatever kind available for distribution to the holders of all classes of the Common Stock. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each record holder of Series C Preferred Stock.
Conversion - The Series C Preferred Stock shall be convertible automatically into shares of the Company's Class A Common Stock (the “Automatic Conversion”) as follows: 
Each share of Series C Preferred Stock will automatically convert into shares of the Company’s Class A Common Stock on the earlier to occur of (a) the fifth day after the twenty-four month anniversary of the original issue date or (b) the fifth day after the date on which the Company’s Class A Common Stock first
trades on a national securities exchange (including but not limited to NASDAQ, NYSE, or NYSE American but excluding OTCQX Market) (such date, the “Automatic Conversion Date”).
The number of shares of the Company’s Class A Common Stock into which the Series C Preferred Stock shall be converted shall be determined by multiplying the number of shares of Series C Preferred Stock to be converted by the $3.50 stated value, and then dividing that product by the Conversion Price. The Conversion Price shall be equal to the Variable Weighted Average Price (“VWAP”) of the five Trading Days prior to the Automatic Conversion Date. “VWAP” shall be defined as the volume weighted average price of the Company’s Class A Common Stock on the OTC Markets or other stock exchange or trading medium where such shares are traded as reported by Bloomberg, L.P. using the VWAP function. If for any reason, VWAP cannot be thus determined, “VWAP” shall mean the average closing or last sale prices over the five Trading Days prior to the Automatic Conversion Date of the Company’s Class A Common Stock on the OTC Markets or such other exchange or trading medium.
Restrictions on Resales of Class C Common Stock - The sale of shares of the Company’s Class A Common Stock issued at the time of conversion by any holder into the market or to any private purchaser shall be limited to not more than twenty-five percent (25%) of all conversion shares received by such holder at the time of the automatic conversion in any given 120-day period.
Company Redemption Rights - At any time on or prior to the Automatic Conversion Date, the Company shall have the right to redeem all (but not less than all) shares of the Series C Preferred Stock issued and outstanding at any time after the original issue date, upon three (3) business days’ notice, at a redemption price per share of Series C Preferred Stock then issued and outstanding (the “Corporation Redemption Price”), equal to the stated value of $3.50 per share.
During the year ended December 31, 2020, the Company issued 1,714,286 shares of Series C Preferred Stock in connection with the acquisition of assets of IA that were valued at $5,848,013. The difference in stated value will be accreted over a 24 month period or upon conversion from Series C Preferred Stock to Class A Common stock. As of December 31, 2022, and 2021, 1,714,286 and 1,704,137, respectively, of these shares had been converted to Class A common stock. Prior to conversion the Company recognized accretion to interest expense in the amount of $0 and $69,661 for the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2022 and 2021, 0 and 10,149 shares of Series C Preferred Stock were outstanding, respectively.
Series D Preferred Stock
The Company designated 1,628,572 shares of Series D Preferred Stock with a stated value of $3.50 per share. No dividends will accrue on the Series D Preferred Stock. If dividends are declared on the Company’s Class A, Class B, or Class C Common Stock, the holders of the Series D Preferred Stock will participate in such dividends on a per share basis, pari passu with the Classes of Common Stock.
Voting Rights - The Series D Preferred Stock will vote together with the Class A Common Stock on a one-vote-for-one-Preferred-share basis. As long as any shares of Series D Preferred Stock are outstanding, the Company may not, without the affirmative vote or written consent of the holders of a majority of the then outstanding shares of the Series D Preferred Stock, (a) alter or change the powers, preferences or rights given to the Series D Preferred Stock or alter or amend the Certificate of Designation, (b) amend its Certificate of Incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Series D Preferred Stock, or (c) enter into any agreement or arrangement with respect to any of the foregoing.
Liquidation - Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a "Liquidation"), the holders of the Series D Preferred Stock shall participate on a per share basis with the holders of the Class A, Class B, and Class C Common Stock of the Company, and shall be entitled to share equally, on a per share basis, all assets of the Company of whatever kind available for distribution to the holders of all classes of the Common Stock. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each record holder of Series D Preferred Stock.
Conversion - The Series D Preferred Stock shall be convertible automatically into shares of the Company's Class A Common Stock (the “Automatic Conversion”) as follows:
Each share of Series D Preferred Stock will automatically convert into shares of the Company’s Class A Common Stock on the earlier to occur of (a) the fifth day after the twenty-four month anniversary of the original issue date or (b) the fifth day after the date on which the Company’s Class A Common Stock first trades on a national securities exchange (including but not limited to NASDAQ, NYSE, or NYSE American but excluding OTCQX Market) (such date, the “Automatic Conversion Date”).
The number of shares of the Company’s Class A Common Stock into which the Series D Preferred Stock shall be converted shall be determined by multiplying the number of shares of Series D Preferred Stock to be converted by the $3.50 stated value, and then dividing that product by the Conversion Price. The Conversion Price shall be equal to the Variable Weighted Average Price (“VWAP”) of the five Trading Days prior to the Automatic Conversion Date. “VWAP” shall be defined as the volume weighted average price of the Company’s Class A Common Stock on the OTC Markets or other stock exchange or trading medium where such shares are traded as reported by Bloomberg, L.P. using the VWAP function. If for any reason, VWAP cannot be thus determined, “VWAP” shall mean the average closing or last sale prices over the five Trading Days prior to the Automatic Conversion Date of the Company’s Class A Common Stock on the OTC Markets or such other exchange or trading medium.
Restrictions on Resales of Class A Common Stock - The sale of shares of the Company’s Class A Common Stock issued at the time of conversion by any holder into the market or to any private purchaser shall be limited to not more than twenty-five percent (25%) of all conversion shares received by such holder at the time of the automatic conversion in any given 90-day period.
Company Redemption Rights - At any time on or prior to the Automatic Conversion Date, the Company shall have the right to redeem all (but not less than all) shares of the Series D Preferred Stock issued and outstanding at any time after the original issue date, upon three (3) business days’ notice, at a redemption price per share of Series D Preferred Stock then issued and outstanding (the “Corporation Redemption Price”), equal to the stated value of $3.50 per share.
Registration Rights - The shares issued on conversion of the Series D Preferred Stock have piggyback registration rights beginning on that date which his six months after the date on which the Company’s Class A Common Stock trades on a national securities exchange, and are subject to standard underwriter holdback limitations.
During the year ended December 31, 2021, the Company issued 1,432,224 shares of Series D Preferred Stock in connection with the acquisition of assets of Vayu that were valued at $6,653,309. The difference in stated value will be accreted over a 24-month period or upon conversion from Series D Preferred Stock to Class A Common stock. As of December 31, 2022 and 2021, 1,432,224 and 1,353,570, respectively, of these shares had been converted to Class A common stock. Prior to conversion the Company recognized accretion to interest income in the amount of $0 and $615,170 for the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2022 and 2021, 0 and 78,674 shares of Series D Preferred Stock were outstanding, respectively.
Stockholders' Equity
Preferred Stock
The Company is authorized to issue 5,000,000 shares of $0.0001 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 December 31, 2022 and 2021, 5 and 5 shares of Series B Preferred Stock were outstanding and were issued to certain members of the Board of Directors for services rendered.
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. Other than the voting rights, the Class A and Class B common stock are identical. Any holder of Class C common stock may convert 25% of his or her shares at any time after the 3rd to 6th anniversary into shares of Class A common stock on a share-for-share basis. Other than the voting rights the Class A and Class C common stock are identical.
The Company had the following transactions in its common stock during the year ended December 31, 2022:
In January 2022, the Company issued 72,152 shares of Class A common stock for no additional consideration upon conversion of 10,149 shares of Series C Preferred Stock and 78,674 of Series D Preferred Stock.
In January 2022, the Company amended the Corporation's Amended and Restated Certificate of Incorporation increasing the authorized capital stock from 195,000,000 to 295,000,000.
In March 2022, the Company issued 39,386 shares of Class A common stock for services with a value of $99,252.
In April 2022, the Company issued 171,850 shares of Class A common stock at a value of $132,325 as employee compensation.
During May and June 2022, the Company issued 76,119 shares of Class A common stock for cash of $55,144 in connection with a registered at-the-market offering (the "ATM Offering").
In July 2022, the Company sold 14,492,754 shares of Class A common stock and 14,492,754 warrants to certain investors, under a registered direct offering, for net proceeds of $9,175,000. The warrants have an exercise price of $0.69 per share and a term of 5 years.
In July 2022, the Company issued 60,600 shares of Class A common stock for cash of $42,318 in connection with its ATM offering.
In August 2022, certain investors exercised 1,449,276 warrants at an exercise price of $0.69, for net proceeds of $1,000,000.
In September 2022, certain shareholders converted 37,500 shares of Class C common stock for 37,500 shares of Class A common stock.
In October 2022, certain shareholders converted 201,806 shares of Class C common stock for 201,806 shares of Class A common stock.
In November 2022, certain shareholders converted 22,662 shares of Class C common stock for 22,662 shares of Class A common stock.
The Company had the following transactions in its common stock during the year ended December 31, 2021:
On February 11, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors to purchase 8,333,333 shares of the Company’s Class A common stock for aggregate gross proceeds of approximately $50 million. A.G.P./Alliance Global Partners served as the placement agent and received a cash fee of 7% of the aggregate gross proceeds and warrants to purchase shares of the Company’s Class A Common Stock equal to 5% of the number of shares sold in the offering with an exercise price of $6.60 per share and are not exercisable until August 16, 2021. Net proceeds from the sale of shares amounted to approximately $45 million.
In February 2021, the Company issued 1,524,064 shares of Class A common stock to an investor for cash for total proceeds of approximately $9.3 million.
On March 17, 2021, the Company repurchased 45,000 shares of Class C common stock for $185,850.
On April 30, 2021, the Company issued 1,617,067 shares of Class A common stock for no additional consideration upon conversion of that number of shares of Class C common stock by the holder of the Class C common stock.
On May 5, 2021, the Company issued 281,223 shares of Class A common stock that were valued at $1,102,394 in connection with the acquisition of TDI.
On May 10, 2021, the Company issued 361,787 shares of Class A common stock that were valued at $1,432,677 in connection with the acquisition of Alt Labs.
On May 17, 2021, the Company issued 350,000 shares of Class A common stock for no additional consideration upon conversion of that number of shares of Class B common stock by the holder of the Class B common stock.
On October 20, 2021, the Company issued 888,881 shares of Class A common stock that were valued at $3,617,746 in connection with the acquisition of Identified Technology.
On November 9, 2021, the Company issued 2,409,248 shares of Class A common stock for no additional consideration upon conversion of 1,704,137 shares of Series D Preferred Stock and 1,353,570 shares of Series C Preferred Stock.
On November 15, 2021 the Company issued 125,000 shares of Class A common stock for no additional consideration upon conversion of that number of shares of Class B common stock by the holder of the Class B common stock .
On November 26, 2021, the Company closed on a registered direct offering where it sold to certain investors a total of 8,571,430 shares of the Company’s Class A common stock and 4,285,715 warrant to purchase shares of Class A common stock for net proceeds of $22,189,152.
On November 29, 2021, the Company issued 1,803,279 shares of Class A common stock that were valued at $4,562,996 in connection with the ElecJet acquisition.
On November 29, 2021, the Company granted 983,636 contingent shares of Class A common stock that were valued at $2,488,599 in connection with the ElecJet acquisition. These contingent shares represent equity compensation for post-acquisition services and are accounted for under ASC 718. Of this amount, 655,758 of the contingent shares valued at $1,659,063 are performance based and management determined the performance conditions were deemed not probable and as such, no expense was recognized for the years ended December 31, 2022 and 2021. The remaining 327,878 shares are a time-based award and is recognized based on the grant-date fair value of the shares of $829,536 over the vesting period of 3-years. As such, the Company recognized $0 and $299,555 of stock based compensation expense related to this award for the years ended December 31, 2021 and 2022, respectively.
On December 9, 2021, in connection with the acquisition of DTI Services Limited Liability Company, the Company issued 1,587,301 shares of its Class A Common Stock that were valued at $3,682,539.
On December 20, 2021, the Company issued 100,000 shares of Class A common stock in connection with the HWT legal proceedings.
On December 29, 2021, the Company issued 99,018 shares of Class A common stock to management in connection with the acquisition of DTI Services Limited Liability Company.
During the year ended December 31, 2021 , the Company issued 7,384,018 shares of Class A common stock for the conversion of total debt and accrued liabilities totaling $1,886,898.
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 years ended December 31, 2022 and 2021:
OptionsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
1,790,000 $0.19 7.09$6,176,855 
Granted— 
Forfeited— 
Exercised— 
Outstanding at December 31, 2021
1,790,000 $0.19 6.09$3,098,055 
Granted2,084,620 $0.77 
Forfeited(781,712)$0.32 
Exercised— $— 
Outstanding at December 31, 2022
3,092,908 $0.55 7.94$463,494 
Vested and expected to vest at December 31, 2022
3,092,909 $0.55 7.94$463,494 
Exercisable at December 31, 2022
1,084,500 $0.14 5.37$463,494 
The following table summarizes information about options outstanding and exercisable as of December 31, 2022:
Options OutstandingOptions Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$0.05 891,500 5.38$0.05 891,500 $0.05 
0.10 85,000 5.280.10 85,000 0.10 
0.13 — 4.580.13 — 0.13 
0.77 2,008,409 9.330.77 — 0.77 
0.90 108,000 4.270.90 108,000 0.90 
3,092,909 1,084,500 
During the years ended December 31, 2022 and 2021, stock option expense amounted to $473,159 and $36,538, respectively. Unrecognized stock option expense as of December 31, 2022 amounted to $1,053,547, which will be recognized over a period extending through December 2023.
During the year ended December 31, 2022, the Company issued 2,084,620 options in connection with the Company's 2021 Employee Equity Incentive Plan (the "Plan"). The options have an exercise price of $0.77, vest annually over a three year vesting period and expire on April 29, 2032.
The fair value of the 2,084,620 options issued in connection with the Plan is $1,534,401, and was determined using the Black-Scholes option pricing model with the following assumptions:
Stock price$0.77 
Risk-free interest rate2.90 %
Expected life of the options6.25 years
Expected volatility158 %
Expected dividend yield%
Warrants
The following summarizes the warrant activity for the years ended December 31, 2022, and 2021:
WarrantsWeighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
275,000 $1.01 0.23$723,250 
Granted5,527,778 3.32
Forfeited(275,000)1.01
Exercised— — 
Outstanding at December 31, 2021
5,527,778 $3.32 4.62$— 
Granted14,492,754 0.69
Forfeited— — 
Exercised(1,449,276)0.69 
Outstanding at December 31, 2022
18,571,256 $1.47 4.31$— 
Vested and expected to vest at December 31, 2022
18,571,256 $1.47 4.31$— 
Exercisable at December 31, 2022
18,571,256 $1.47 4.31$— 
The following table summarizes information about warrants outstanding and exercisable as of December 31, 2022:
Warrants OutstandingWarrants Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$6.60 416,667 2.13$6.60 416,667 $6.60 
2.52 396,825 1.942.52 396,825 2.52 
3.10 4,285,715 3.93.10 4,285,715 3.1 
3.08 428,571 3.93.08 428,571 3.08 
0.6913,043,478 4.60.6913,043,478 0.69 
18,571,256 18,571,256 
During the year ended December 31, 2021, the Company issued 416,667 warrants to a placement agent in connection with sale of its common stock. The warrants have an exercise price of $6.60, were exercisable as of August 16, 2021 and expire on February 16, 2025. The Company issued another 428,571 warrants to a placement agent in connection with the sale of its common stock. The warrants have an exercise price of $3.08, were
exercisable as of May 26, 2021 and expire November 22, 2026. The Company issued another 396,825 warrants in connection to the RCA acquisition. The warrants have an exercise price of $2.52, were exercisable as of December 9, 2021 and expire December 9, 2024. During July 2022, the Company issued another 14,492,754 warrants to certain investors in connection with the sale of its common stock. The warrants have an exercise price of 0.69, were exercisable as of as of July 13, 2022, and expire July 13, 2027.
The fair value of the 416,667, 428,571, and the 396,825 warrants issued to the placement agent in connection with a registered direct offering, and to the RCA sellers in connection with the DTI/RCA acquisition (discussed below in Note 7) during the year ended December 31, 2021, are $2,498,637, $902,414, and $668,863 respectively and was determined using the Black-Scholes option pricing model. The fair value of the 14,492,754 warrants issued to the placement agent during the year ended December 31, 2022, are $7,083,038, and was determined using the Black-Scholes option pricing model. All of these warrants were determined using the following assumptions:
Stock price
$0.62 - 7.03
Risk-free interest rate
0.01 - 1.02%
Expected life of the options
1.5-5 years
Expected volatility
157-347%
Expected dividend yield%
Stockholders' EquityOn May 12, 2023, a Certificate of Amendment was filed to effect a one-for-eight (1-for-8) reverse split (the “Reverse Split”) of the shares of the Company’s the Class A, Class B, and Class C Common Stock, and to decrease the number of shares of Class A Common Stock from 295,000,000 shares to 200,000,000 shares (the “Class A Common Stock Decrease”). The Reverse Split and the Class A Common Stock Decrease became effective on May 12, 2023. As a result of the Reverse Split, every eight shares of the Company’s issued and outstanding Class A
Common Stock automatically converted into one share of Class A Common Stock, without any change in the par value per share, and began trading on a post-split basis under the Company’s existing trading symbol, “ALPP,” when the market opened on May 15, 2023. Additionally, every eight shares of the Company’s issued and outstanding Class B Common Stock automatically converted into one share of Class B Common Stock, without any change in the par value per share, and every eight shares of the Company’s issued and outstanding Class C Common Stock automatically converted into one share of Class C Common Stock, without any change in the par value per share. The Reverse Split affected all holders of Class A, Class B, and Class C Common Stock uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares. A total of 180,037,350 shares of Class A Common Stock were issued and outstanding immediately prior to the Reverse Split, and approximately 22,504,669 shares of common stock were issued and outstanding immediately after the Reverse Split. No fractional shares will be outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock will automatically be entitled to receive an additional fraction of a share of common stock to round up to the next whole share. In addition, effective as of the same time as the Reverse Split, proportionate adjustments were made to all then-outstanding options and warrants with respect to the number of shares of Class A Common Stock subject to such options or warrants and the exercise prices thereof. The impact of this change in capital structure has been retrospectively applied to all periods presented herein.
Common Stock
The Company had the following transactions in its common stock during the three months ended March 31, 2023:
In January 2023, certain shareholders converted 1,428 shares of Class C common stock into 1,428 shares of Class A common stock.
Series B Preferred Stock
During February 2023, the Company identified that it had inappropriately awarded a Series B Preferred Share to an executive officer who is not also a board member. As the Series B Preferred Shares can only be held by members of the Board, the share issuance was rescinded.
Stock Options
The following summarizes the stock option activity for the three months ended March 31, 2023:
OptionsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2022
386,751 $4.39 7.94$463,495 
Granted— — 
Forfeited(7,689)6.16 
Exercised— — 
Outstanding at March 31, 2023
379,062 $4.35 7.67$444,942 
Vested and expected to vest at March 31, 2023
379,062 $4.35 7.67$444,942 
Exercisable at March 31, 2023
135,567 $1.11 5.12$444,942 
The following table summarizes information about options outstanding and exercisable as of March 31, 2023:
Options OutstandingOptions Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$0.05 111,438 5.26$0.40 111,438 $0.40 
0.10 10,625 5.030.80 10,625 0.80 
0.77 243,495 9.086.16 — — 
0.90 13,504 4.027.20 13,504 7.20 
379,062 135,567 
During the three months ended March 31, 2023 and 2022, stock option expense amounted to $0.2 million and $0.2 million, respectively. Unrecognized stock option expense as of March 31, 2023, amounted to $0.9 million, which will be recognized over a period extending through April 2025.
Warrants
The following summarizes the warrants activity for the three months ended March 31, 2023:
WarrantsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2022
2,321,411 $11.78 4.31$— 
Granted— — 0
Forfeited— — 
Exercised— — 
Outstanding at March 31, 2023
2,321,411 $11.78 4.02$— 
Vested and expected to vest at March 31, 2023
2,321,411 $11.78 4.02$— 
Exercisable at March 31, 2023
2,321,411 $11.78 4.02$— 
The following table summarizes information about warrants outstanding and exercisable as of March 31, 2023:
Warrants OutstandingWarrants Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$52.80 52,084 1.89$52.80 52,084 $52.80 
20.16 49,604 1.7020.16 49,604 20.16
24.80 535,716 3.6624.80 535,716 24.80
24.64 53,572 3.6524.64 53,572 24.64
5.52 1,630,435 4.29$5.52 1,630,435 5.52
 2,321,411 2,321,411 

v3.23.2
Segment Reporting
6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
Industry Segments Industry Segments
The Company discloses segment information that is consistent with the way in which management operates and views its business. Effective during the quarter ended September 30, 2022, the Company increased its reportable segments to eight segments. All segments and the subsidiaries within each segment are geographically located in North America. The financial results are logical to review in this manner for comparison, trend, deviations, etc. purposes.
Management excludes the following when reviewing the profit/loss by segment.
Intercompany Sales/COGS
Management fees to the parent Company
Income tax benefit/expense
There has not been any change to the measurement method in how management reviews the profit/loss by segment.
The reporting segments and their business activity are as follows:
A4 Construction Services Morris Sheet Metal (“MSM”) provides commercial construction services primarily as a sheet metal contractor.
A4 Construction Services Excel Construction (“Excel”) provides commercial construction services primarily as a sheet metal contractor.
A4 Manufacturing Quality Circuit Assembly (QCA) is a contract manufacturer within the technology industry.
A4 Manufacturing Alternative Labs (“Alt Labs”) is a contract manufacturer within the dietary & nutraceutical supplements industry.
A4 Defense Thermal Dynamics does contracting for the US Government particularity for the US Defense Department and US Department of State.
A4 Technologies RCA Commercial Electronics (“RCA”) is a B2B commercial electronics manufacturer.
A4 Technologies ElecJet is a battery research & development company.
A4 Aerospace Vayu is a drone aircraft manufacturer.
A4 All Other includes the QCA-Central, Identified Technologies and Corporate operating segments.
The Company’s reportable segments for the years ended December 31, 2022 and 2021:
Years Ended December 31,
20222021
Revenue
A4 Construction Services - MSM$18,290,019 $16,191,284 
A4 Construction Services - Excel1,761,572 1,803,739 
A4 Manufacturing - QCA16,763,989 14,258,084 
A4 Manufacturing - Alt Labs12,889,992 11,674,220 
A4 Defense - TDI10,046,658 4,467,376 
A4 Technologies - RCA40,092,612 1,454,451 
A4 Technologies - ElecJet1,098,534 89,018 
A4 Aerospace - Vayu81,100 — 
All Other3,538,526 1,702,641 
$104,563,002 $51,640,813 
Gross profit
A4 Construction Services - MSM$1,374,517 $(385,266)
A4 Construction Services - Excel3,681 (92,765)
A4 Manufacturing - QCA3,258,082 2,763,213 
A4 Manufacturing - Alt Labs2,343,368 3,749,878 
A4 Defense - TDI3,082,844 1,073,636 
A4 Technologies - RCA10,687,202 379,740 
A4 Technologies - ElecJet(236,636)76,818 
A4 Aerospace - Vayu13,087 — 
All Other1,188,257 132,744 
$21,714,402 $7,697,998 
Income (loss) from operations
A4 Construction Services - MSM$(883,922)$(4,247,240)
A4 Construction Services - Excel(973,934)(1,969,535)
A4 Manufacturing - QCA702,875 1,426,141 
A4 Manufacturing - Alt Labs2,284,308 (3,027,203)
A4 Defense - TDI1,072,306 (282,882)
A4 Technologies - RCA2,525,619 (100,328)
A4 Technologies - ElecJet(1,107,254)(62,163)
A4 Aerospace - Vayu(3,336,279)(4,875,829)
All Other(11,039,503)(8,983,320)
$(10,755,784)$(22,122,359)
Depreciation and amortization
A4 Construction Services - MSM$684,563 $846,808 
A4 Construction Services - Excel267,966 291,556 
A4 Manufacturing - QCA417,172 377,868 
A4 Manufacturing - Alt Labs983,931 611,079 
A4 Defense - TDI288,950 191,740 
A4 Technologies - RCA979,206 49,299 
A4 Technologies - ElecJet414,333 33,833 
A4 Aerospace - Vayu1,025,412 1,093,995 
All Other1,113,005 658,181 
$6,174,538 $4,154,359 
Interest Expenses
A4 Construction Services - MSM$421,287 $706,607 
A4 Construction Services - Excel245,855 291,263 
A4 Manufacturing - QCA262,551 230,044 
A4 Manufacturing - Alt Labs351,503 72,060 
A4 Defense - TDI11,975 825 
A4 Technologies - RCA159,878 15,347 
A4 Technologies - ElecJet— — 
A4 Aerospace - Vayu10,677 
All Other1,660,406 1,973,078 
$3,124,132 $3,289,233 
Net income (loss)
A4 Construction Services - MSM$(1,246,295)$(1,481,382)
A4 Construction Services - Excel(1,219,789)(1,899,512)
A4 Manufacturing - QCA367,760 1,774,139 
A4 Manufacturing - Alt Labs2,054,958 (2,643,752)
A4 Defense - TDI1,060,331 (270,289)
A4 Technologies - RCA2,365,741 (115,675)
A4 Technologies - ElecJet(1,110,727)(62,163)
A4 Aerospace - Vayu(3,346,956)(4,852,182)
All Other(11,800,336)(9,932,322)
$(12,875,313)$(19,483,138)
As of
December 31, 2022
As of
December 31, 2021
Total Assets
A4 Construction Services - MSM$11,309,049 $10,935,355 
A4 Construction Services - Excel3,359,818 3,050,206 
A4 Manufacturing - QCA20,988,492 11,869,711 
A4 Manufacturing - Alt Labs26,636,905 23,173,298 
A4 Defense - TDI13,497,381 11,982,580 
A4 Technologies - RCA27,191,977 28,174,091 
A4 Technologies - ElecJet12,897,440 12,904,267 
A4 Aerospace - Vayu14,632,530 14,702,838 
All Other$15,118,622 $17,831,504 
$145,632,214 $134,623,850 
Goodwill
A4 Construction Services - MSM$113,592 $113,592 
A4 Construction Services - Excel— — 
A4 Manufacturing - QCA1,963,761 1,963,761 
A4 Manufacturing - Alt Labs4,410,564 4,410,564 
A4 Defense - TDI6,426,786 6,426,786 
A4 Technologies - RCA1,355,728 1,355,728 
A4 Technologies - ElecJet6,496,343 6,496,343 
A4 Aerospace - Vayu— — 
All Other1,913,310 1,913,310 
$22,680,084 $22,680,084 
Accounts receivable, net
A4 Construction Services - MSM$5,188,521 $3,906,271 
A4 Construction Services - Excel288,243 286,972 
A4 Manufacturing - QCA3,867,141 2,339,597 
A4 Manufacturing - Alt Labs1,833,502 406,333 
A4 Defense - TDI1,905,314 1,371,184 
A4 Technologies - RCA3,232,559 2,961,201 
A4 Technologies - ElecJet12,888 37,744 
A4 Aerospace - Vayu— — 
All Other811,776 565,874 
$17,139,944 $11,875,176 
Segment ReportingThe Company discloses segment information that is consistent with the way in which management operates and views its business. Effective during the quarter ended September 30, 2022, the Company increased its reportable
segments to eight segments. All segments and the subsidiaries within each segment are geographically located in North America. The financial results are logical to review in this manner for comparison, trend, deviations, etc. purposes.
Management excludes the following when reviewing the profit/loss by segment.
Intercompany Sales/COGS
Management fees to the parent Company
Income tax benefit/expense
There has not been any change to the measurement method in how management reviews the profit/loss by segment.
The operating segments and their business activity are as follows:
A4 Construction Services - Morris Sheet Metal (“MSM”) provides commercial construction services primarily as a sheet metal contractor.
A4 Construction Services - Excel Construction (“Excel”) provides commercial construction services primarily as a sheet metal contractor.
A4 Manufacturing - Quality Circuit Assembly ("QCA") is a contract manufacturer within the technology industry.
A4 Manufacturing - Alternative Labs (“Alt Labs”) is a contract manufacturer within the dietary & nutraceutical supplements industry.
A4 Defense - Thermal Dynamics does contracting for the US Government particularly for the US Defense Department and US Department of State.
A4 Technologies - RCA Commercial Electronics (“RCA”) is a business-to-business ("B2B") commercial electronics manufacturer.
A4 Technologies - ElecJet is a battery research and development company.
A4 Aerospace - Vayu is a drone aircraft manufacturer.
A4 All Other includes the QCA-Central, Identified Technologies and Corporate.
Three Months Ended March 31,
20232022
Revenue
A4 Construction Services - MSM$3,813,140 $3,767,390 
A4 Construction Services - Excel332,864 288,814 
A4 Manufacturing - QCA4,191,643 4,318,860 
A4 Manufacturing - Alt Labs4,226,914 3,824,138 
A4 Defense - TDI2,970,087 2,687,981 
A4 Technologies - RCA7,453,423 9,237,259 
A4 Technologies - ElecJet102,495 556,729 
A4 Aerospace - Vayu— 25,000 
All Other1,271,147 $885,983 
$24,361,713 $25,592,154 
Gross profit
A4 Construction Services - MSM$231,888 $463,806 
A4 Construction Services - Excel(150,008)(98,974)
A4 Manufacturing - QCA897,715 1,027,184 
A4 Manufacturing - Alt Labs948,752 901,479 
A4 Defense - TDI616,582 843,189 
A4 Technologies - RCA2,374,178 2,184,328 
A4 Technologies - ElecJet(73,809)(62,029)
A4 Aerospace - Vayu(2,410)25,000 
All Other373,568 $353,474 
$5,216,456 $5,637,457 
Income (loss) from operations
A4 Construction Services - MSM$(404,413)$(315,698)
A4 Construction Services - Excel(432,081)(319,990)
A4 Manufacturing - QCA19,097 414,448 
A4 Manufacturing - Alt Labs(559,125)(987,483)
A4 Defense - TDI181,534 423,140 
A4 Technologies - RCA475,864 566,290 
A4 Technologies - ElecJet(245,421)(304,346)
A4 Aerospace - Vayu(820,967)(806,897)
All Other(3,354,961)(2,425,619)
$(5,140,473)$(3,756,155)
Depreciation and amortization
A4 Construction Services - MSM$174,298 $166,404 
A4 Construction Services - Excel67,525 — 
A4 Manufacturing - QCA116,879 100,479 
A4 Manufacturing - Alt Labs208,554 307,035 
A4 Defense - TDI72,433 72,090 
A4 Technologies - RCA244,804 170,046 
A4 Technologies - ElecJet105,666 101,500 
A4 Aerospace - Vayu258,911 274,669 
All Other278,713 277,441 
$1,527,783 $1,469,664 
Interest expense
A4 Construction Services - MSM$113,710 $103,025 
A4 Construction Services - Excel60,570 61,985 
A4 Manufacturing - QCA163,645 36,289 
A4 Manufacturing - Alt Labs64,680 57,116 
A4 Defense - TDI17,347 — 
A4 Technologies - RCA85,956 54,817 
A4 Technologies - ElecJet— — 
A4 Aerospace - Vayu5,958 — 
All Other487,004 295,729 
$998,870 $608,961 
Net income (loss)
A4 Construction Services - MSM$(480,600)$(362,367)
A4 Construction Services - Excel(492,651)(381,975)
A4 Manufacturing - QCA(144,187)373,867 
A4 Manufacturing - Alt Labs(658,756)(1,111,462)
A4 Defense - TDI164,187 423,140 
A4 Technologies - RCA389,908 511,473 
A4 Technologies - ElecJet(245,421)(304,346)
A4 Aerospace - Vayu(826,925)(806,897)
All Other(3,474,698)(2,340,993)
$(5,769,143)$(3,999,560)
The Company’s reportable segments as of March 31, 2023, and December 31, 2022, were as follows:
As of
March 31, 2023
As of
December 31, 2022
Total assets
A4 Construction Services - MSM$10,699,259 $11,309,049 
A4 Construction Services - Excel3,390,848 3,359,818 
A4 Manufacturing - QCA21,046,251 20,988,492 
A4 Manufacturing - Alt Labs27,083,918 26,636,905 
A4 Defense - TDI13,748,110 13,497,381 
A4 Technologies - RCA23,339,534 27,191,977 
A4 Technologies - ElecJet12,972,480 12,897,440 
A4 Aerospace - Vayu13,594,000 14,632,530 
All Other16,070,325 15,118,622 
$141,944,725 $145,632,214 
Goodwill
A4 Construction Services - MSM$113,592 $113,592 
A4 Construction Services - Excel— — 
A4 Manufacturing - QCA1,963,761 1,963,761 
A4 Manufacturing - Alt Labs4,410,564 4,410,564 
A4 Defense - TDI6,426,786 6,426,786 
A4 Technologies - RCA1,355,728 1,355,728 
A4 Technologies - ElecJet6,496,343 6,496,343 
A4 Aerospace - Vayu— — 
All Other1,913,310 1,913,310 
$22,680,084 $22,680,084 
Accounts receivable, net
A4 Construction Services - MSM$3,790,520 $5,188,521 
A4 Construction Services - Excel222,895 288,243 
A4 Manufacturing - QCA3,397,802 3,867,141 
A4 Manufacturing - Alt Labs1,994,703 1,833,502 
A4 Defense - TDI2,367,869 1,905,314 
A4 Technologies - RCA2,845,356 3,232,559 
A4 Technologies - ElecJet22,959 12,888 
A4 Aerospace - Vayu(491)— 
All Other898,915 811,776 
$15,540,528 $17,139,944 

v3.23.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Licensing Agreement
DTI has entered into licensing agreements with RCA Trademark Management for the licensing rights to the respective trademarks in the United States of America and Canada. The RCA licensing agreement was amended with Technicolor, S.A., as licensor, and expires December 31, 2024. DTI agrees to pay a royalty fee of 2.50% on net sales of the licensed products with a minimum annual payment of $440,000 for the year ended 2022, $460,000 for the year ended 2023, and $480,000 for the year ended 2024. These amounts were amended as part of the agreement signed in May 2023. The amended agreement extended our licensing agreement under December 31, 2027, and
provides us the ability to sell additional products under the trademark in exchange for higher royalty payments (See Note 8).
Warranty Service Agreement
DTI entered into a warranty service agreement to provide certain warranty services for a lighting supplier through December 31, 2024, except for one class of customer, for whom services will be provided through 2030. In exchange for these services, DTI expects to receive $66,626 and $59,964 during the year ended 2023 and 2024, respectively.
Royalty Agreement
On November 28, 2021, the Company entered into a Royalty Agreement with the sellers of ElecJet. Upon closing the Company desires to build its initial factory (“Factory”) to manufacture graphene batteries in the territory of the United States. The Company agrees to pay the sellers 1.5% of net sales for batteries produced by the Factory. Royalty payments shall continue to be paid for a period of ten years from the starting date, or until the total of the royalty payments equals $50 million, whichever occurs first.
Legal Proceedings
From time to time, the Company may become involved in lawsuits and other legal proceedings that arise in the course of business. Litigation is subject to inherent uncertainties, and it is not possible to predict the outcome of litigation with total confidence. As of the date of this Report, the Company was not aware of any legal proceedings or potential claims against it whose outcome would be likely, individually or in the aggregate, to have a material adverse effect on the Company’s business, financial condition, operating results, or cash flows.
In August 2020, in a matter relating to the Company’s subsidiary Horizon Well Testing, LLC (“Horizon”), the Company filed a lawsuit in the United States District Court, District of Arizona (Case No.2:20-cv-01679-DJH), against Alan Martin, the seller of Horizon dba Venture West Energy Services, LLC (“VWES”). The Company brought suit in 2020 seeking to avoid the claimed liability due from the Company to Alan Martin, for the Company’s 2017 purchase of Mr. Martin’s business, Horizon. On summary judgment, the court found that the Company’s claim was barred by a time-limiting clause for indemnification claims. The Company disagrees with the court’s ruling and intends to appeal. Before the Company can file its appeal of the summary judgment order, the court must resolve Mr. Martin’s counterclaim in which Mr. Martin claims that Mr. Martin remains unpaid on the promissory note, as modified, under which the Company purchased the Horizon. The note balance is alleged to have a principal sum due of $3.3 million, plus interest at 8% accruing from 2019 to present, plus late fees accruing at $575 per day (see Note 4). The Company continues to dispute the amount claimed due. As well, the Company’s legal position remains that the indebtedness should be discharged due to material misrepresentations by Mr. Martin in the original transaction.
In August 2021, in a matter relating to Horizon, Rob Porter filed a lawsuit in the District Court of Oklahoma County, State of Oklahoma (CJ-2021-3421), alleging unjust enrichment and breach of contract with respect to shares of Company that Mr. Porter claims was owed under his employment contract with the Company as President of Horizon. In October 2021, the Company filed its answer denying such claims. In October 2021, the Company also filed counterclaims against Mr. Porter for conversion and breach of fiduciary duties. The Company believes this is a frivolous lawsuit and as such, no accrual has been recorded as of March 31, 2023, and December 31, 2022. As of the date of this Report, a pre-trial scheduling conference was scheduled for June 21, 2023, and the Company was participating in discovery.
In October 2021, in a matter relating to Horizon, the Company received three complaints in the District Court of Oklahoma Country State of Oklahoma from former VWES employees Bruce Morse (CJ-2021-4316), Brian Hobbs (CJ-2021-4315), Thomas Karraker (CJ-2021-4314) for unjust enrichment, and breach of contract with respect to their employment contracts with Horizon. On January 19, 2022, the Company filed answers to all three lawsuits that denied these claims. The Company believes these are frivolous lawsuits. In July 2022, the Company and Mr. Morse settled his claims against the Company. The settlement included the cash payment of $24,375 for Mr. Morse's claimed 37,500 shares of Class A Common stock, and subsequently Mr. Morse’s case has been dismissed. Subsequently, Mr. Hobbs and Mr. Karraker have also expressed interest in settling claims on similar terms, and
negotiations were ongoing as of the date of this Report. As no formal settlement offer has been extended, no accrual has been recorded as of March 31, 2023, and December 31, 2022.
In June 2022, in a matter relating to the Company’s subsidiaries, DTI Services Limited Liability Company and Direct Tech Sales, LLC (doing business as RCA Commercial Electronics) (“RCA”), the Company received a complaint filed in the Superior Court of Marion County State of Indiana (CAUSE NO. 49D01-2203-PL-006662) by Gatehouse, LLC (“Gatehouse”), a supplier of PPP gloves for resale by RCA, seeking payment of $213,000 for supplied goods that RCA has good reason to believe are counterfeit, and thus unsalable. RCA has answered the complaint and asserted counterclaims of fraud and breach of contract. After a long delay in prosecution of the case by the plaintiff Gatehouse, motion practice has begun in this matter, however no scheduling, hearings, or trial date has yet been set in this matter.
In November 2022, the Company received a complaint filed by Mr. Mark Bell in the district court of Idaho (CV42-22-4066) with regard to the Company’s February 2020 purchase of Excel Fabrication LLC (“Excel”) from Mr. Bell, over the Company’s refusal to continue paying on a $2.3 million note comprising part of the purchase consideration (Note 4). In December 2022 the Company counter-sued Mr. Bell for breach of contract, fraud, and misrepresentation in the February 2020 sale of Excel to the Company. The case is set for trial in June of 2024.
In December 2022, the Company’s subsidiary Excel Fabrication LLC (“Excel”) received a demand for binding arbitration (AAA Case No. 01-22-0004-9935) by Starr Corporation of Idaho, a contractor for whom Excel Fabrication LLC was performing as sub-contractor and who stopped its work for Starr Corporation pursuant to its claimed contract right of termination due to failure of Starr Corporation to make payment within the contracted period for payment for work satisfactorily performed. Starr Corporation claims that Excel’s termination was wrongful, and seeks approximately $0.5 million, reflecting its costs in having to complete work that was called for under the contract. Excel is seeking a determination that its termination was rightful under the terms of the contract between the parties, and in addition seeks payment on its unpaid billing submittals and additional costs. Arbitration hearings are scheduled to commence in April 2024. As no formal settlement offer has been extended, no accrual has been recorded as of March 31, 2023, and December 31, 2022.
In February 2023, the Company learned that a complaint the State of New York brought against Vayu in 2019 (prior to the Company’s ownership of Vayu) seeking a refund for two returned airframes, a case which had originally been dismissed for lack of jurisdiction, had become revived by virtue of New York’s highest court ruling (State of New York v Vayu, APL-2021-00148) that the State’s long arm statute applied to the 2016 transaction between Vayu and the State University of New York at Stonybrook. Total damages sought by the State of New York are less than $100,000, including interest and costs. In light of the decision by the Court of Appeals to return the case to the trial courts for adjudication, the Company has expressed its wish to settle the matter and is currently awaiting the State of New York's response to the Company's response including the possibility of the State providing information useful to the Company should it wish to subsequently seek redress from the previous owners of Vayu.

v3.23.2
Subsequent Events
6 Months Ended
Jun. 30, 2023
Subsequent Events [Abstract]  
Subsequent Events Subsequent Events
In January 2023, the Company made a $250,000 investment for a 10% equity interest in a battery materials company, which includes a seat on its board, and participation rights in future funding rounds.
In February 2023, the Company learned that a complaint the State of New York brought against Vayu in 2019 (prior to the Company’s ownership of Vayu) seeking a refund for two returned airframes, a case which had originally been dismissed for lack of jurisdiction, had become revived by virtue of New York’s highest court ruling (State of New York v Vayu, APL-2021-00148) that the State’s long arm statute applied to the 2016 transaction between Vayu and the State University of New York at Stonybrook. Total damages sought by the State of New York are less than $100,000, including interest and costs. The company is currently considering its options for reaching a settlement with the State of New York, and for the possibility of seeking redress from the previous owners of Vayu.
In April 2023, a certain investor converted 1.3 million shares of Class B common stock and 1 share of Class B preferred stock for 1,300,001 shares of Class A common stock.
Subsequent Events
In April 2023, a shareholder converted 1,300,000 shares of Class B common stock and 1 share of Series B preferred stock into 1,300,001 shares of Class A common stock.
On May 12, 2023, a Certificate of Amendment was filed to effect a one-for-eight (1-for-8) reverse split (the “Reverse Split”) of the shares of the Company’s the Class A, Class B, and Class C Common Stock, and to decrease the number of shares of Class A Common Stock from 295,000,000 shares to 200,000,000 shares (the “Class A Common Stock Decrease”). The Reverse Split and the Class A Common Stock Decrease became effective on May 12, 2023. As a result of the Reverse Split, every eight shares of the Company’s issued and outstanding Class A Common Stock automatically converted into one share of Class A Common Stock, without any change in the par value per share, and began trading on a post-split basis under the Company’s existing trading symbol, “ALPP,” when the market opened on May 15, 2023. Additionally, every eight shares of the Company’s issued and outstanding Class B Common Stock automatically converted into one share of Class B Common Stock, without any change in the par value per share, and every eight shares of the Company’s issued and outstanding Class C Common Stock automatically converted into one share of Class C Common Stock, without any change in the par value per
share. The Reverse Split affected all holders of Class A, Class B, and Class C Common Stock uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares. A total of 180,037,350 shares of Class A Common Stock were issued and outstanding immediately prior to the Reverse Split, and approximately 22,504,669 shares of common stock were issued and outstanding immediately after the Reverse Split. No fractional shares will be outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock will automatically be entitled to receive an additional fraction of a share of common stock to round up to the next whole share. In addition, effective as of the same time as the Reverse Split, proportionate adjustments were made to all then-outstanding options and warrants with respect to the number of shares of Class A Common Stock subject to such options or warrants and the exercise prices thereof.
In May 2023, Mr. Kevin Thomas, who sold Alternative Laboratories, LLC to the Company in May of 2021, sued the Company in the State circuit court for Collier County Florida (Case Number 23-CA-1981), alleging that the Company failed to deliver shares in the Company as promised by the terms of the purchase agreement, and additionally claims that with respect to an amount of $610,000 in Employee Retention Credits received by the Company, that portion representing the credit attributed to the 1st quarterly period of 2021 and the part of the 2nd quarterly period of 2021 prior to the May 4th, 2021 date of sale, should be remitted to him rather than retained by the Company. The Company believes that Mr. Thomas’ complaint is wholly without merit, and the Company is in the process of answering the complaint and considering possible motions and counterclaims.
In May 2023, the RCA licensing agreement was amended and extended with a new expiration date of December 31, 2027 except for the agreement relating to Computer Monitors & Outdoor Televisions which expires on December 31, 2025. DTI Services LLC agreed to pay the following royalty fees ranging from 2.50% - 3.50% of net sales based on product type with a total minimum annual payment of $550,000 for the year ended 2023, and $600,000 for the year ended 2024, $620,000 for the year ended 2025, $660,000 for the year ended 2026, and $700,000 for the year ended 2027.
In May 2023, the Company issued a nine-month $0.2 million note payable to an outside investor with an annual interest rate of 15%, with the proceeds to be used for general corporate purposes.
In May 2023, the Company issued a one-year $0.4 million convertible note payable to an outside investor with an annual interest rate of 12% with the proceeds to be used for general corporate purposes. In connection with this convertible note payable, the Company issued 13,750 restricted shares of Class A Common Stock to the investor as additional consideration for the purchase of the note and 196,250 restricted shares of Class A Common Stock, which shall be returned to the Company if timely repayments are made against the note.
Morris had a revolving line of credit totaling $2.5 million that was scheduled to expire on May 31, 2023. In June 2023, Morris entered into a Forbearance agreement with its banking partner that extended the maturity of the line of credit to July 21, 2023.
In June 2023, Quality Circuit Assembly entered into the third amendment on its loan and security agreement that increased the maximum limit to $7 million from $5 million.

v3.23.2
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Basis of presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”)
Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of December 31, 2022 and 2021. Significant intercompany balances and transactions have been eliminated.The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of March 31, 2023, and December 31, 2022. Significant intercompany balances and transactions have been eliminated.
Use of estimates The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable. In many instances, the Company could have reasonably used different accounting estimates and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. This applies in particular to useful lives of long-lived assets, reserves for accounts receivable and inventory, valuation allowance for deferred tax assets, fair values assigned to intangible assets acquired, and impairment of long-lived assets. Actual results could differ significantly from our estimates. To the extent that there are material differences between these estimates and actual results, the Company’s future financial statement presentation, financial condition, results of operations and cash flows will be affected.
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.
Major Customers
The Company had no customers that made up over 10% of accounts receivable as of December 31, 2022, and 2021.
For the year ended December 31, 2022, the Company had one customer that made up 14% of total Company revenues within the A4 Technology - RCA segment. This customer had an accounts receivable balance of $1.2 million as December 31, 2022. For the year ended December 31, 2021, the Company had two customers that each made up 11% of total Company revenues with the A4 Manufacturing - QCA segment and A4 Manufacturing - Alt Labs segment. The customer within A4 Manufacturing - QCA segment had an accounts receivable balance of $1.0 million as of December 31, 2021. The customer within A4 Manufacturing - Alt Labs segment had an accounts receivable balance of $0, as of December 31, 2021, as the account receivable related to this customer was written off as bad debt expense noted in the section below.
For the year ended December 31, 2022, the Company had 9% of total revenues made up of government contracts.
Major Vendors
For the year ended December 31, 2022, there was one vendor that made up 14% of total Company purchases within the A4 Technology - RCA segment.. For the year ended December 31, 2021, there were no vendors that made up at least 10% of total purchases within the Company.
The Company had no customers which made up over 10% of total Company accounts receivable as of March 31, 2023, or December 31, 2022.
For the three months ended March 31, 2023, the Company had no customers which made up over 10% of total Company revenues. For the three months ended March 31, 2022, the Company had one customer within the A4 Technology - RCA segment, which made up 13% of total Company revenues.
For the three months ended March 31, 2023 and 2022, the Company received 12% and 11%, respectively, of total Company revenues from prime contractors.
For the three months ended March 31, 2023, the Company had no vendors, which made up over 10% of total Company purchases. For the three months ended March 31, 2022, the Company had one vendor within the A4 Technology - RCA segment, which made up 17% of total Company purchases.
Accounts Receivable, net 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 December 31, 2022 and 2021, allowance for bad debt was $52,531 and $199,936, respectively. During the years ended December 31, 2022 and 2021, the Company wrote off $202,761 and $3,028,757, respectively to bad debts expense.
Inventory
Inventory for all subsidiaries is valued at weighted average. 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-process and finished goods. Inventory as of December 31, 2022 and 2021 consisted of:
December 31,
2022
December 31,
2021
Raw materials$9,116,824 $8,253,104 
Work in process3,165,876 2,480,979 
Finished goods12,975,669 13,685,571 
Inventory$25,258,369 $24,419,654 
Inventory for all subsidiaries is valued at weighted average cost. 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-process and finished goods.
Property and Equipment, net
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 five years to 39 years as follows:
Automobiles and trucks
5 to 7 years
Machinery and equipment10 years
Office furniture and fixtures5 years
Buildings and improvements39 years
Maintenance and repair costs are expensed as incurred. Significant improvements are capitalized and depreciated over the estimated life of the asset.
Property and equipment consisted of the following as of December 31, 2022 and 2021:
December 31,
2022
December 31,
2021
Automobiles and trucks$1,056,551 $1,251,187 
Machinery and equipment9,864,846 8,876,402 
Office furniture and fixtures186,464 167,581 
Buildings and improvements16,696,926 23,630,250 
Total Property and equipment27,804,787 33,925,420 
Less: Accumulated depreciation(8,301,302)(5,823,949)
Property and equipment, net$19,503,485 $28,101,471 
Included in Buildings and improvements in the above table are two buildings of $9,000,000 and $2,000,000 related to sale leaseback transactions. (See Note 3)
The Company recorded depreciation expense of $3,026,483 and $2,396,966 in 2022 and 2021, respectively.
Purchased Intangibles and Other Long-Lived Assets, net
The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between one and seventeen years as follows:
Software5 years
Non-compete agreements
1-15 years
Customer list
3-16 years
Patents, trademarks, and licenses
3-17 years
Proprietary technology15 years
Intangible assets consisted of the following as of December 31, 2022 and 2021:
CostWeighted Average Amortization PeriodDecember 31,
2022
December 31,
2021
Software2.0 years$128,474 $128,474 
Non-compete agreement6.3 years1,426,276 1,378,772 
Customer list11.9 years13,011,187 13,011,187 
Patents, trademarks, and licenses13.9 years7,127,408 7,174,912 
Proprietary technology13.5 years19,866,743 19,616,743 
12.9 years41,560,088 41,310,088 
Accumulated amortization
Software$(77,084)$(64,757)
Non-compete agreement(478,510)(210,465)
Customer list(1,711,327)(1,112,797)
Patents, trademarks, and licenses(962,258)(8,444)
Proprietary technology(2,048,300)(732,961)
(5,277,479)(2,129,424)
Intangibles assets, net$36,282,609 $39,180,664 
Expected amortization expense of intangible assets over the next 5 years and thereafter is as follows:
Years Ending December 31,
2023$3,152,048 
20243,152,048 
20252,919,686 
20262,900,686 
20272,762,686 
Thereafter21,395,455 
Total$36,282,609 
The Company recorded amortization expense of $3,148,055 and $1,757,393 in 2022 and 2021, respectively.
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 the third quarter of 2022, there was a triggering event related to the customer list for Alt Labs which required an analysis to be performed. This analysis was performed in conjunction with a third-party valuation expert. As a result of the analysis, it was determined that the value of the estimated future cash flows were greater than the carrying value of the reporting unit's assets. No impairment was recognized during the year ended December 31, 2022.
During the year ended December 31, 2021, due to the significant impact of COVID-19, the Company determined that the customer list for Excel was impaired and took a charge to earnings of $359,890.
The Company accounts for long-lived assets in accordance with the provisions of 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 the three months ended March 31, 2023, there were no events or changes in circumstances that indicated a quantitative impairment analysis was necessary.
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 December 31, 2022 and 2021, the reporting units with goodwill were QCA, Morris, Alt Labs, TDI, Identified Technology, ElecJet, and RCA.
During the year ended December 31, 2021, the Company determined that the goodwill for Excel was impaired and took a charge to earnings of $7,629. During the 2022 fourth quarter, we conducted our annual goodwill impairment test and no impairment charges were recorded. The estimated fair values of all our reporting units exceeded their carrying amounts. Based on the analysis, the ElecJet reporting unit is considered an at-risk reporting unit. Our methods and assumptions were consistent with those discussed below in the Fair Value Measurement subsection. This reporting unit is primarily considered at-risk as it is a start-up subsidiary with minimal to no revenue to offset its research & development expenses. The DCF model includes revenue growth assumptions of us executing large new customer and/or supplier agreements within the next two years and then steadily increasing revenue at a more normalized rate thereafter. If we fail to execute these customer and/or supplier arrangements, this would negatively impact the key growth assumptions.
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 March 31, 2023, and December 31, 2022, the reporting units with goodwill were QCA, MSM, Excel, Alt Labs, TDI, Identified Technology, ElecJet, and RCA. Consistent with our prior year assessment, the ElecJet reporting unit is considered an at-risk reporting unit. Our methods and assumptions were consistent with those discussed below in the Fair Value Measurement subsection. This reporting unit is primarily considered at-risk as it is a start-up subsidiary with minimal to no revenue to offset its research & development expenses. The DCF model includes revenue growth assumptions of us executing large new customer and/or supplier agreements within the next two years and then steadily increasing revenue at a more normalized rate thereafter. Any failure to execute these customer and/or supplier arrangements would negatively impact the key growth assumptions.
Leases The Company accounts for its leases under ASC 842, Leases (“ASC 842”). Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. The Company excludes short-term leases having initial terms of 12 months or less as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.
Fair Value Measurement
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.
We apply the provisions of fair value measurement to various nonrecurring measurements for our financial and nonfinancial assets and liabilities. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, convertible notes, notes payable and lines of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches. For the income approach, we use a discounted cash flow models developed in connection with our third-party valuation specialists that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates; and estimated discount rates. For the market approach, we use analyses based primarily on market comparables. We base these assumptions on historical data and experience, industry projections, and general economic conditions.
The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. As of December 31, 2022 and 2021, the Company had no financial assets or liabilities that were required to be fair valued on a recurring basis as all of our financial assets and liabilities were Level 1.
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.
We apply the provisions of fair value measurement to various nonrecurring measurements for our financial and nonfinancial assets and liabilities. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, notes payable and lines of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches. For the income approach, we use a discounted cash flow models developed in connection with our third-party valuation specialists that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates; and estimated discount rates. For the market approach, we use analyses based primarily on market comparables. We base these assumptions on historical data and experience, industry projections, and general economic conditions.
The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. As of March 31, 2023, and December 31, 2022, the Company had no financial assets or liabilities that were required to be fair valued on a recurring basis, as all of our financial assets and liabilities were Level 1.
Equity Investments The Company’s equity investments consisted of investment in one private company in which the Company does not have the ability to exercise significant influence over their operating and financial activities. This investment is carried at cost as there is no market for the membership units, accordingly, no quoted market price is available. The investment is tested for impairment, at least annually, and more frequently upon the occurrences of certain events. As of December 31, 2021, in accordance with the ASC 321 guidelines, the Company recognized a loss on impairment for the entire value of $1,350,000. The current book value for this investment as of December 31, 2022 is $0.
Research and Development The Company focuses on quality control and development of new products and the improvement of existing products. All costs related to research and development activities are expensed as incurred. During the years ended December 31, 2022 and 2021, research and development cost totaled $876,542 and $1,464,918, respectively.The Company focuses on quality control and development of new products and the improvement of existing products. All costs related to research and development activities are expensed as incurred.
Revenue Recognition
The Company recognizes revenue under ASC Topic 606, Revenue from contract with Customers ("Topic 606"). The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
Revenue is recognized under Topic 606, at a point in time and over a period of time, in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
executed 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 Company’s subsidiaries are all located in North America, as well as the customer base in which the Company’s revenue is derived from. The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
QCA and Alt Labs
QCA (Circuit boards and cables) and Alt Labs (Supplements) are contract manufacturers and 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 as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
ElecJet
ElecJet is a manufacturer of electric components, and a research and development company for battery technology and recognizes revenue when the products have been shipped to the customer. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
Identified Technologies
Identified Technologies provides 3D mapping drone software and data for industrial job sites and recognizes revenue when the service has been provided to the customer. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
Direct Tech Sales (“RCA”)
RCA is engaged in the design, manufacture and wholesale distribution of electronics such as televisions, mounting solutions, projectors and screens, audio equipment, digital signage, mobile audio and video systems, and all wire and connecting products throughout the United States of America. RCA recognizes revenue when the products have been shipped to the customer which is also when title transfers. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
MSM, Excel and TDI
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 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 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 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 December 31, 2022 and 2021, accounts receivable included retainage billed under terms of our contracts. These retainage amounts represent amounts which have been contractually invoiced to customers where payments have been partially withheld pending the achievement of certain milestones, satisfaction of other contractual conditions or completion of the project. The Company has recorded a receivable for retainage of approximately $2.0 million and $1.6 million as of December 31, 2022, and 2021, respectively.
The following table presents our revenues disaggregated by type with the sales of goods recognized upon delivery and the sales of services recognized over the time of the contract as described above:
Year ended December 31,
20222021
Sale of goods
Circuit boards and cables$18,780,769 $15,700,902 
Supplements12,889,992 11,674,220 
Electronics41,191,146 1,543,469 
Total sale of goods72,861,907 28,918,591 
Sale of services
Construction contracts30,098,249 22,462,399 
Drone 3D mapping1,602,846 259,823 
Total sale of services31,701,095 22,722,222 
Total revenues$104,563,002 $51,640,813 
The Company recognizes revenue under ASC Topic 606, Revenue from contract with Customers ("Topic 606"). The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
Revenue is recognized under Topic 606, at a point in time and over a period of time, in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
executed contract with the Company's customers that it believes are legally enforceable;
identification of performance obligations in the respective contract;
determination of the transaction price for each performance obligation in the respective contract;
allocation of the transaction price to each performance obligation; and
recognition of revenue only when the Company satisfies each performance obligation.
The following tables presents our revenues disaggregated by type for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31, 2023
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$— $9,320,821 $— $7,555,918 $— $16,876,739 
Sale of services4,146,004 — 2,970,087 — 368,883 7,484,974 
Total revenues
$4,146,004 $9,320,821 $2,970,087 $7,555,918 $368,883 $24,361,713 
Three Months Ended March 31, 2022
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$— $8,648,095 $— $9,793,988 $— $18,442,083 
Sale of services4,056,204 — 2,687,981 — 405,886 7,150,071 
Total revenues
$4,056,204 $8,648,095 $2,687,981 $9,793,988 $405,886 $25,592,154 
Earnings (loss) per share
The Company presents both basic and diluted net income (loss) per share on the face of the consolidated statements of operations. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted per share calculations give effect to all potentially dilutive shares of common stock outstanding during the period, including stock options and warrants, using the treasury-stock method. If antidilutive, the effect of potentially dilutive shares of common stock is ignored. The amount of anti-dilutive shares related to stock options and warrants as of December 31, 2022 and 2021, were 21,664,165 and 7,317,778, respectively. The following table illustrates the computation of basic and diluted earnings per share (“EPS”) inclusive of all classes of common stock as the only difference between the classes of common stock are related to the voting rights (Note 6) for the years ended December 31, 2022 and 2021:
For the Year Ended December 31, 2022
For the Year Ended December 31, 2021
Net lossSharesPer Share AmountNet lossSharesPer Share Amount
Basic EPS
Loss available to stockholders$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
Effect of Dilutive Securities
Stock options and warrants— — — — — — 
Dilute EPS
Loss available to stockholders plus assumed conversions$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
The Company presents both basic and diluted net income (loss) per share on the face of the consolidated statements of operations. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted per share calculations give effect to all potentially dilutive shares of common stock outstanding during the period, including stock options and warrants, using the treasury-stock method. If antidilutive, the effect of potentially dilutive shares of common stock is ignored. The amount of anti-dilutive shares related to stock options and warrants as of March 31, 2023 and 2022 was 2,700,473 and 837,472. respectively. The following table illustrates the computation of basic and diluted
earnings per share (“EPS”) inclusive of all classes of common stock as the only difference between the classes of common stock are related to the voting rights for the three months ended March 31, 2023 and 2022:
For the Three Months Ended March 31, 2023
For the Three Months Ended March 31, 2022
Net LossSharesPer Share AmountNet LossSharesPer Share Amount
Basic EPS
Net loss$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Effect of Dilutive Securities
Stock options and warrants— — — — — — 
Dilute EPS
Total
$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Stock-based compensation The Company follows the guidelines in ASC 718-10 Compensation-Stock Compensation, which requires companies to measure the cost of employee and non-employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Stock-based compensation expense for stock options is recognized on a straight-line basis over the requisite service period. The Company may issue compensatory shares for services including, but not limited to, executives, management, accounting, operations, corporate communication, financial and administrative consulting services. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model.
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.
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
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.
In June 2016, the FASB issued ASC 326, Financial Instruments - Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The new standard is effective in the first quarter of fiscal 2023 and is expected to have an immaterial impact on the Company's financial statements.
Effective January 1, 2023, we adopted ASU 2016-13, Credit Losses Topic 326 (the new credit losses standard), using the modified retrospective approach. The comparative periods have not been restated and continue to be
reported under the accounting standard in effect for those periods. The new credit losses standard amends the impairment model to use a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Our adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements for the three months ended March 31, 2023, and we did not recognize a cumulative effect adjustment to retained earnings as of January 1, 2023.
To assist in quantifying the impact on our consolidated financial statements and supplementing our existing disclosures, we identified financial assets measured at an amortized cost basis in our consolidated balance sheet and evaluated the collectability considerations based on an expected credit loss assessment. We perform ongoing credit evaluations of our customers, but generally do not require collateral to support customer receivables. We establish an allowance for doubtful accounts based on various factors including the age of receivables outstanding, historical trends, economic conditions and other information. We also review outstanding balances on an account-specific basis based on the credit risk of the customer. We determined that all of our accounts receivable share similar risk characteristics within our operating segments based on historical data. We monitor our credit exposure on an ongoing basis and assess whether assets in the pool continue to display similar risk characteristics. We actively monitor the credit risk of our specific customers, age of receivables outstanding, recent collection trends and general economic conditions to evaluate the risk of credit loss. The consolidated statement of income for the three months ended March 31, 2023, reflects the measurement of credit losses for newly recognized financial assets as well as any changes to historical financial assets.
Allowance for Doubtful Accounts
Balance as of December 31, 2022$52,531 
Additions charged to expense153,243 
Accounts written-off(18,937)
Balance as of March 31, 2023
$186,837 
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.

v3.23.2
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Basis of presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”)
Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of December 31, 2022 and 2021. Significant intercompany balances and transactions have been eliminated.The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of March 31, 2023, and December 31, 2022. Significant intercompany balances and transactions have been eliminated.
Use of estimates The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable. In many instances, the Company could have reasonably used different accounting estimates and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. This applies in particular to useful lives of long-lived assets, reserves for accounts receivable and inventory, valuation allowance for deferred tax assets, fair values assigned to intangible assets acquired, and impairment of long-lived assets. Actual results could differ significantly from our estimates. To the extent that there are material differences between these estimates and actual results, the Company’s future financial statement presentation, financial condition, results of operations and cash flows will be affected.
Cash Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days.
Major customers & vendors
The Company had no customers that made up over 10% of accounts receivable as of December 31, 2022, and 2021.
For the year ended December 31, 2022, the Company had one customer that made up 14% of total Company revenues within the A4 Technology - RCA segment. This customer had an accounts receivable balance of $1.2 million as December 31, 2022. For the year ended December 31, 2021, the Company had two customers that each made up 11% of total Company revenues with the A4 Manufacturing - QCA segment and A4 Manufacturing - Alt Labs segment. The customer within A4 Manufacturing - QCA segment had an accounts receivable balance of $1.0 million as of December 31, 2021. The customer within A4 Manufacturing - Alt Labs segment had an accounts receivable balance of $0, as of December 31, 2021, as the account receivable related to this customer was written off as bad debt expense noted in the section below.
For the year ended December 31, 2022, the Company had 9% of total revenues made up of government contracts.
Major Vendors
For the year ended December 31, 2022, there was one vendor that made up 14% of total Company purchases within the A4 Technology - RCA segment.. For the year ended December 31, 2021, there were no vendors that made up at least 10% of total purchases within the Company.
The Company had no customers which made up over 10% of total Company accounts receivable as of March 31, 2023, or December 31, 2022.
For the three months ended March 31, 2023, the Company had no customers which made up over 10% of total Company revenues. For the three months ended March 31, 2022, the Company had one customer within the A4 Technology - RCA segment, which made up 13% of total Company revenues.
For the three months ended March 31, 2023 and 2022, the Company received 12% and 11%, respectively, of total Company revenues from prime contractors.
For the three months ended March 31, 2023, the Company had no vendors, which made up over 10% of total Company purchases. For the three months ended March 31, 2022, the Company had one vendor within the A4 Technology - RCA segment, which made up 17% of total Company purchases.
Inventory
Inventory for all subsidiaries is valued at weighted average. 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-process and finished goods. Inventory as of December 31, 2022 and 2021 consisted of:
December 31,
2022
December 31,
2021
Raw materials$9,116,824 $8,253,104 
Work in process3,165,876 2,480,979 
Finished goods12,975,669 13,685,571 
Inventory$25,258,369 $24,419,654 
Inventory for all subsidiaries is valued at weighted average cost. 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-process and finished goods.
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 the third quarter of 2022, there was a triggering event related to the customer list for Alt Labs which required an analysis to be performed. This analysis was performed in conjunction with a third-party valuation expert. As a result of the analysis, it was determined that the value of the estimated future cash flows were greater than the carrying value of the reporting unit's assets. No impairment was recognized during the year ended December 31, 2022.
During the year ended December 31, 2021, due to the significant impact of COVID-19, the Company determined that the customer list for Excel was impaired and took a charge to earnings of $359,890.
The Company accounts for long-lived assets in accordance with the provisions of 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 the three months ended March 31, 2023, there were no events or changes in circumstances that indicated a quantitative impairment analysis was necessary.
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 December 31, 2022 and 2021, the reporting units with goodwill were QCA, Morris, Alt Labs, TDI, Identified Technology, ElecJet, and RCA.
During the year ended December 31, 2021, the Company determined that the goodwill for Excel was impaired and took a charge to earnings of $7,629. During the 2022 fourth quarter, we conducted our annual goodwill impairment test and no impairment charges were recorded. The estimated fair values of all our reporting units exceeded their carrying amounts. Based on the analysis, the ElecJet reporting unit is considered an at-risk reporting unit. Our methods and assumptions were consistent with those discussed below in the Fair Value Measurement subsection. This reporting unit is primarily considered at-risk as it is a start-up subsidiary with minimal to no revenue to offset its research & development expenses. The DCF model includes revenue growth assumptions of us executing large new customer and/or supplier agreements within the next two years and then steadily increasing revenue at a more normalized rate thereafter. If we fail to execute these customer and/or supplier arrangements, this would negatively impact the key growth assumptions.
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 March 31, 2023, and December 31, 2022, the reporting units with goodwill were QCA, MSM, Excel, Alt Labs, TDI, Identified Technology, ElecJet, and RCA. Consistent with our prior year assessment, the ElecJet reporting unit is considered an at-risk reporting unit. Our methods and assumptions were consistent with those discussed below in the Fair Value Measurement subsection. This reporting unit is primarily considered at-risk as it is a start-up subsidiary with minimal to no revenue to offset its research & development expenses. The DCF model includes revenue growth assumptions of us executing large new customer and/or supplier agreements within the next two years and then steadily increasing revenue at a more normalized rate thereafter. Any failure to execute these customer and/or supplier arrangements would negatively impact the key growth assumptions.
Fair Value Measurement
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.
We apply the provisions of fair value measurement to various nonrecurring measurements for our financial and nonfinancial assets and liabilities. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, convertible notes, notes payable and lines of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches. For the income approach, we use a discounted cash flow models developed in connection with our third-party valuation specialists that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates; and estimated discount rates. For the market approach, we use analyses based primarily on market comparables. We base these assumptions on historical data and experience, industry projections, and general economic conditions.
The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. As of December 31, 2022 and 2021, the Company had no financial assets or liabilities that were required to be fair valued on a recurring basis as all of our financial assets and liabilities were Level 1.
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.
We apply the provisions of fair value measurement to various nonrecurring measurements for our financial and nonfinancial assets and liabilities. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, notes payable and lines of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches. For the income approach, we use a discounted cash flow models developed in connection with our third-party valuation specialists that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates; and estimated discount rates. For the market approach, we use analyses based primarily on market comparables. We base these assumptions on historical data and experience, industry projections, and general economic conditions.
The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. As of March 31, 2023, and December 31, 2022, the Company had no financial assets or liabilities that were required to be fair valued on a recurring basis, as all of our financial assets and liabilities were Level 1.
Research and Development The Company focuses on quality control and development of new products and the improvement of existing products. All costs related to research and development activities are expensed as incurred. During the years ended December 31, 2022 and 2021, research and development cost totaled $876,542 and $1,464,918, respectively.The Company focuses on quality control and development of new products and the improvement of existing products. All costs related to research and development activities are expensed as incurred.
Earnings (loss) per share
The Company presents both basic and diluted net income (loss) per share on the face of the consolidated statements of operations. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted per share calculations give effect to all potentially dilutive shares of common stock outstanding during the period, including stock options and warrants, using the treasury-stock method. If antidilutive, the effect of potentially dilutive shares of common stock is ignored. The amount of anti-dilutive shares related to stock options and warrants as of December 31, 2022 and 2021, were 21,664,165 and 7,317,778, respectively. The following table illustrates the computation of basic and diluted earnings per share (“EPS”) inclusive of all classes of common stock as the only difference between the classes of common stock are related to the voting rights (Note 6) for the years ended December 31, 2022 and 2021:
For the Year Ended December 31, 2022
For the Year Ended December 31, 2021
Net lossSharesPer Share AmountNet lossSharesPer Share Amount
Basic EPS
Loss available to stockholders$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
Effect of Dilutive Securities
Stock options and warrants— — — — — — 
Dilute EPS
Loss available to stockholders plus assumed conversions$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
The Company presents both basic and diluted net income (loss) per share on the face of the consolidated statements of operations. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted per share calculations give effect to all potentially dilutive shares of common stock outstanding during the period, including stock options and warrants, using the treasury-stock method. If antidilutive, the effect of potentially dilutive shares of common stock is ignored. The amount of anti-dilutive shares related to stock options and warrants as of March 31, 2023 and 2022 was 2,700,473 and 837,472. respectively. The following table illustrates the computation of basic and diluted
earnings per share (“EPS”) inclusive of all classes of common stock as the only difference between the classes of common stock are related to the voting rights for the three months ended March 31, 2023 and 2022:
For the Three Months Ended March 31, 2023
For the Three Months Ended March 31, 2022
Net LossSharesPer Share AmountNet LossSharesPer Share Amount
Basic EPS
Net loss$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Effect of Dilutive Securities
Stock options and warrants— — — — — — 
Dilute EPS
Total
$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Revenue Recognition
The Company recognizes revenue under ASC Topic 606, Revenue from contract with Customers ("Topic 606"). The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
Revenue is recognized under Topic 606, at a point in time and over a period of time, in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
executed 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 Company’s subsidiaries are all located in North America, as well as the customer base in which the Company’s revenue is derived from. The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
QCA and Alt Labs
QCA (Circuit boards and cables) and Alt Labs (Supplements) are contract manufacturers and 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 as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
ElecJet
ElecJet is a manufacturer of electric components, and a research and development company for battery technology and recognizes revenue when the products have been shipped to the customer. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
Identified Technologies
Identified Technologies provides 3D mapping drone software and data for industrial job sites and recognizes revenue when the service has been provided to the customer. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
Direct Tech Sales (“RCA”)
RCA is engaged in the design, manufacture and wholesale distribution of electronics such as televisions, mounting solutions, projectors and screens, audio equipment, digital signage, mobile audio and video systems, and all wire and connecting products throughout the United States of America. RCA recognizes revenue when the products have been shipped to the customer which is also when title transfers. If a deposit for a product or service is received prior to completion, the payment is recorded as 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, and have determined that the warranty and returns would be immaterial for the periods presented.
MSM, Excel and TDI
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 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 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 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 December 31, 2022 and 2021, accounts receivable included retainage billed under terms of our contracts. These retainage amounts represent amounts which have been contractually invoiced to customers where payments have been partially withheld pending the achievement of certain milestones, satisfaction of other contractual conditions or completion of the project. The Company has recorded a receivable for retainage of approximately $2.0 million and $1.6 million as of December 31, 2022, and 2021, respectively.
The following table presents our revenues disaggregated by type with the sales of goods recognized upon delivery and the sales of services recognized over the time of the contract as described above:
Year ended December 31,
20222021
Sale of goods
Circuit boards and cables$18,780,769 $15,700,902 
Supplements12,889,992 11,674,220 
Electronics41,191,146 1,543,469 
Total sale of goods72,861,907 28,918,591 
Sale of services
Construction contracts30,098,249 22,462,399 
Drone 3D mapping1,602,846 259,823 
Total sale of services31,701,095 22,722,222 
Total revenues$104,563,002 $51,640,813 
The Company recognizes revenue under ASC Topic 606, Revenue from contract with Customers ("Topic 606"). The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries.
Revenue is recognized under Topic 606, at a point in time and over a period of time, in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
executed contract with the Company's customers that it believes are legally enforceable;
identification of performance obligations in the respective contract;
determination of the transaction price for each performance obligation in the respective contract;
allocation of the transaction price to each performance obligation; and
recognition of revenue only when the Company satisfies each performance obligation.
The following tables presents our revenues disaggregated by type for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31, 2023
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$— $9,320,821 $— $7,555,918 $— $16,876,739 
Sale of services4,146,004 — 2,970,087 — 368,883 7,484,974 
Total revenues
$4,146,004 $9,320,821 $2,970,087 $7,555,918 $368,883 $24,361,713 
Three Months Ended March 31, 2022
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$— $8,648,095 $— $9,793,988 $— $18,442,083 
Sale of services4,056,204 — 2,687,981 — 405,886 7,150,071 
Total revenues
$4,056,204 $8,648,095 $2,687,981 $9,793,988 $405,886 $25,592,154 
Recent Accounting Pronouncements
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.
In June 2016, the FASB issued ASC 326, Financial Instruments - Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The new standard is effective in the first quarter of fiscal 2023 and is expected to have an immaterial impact on the Company's financial statements.
Effective January 1, 2023, we adopted ASU 2016-13, Credit Losses Topic 326 (the new credit losses standard), using the modified retrospective approach. The comparative periods have not been restated and continue to be
reported under the accounting standard in effect for those periods. The new credit losses standard amends the impairment model to use a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Our adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements for the three months ended March 31, 2023, and we did not recognize a cumulative effect adjustment to retained earnings as of January 1, 2023.
To assist in quantifying the impact on our consolidated financial statements and supplementing our existing disclosures, we identified financial assets measured at an amortized cost basis in our consolidated balance sheet and evaluated the collectability considerations based on an expected credit loss assessment. We perform ongoing credit evaluations of our customers, but generally do not require collateral to support customer receivables. We establish an allowance for doubtful accounts based on various factors including the age of receivables outstanding, historical trends, economic conditions and other information. We also review outstanding balances on an account-specific basis based on the credit risk of the customer. We determined that all of our accounts receivable share similar risk characteristics within our operating segments based on historical data. We monitor our credit exposure on an ongoing basis and assess whether assets in the pool continue to display similar risk characteristics. We actively monitor the credit risk of our specific customers, age of receivables outstanding, recent collection trends and general economic conditions to evaluate the risk of credit loss. The consolidated statement of income for the three months ended March 31, 2023, reflects the measurement of credit losses for newly recognized financial assets as well as any changes to historical financial assets.
Allowance for Doubtful Accounts
Balance as of December 31, 2022$52,531 
Additions charged to expense153,243 
Accounts written-off(18,937)
Balance as of March 31, 2023
$186,837 
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.

v3.23.2
Summary of Significant Accounting Policies (Tables)
6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Schedule of Inventory Inventory as of December 31, 2022 and 2021 consisted of:
December 31,
2022
December 31,
2021
Raw materials$9,116,824 $8,253,104 
Work in process3,165,876 2,480,979 
Finished goods12,975,669 13,685,571 
Inventory$25,258,369 $24,419,654 
Inventory at March 31, 2023, and December 31, 2022, consists of:
March 31, 2023December 31, 2022
Raw materials$10,083,241 $9,116,824 
Work in process3,236,331 3,165,876 
Finished goods11,943,087 12,975,669 
Inventory25,262,659 25,258,369 
Schedule of Property and Equipment
Automobiles and trucks
5 to 7 years
Machinery and equipment10 years
Office furniture and fixtures5 years
Buildings and improvements39 years
Property and equipment consisted of the following as of December 31, 2022 and 2021:
December 31,
2022
December 31,
2021
Automobiles and trucks$1,056,551 $1,251,187 
Machinery and equipment9,864,846 8,876,402 
Office furniture and fixtures186,464 167,581 
Buildings and improvements16,696,926 23,630,250 
Total Property and equipment27,804,787 33,925,420 
Less: Accumulated depreciation(8,301,302)(5,823,949)
Property and equipment, net$19,503,485 $28,101,471 
Schedule of Finite-Lived Intangible Assets
Software5 years
Non-compete agreements
1-15 years
Customer list
3-16 years
Patents, trademarks, and licenses
3-17 years
Proprietary technology15 years
Schedule of Indefinite-Lived Intangible Assets
Intangible assets consisted of the following as of December 31, 2022 and 2021:
CostWeighted Average Amortization PeriodDecember 31,
2022
December 31,
2021
Software2.0 years$128,474 $128,474 
Non-compete agreement6.3 years1,426,276 1,378,772 
Customer list11.9 years13,011,187 13,011,187 
Patents, trademarks, and licenses13.9 years7,127,408 7,174,912 
Proprietary technology13.5 years19,866,743 19,616,743 
12.9 years41,560,088 41,310,088 
Accumulated amortization
Software$(77,084)$(64,757)
Non-compete agreement(478,510)(210,465)
Customer list(1,711,327)(1,112,797)
Patents, trademarks, and licenses(962,258)(8,444)
Proprietary technology(2,048,300)(732,961)
(5,277,479)(2,129,424)
Intangibles assets, net$36,282,609 $39,180,664 
Schedule of Expected Amortization Expense of Intangible Assets
Expected amortization expense of intangible assets over the next 5 years and thereafter is as follows:
Years Ending December 31,
2023$3,152,048 
20243,152,048 
20252,919,686 
20262,900,686 
20272,762,686 
Thereafter21,395,455 
Total$36,282,609 
Schedule of Other Long-Term Assets
Other long-term assets consisted of the following as of December 31, 2022 and 2021:
December 31,
2022
December 31,
2021
Deposits$578,545 $149,517 
Other1,277,060 207,601 
$1,855,605 $357,118 
Disaggregation of Revenue
Year ended December 31,
20222021
Sale of goods
Circuit boards and cables$18,780,769 $15,700,902 
Supplements12,889,992 11,674,220 
Electronics41,191,146 1,543,469 
Total sale of goods72,861,907 28,918,591 
Sale of services
Construction contracts30,098,249 22,462,399 
Drone 3D mapping1,602,846 259,823 
Total sale of services31,701,095 22,722,222 
Total revenues$104,563,002 $51,640,813 
The following tables presents our revenues disaggregated by type for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31, 2023
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$— $9,320,821 $— $7,555,918 $— $16,876,739 
Sale of services4,146,004 — 2,970,087 — 368,883 7,484,974 
Total revenues
$4,146,004 $9,320,821 $2,970,087 $7,555,918 $368,883 $24,361,713 
Three Months Ended March 31, 2022
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$— $8,648,095 $— $9,793,988 $— $18,442,083 
Sale of services4,056,204 — 2,687,981 — 405,886 7,150,071 
Total revenues
$4,056,204 $8,648,095 $2,687,981 $9,793,988 $405,886 $25,592,154 
Schedule of Computation of Basic and Diluted EPS
For the Year Ended December 31, 2022
For the Year Ended December 31, 2021
Net lossSharesPer Share AmountNet lossSharesPer Share Amount
Basic EPS
Loss available to stockholders$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
Effect of Dilutive Securities
Stock options and warrants— — — — — — 
Dilute EPS
Loss available to stockholders plus assumed conversions$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
The following table illustrates the computation of basic and diluted
earnings per share (“EPS”) inclusive of all classes of common stock as the only difference between the classes of common stock are related to the voting rights for the three months ended March 31, 2023 and 2022:
For the Three Months Ended March 31, 2023
For the Three Months Ended March 31, 2022
Net LossSharesPer Share AmountNet LossSharesPer Share Amount
Basic EPS
Net loss$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Effect of Dilutive Securities
Stock options and warrants— — — — — — 
Dilute EPS
Total
$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)

v3.23.2
Leases (Tables)
6 Months Ended
Jun. 30, 2023
Leases [Abstract]  
Finance Lease, Liability, Fiscal Year Maturity
As of December 31, 2022, the future minimum finance and operating lease payments are as follows:
Years Ending December 31,
Finance
Leases
Operating
Leases
2023$1,925,840 $2,287,038 
20241,952,462 2,443,909 
20251,880,402 1,960,387 
20261,867,799 1,805,158 
20271,910,388 1,770,300 
Thereafter14,952,719 13,253,279 
Total payments24,489,610 23,520,071 
Less: imputed interest(9,171,495)(6,938,692)
Total obligation15,318,115 16,581,379 
Less: current portion(725,302)(1,318,885)
Non-current capital leases obligations$14,592,813 $15,262,494 
As of March 31, 2023, the future minimum finance and operating lease payments were as follows:
Twelve Months Ending March 31,
Finance
Leases
Operating
Leases
2024$1,931,757 $2,398,681 
20251,962,353 2,423,929 
20261,852,006 1,823,638 
20271,880,265 1,814,303 
20281,923,136 1,708,631 
Thereafter14,368,333 12,855,124 
Total payments23,917,850 23,024,306 
Less: imputed interest(8,778,767)(6,698,331)
Total obligation15,139,083 16,325,975 
Less: current portion(743,157)(1,484,846)
Non-current financing leases obligations$14,395,926 $14,841,129 
Lessee, Operating Lease, Liability, Maturity
As of December 31, 2022, the future minimum finance and operating lease payments are as follows:
Years Ending December 31,
Finance
Leases
Operating
Leases
2023$1,925,840 $2,287,038 
20241,952,462 2,443,909 
20251,880,402 1,960,387 
20261,867,799 1,805,158 
20271,910,388 1,770,300 
Thereafter14,952,719 13,253,279 
Total payments24,489,610 23,520,071 
Less: imputed interest(9,171,495)(6,938,692)
Total obligation15,318,115 16,581,379 
Less: current portion(725,302)(1,318,885)
Non-current capital leases obligations$14,592,813 $15,262,494 
As of March 31, 2023, the future minimum finance and operating lease payments were as follows:
Twelve Months Ending March 31,
Finance
Leases
Operating
Leases
2024$1,931,757 $2,398,681 
20251,962,353 2,423,929 
20261,852,006 1,823,638 
20271,880,265 1,814,303 
20281,923,136 1,708,631 
Thereafter14,368,333 12,855,124 
Total payments23,917,850 23,024,306 
Less: imputed interest(8,778,767)(6,698,331)
Total obligation15,139,083 16,325,975 
Less: current portion(743,157)(1,484,846)
Non-current financing leases obligations$14,395,926 $14,841,129 
Schedule of Right of Use Assets and Lease Liabilities
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheet:
Classification on Balance SheetDecember 31,
2022
December 31,
2021
Assets
Operating lease assetsOperating lease right of use assets$16,407,566 $1,460,206 
Total lease assets$16,407,566 $1,460,206 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,318,885 $428,596 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability15,262,494 1,066,562 
Total lease liability$16,581,379 $1,495,158 
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of March 31, 2023, and December 31, 2022:
March 31,
2023
December 31,
2022
Assets 
Operating lease assetsOperating lease right of use assets$15,949,731 $16,407,566 
Total lease assets$15,949,731 $16,407,566 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,484,846 $1,318,885 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability14,841,129 15,262,494 
Total lease liability$16,325,975 $16,581,379 

v3.23.2
Debt (Tables)
6 Months Ended
Jun. 30, 2023
Debt Disclosure [Abstract]  
Schedule of Notes Payable
The outstanding balances for the loans as of December 31, 2022 and 2021 were as follows:
December 31,
2022
December 31,
2021
Lines of credit, current portion$7,426,814 $4,473,489 
Equipment loans, current portion68,410 61,640 
Term notes, current portion3,132,726 5,628,884 
Total current10,627,950 10,164,013 
Line of credit, net of current portion7,215,520 5,640,051 
Long-term portion of equipment loans and term notes4,266,350 8,426,105 
Total notes payable$22,109,820 $24,230,169 
The outstanding balances for the loans as of March 31, 2023, and December 31, 2022, were as follows:
March 31,
2023
December 31,
2022
Lines of credit, current portion$8,970,460 $7,426,814 
Equipment loans, current portion82,787 68,410 
Related Party term notes, current portion535,000 — 
Term notes, current portion5,915,560 3,132,726 
Total current 15,503,807 10,627,950 
Lines of credit, net of current portion3,928,105 7,215,520 
Long-term portion of equipment loans and term notes2,229,684 4,266,350 
Total notes payable and line of Credit$21,661,596 $22,109,820 
Future Scheduled Maturities of Outstanding Notes Payable to Third Parties
Future scheduled maturities of outstanding debt are as follows:
Years Ending December 31,
2023$10,627,950 
20245,104,159 
2025155,254 
2026734,607 
20275,422,850 
Thereafter65,000 
Total$22,109,820 

v3.23.2
Stockholders' Equity (Tables)
6 Months Ended
Jun. 30, 2023
Equity [Abstract]  
Share-based Payment Arrangement, Option, Activity
The following summarizes the stock option activity for the years ended December 31, 2022 and 2021:
OptionsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
1,790,000 $0.19 7.09$6,176,855 
Granted— 
Forfeited— 
Exercised— 
Outstanding at December 31, 2021
1,790,000 $0.19 6.09$3,098,055 
Granted2,084,620 $0.77 
Forfeited(781,712)$0.32 
Exercised— $— 
Outstanding at December 31, 2022
3,092,908 $0.55 7.94$463,494 
Vested and expected to vest at December 31, 2022
3,092,909 $0.55 7.94$463,494 
Exercisable at December 31, 2022
1,084,500 $0.14 5.37$463,494 
The following summarizes the stock option activity for the three months ended March 31, 2023:
OptionsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2022
386,751 $4.39 7.94$463,495 
Granted— — 
Forfeited(7,689)6.16 
Exercised— — 
Outstanding at March 31, 2023
379,062 $4.35 7.67$444,942 
Vested and expected to vest at March 31, 2023
379,062 $4.35 7.67$444,942 
Exercisable at March 31, 2023
135,567 $1.11 5.12$444,942 
Share-based Payment Arrangement, Option, Exercise Price Range
The following table summarizes information about options outstanding and exercisable as of December 31, 2022:
Options OutstandingOptions Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$0.05 891,500 5.38$0.05 891,500 $0.05 
0.10 85,000 5.280.10 85,000 0.10 
0.13 — 4.580.13 — 0.13 
0.77 2,008,409 9.330.77 — 0.77 
0.90 108,000 4.270.90 108,000 0.90 
3,092,909 1,084,500 
The fair value of the 416,667, 428,571, and the 396,825 warrants issued to the placement agent in connection with a registered direct offering, and to the RCA sellers in connection with the DTI/RCA acquisition (discussed below in Note 7) during the year ended December 31, 2021, are $2,498,637, $902,414, and $668,863 respectively and was determined using the Black-Scholes option pricing model. The fair value of the 14,492,754 warrants issued to the placement agent during the year ended December 31, 2022, are $7,083,038, and was determined using the Black-Scholes option pricing model. All of these warrants were determined using the following assumptions:
Stock price
$0.62 - 7.03
Risk-free interest rate
0.01 - 1.02%
Expected life of the options
1.5-5 years
Expected volatility
157-347%
Expected dividend yield%
The following table summarizes information about options outstanding and exercisable as of March 31, 2023:
Options OutstandingOptions Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$0.05 111,438 5.26$0.40 111,438 $0.40 
0.10 10,625 5.030.80 10,625 0.80 
0.77 243,495 9.086.16 — — 
0.90 13,504 4.027.20 13,504 7.20 
379,062 135,567 
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions
The fair value of the 2,084,620 options issued in connection with the Plan is $1,534,401, and was determined using the Black-Scholes option pricing model with the following assumptions:
Stock price$0.77 
Risk-free interest rate2.90 %
Expected life of the options6.25 years
Expected volatility158 %
Expected dividend yield%
Schedule of Stockholders' Equity Note, Warrants or Rights
The following summarizes the warrant activity for the years ended December 31, 2022, and 2021:
WarrantsWeighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
275,000 $1.01 0.23$723,250 
Granted5,527,778 3.32
Forfeited(275,000)1.01
Exercised— — 
Outstanding at December 31, 2021
5,527,778 $3.32 4.62$— 
Granted14,492,754 0.69
Forfeited— — 
Exercised(1,449,276)0.69 
Outstanding at December 31, 2022
18,571,256 $1.47 4.31$— 
Vested and expected to vest at December 31, 2022
18,571,256 $1.47 4.31$— 
Exercisable at December 31, 2022
18,571,256 $1.47 4.31$— 
The following summarizes the warrants activity for the three months ended March 31, 2023:
WarrantsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2022
2,321,411 $11.78 4.31$— 
Granted— — 0
Forfeited— — 
Exercised— — 
Outstanding at March 31, 2023
2,321,411 $11.78 4.02$— 
Vested and expected to vest at March 31, 2023
2,321,411 $11.78 4.02$— 
Exercisable at March 31, 2023
2,321,411 $11.78 4.02$— 
Schedule of Warrants Outstanding and Exercisable
The following table summarizes information about warrants outstanding and exercisable as of December 31, 2022:
Warrants OutstandingWarrants Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$6.60 416,667 2.13$6.60 416,667 $6.60 
2.52 396,825 1.942.52 396,825 2.52 
3.10 4,285,715 3.93.10 4,285,715 3.1 
3.08 428,571 3.93.08 428,571 3.08 
0.6913,043,478 4.60.6913,043,478 0.69 
18,571,256 18,571,256 
The following table summarizes information about warrants outstanding and exercisable as of March 31, 2023:
Warrants OutstandingWarrants Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$52.80 52,084 1.89$52.80 52,084 $52.80 
20.16 49,604 1.7020.16 49,604 20.16
24.80 535,716 3.6624.80 535,716 24.80
24.64 53,572 3.6524.64 53,572 24.64
5.52 1,630,435 4.29$5.52 1,630,435 5.52
 2,321,411 2,321,411 

v3.23.2
Business Combinations (Tables)
6 Months Ended
Jun. 30, 2023
Business Combination and Asset Acquisition [Abstract]  
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed The assets acquired and liabilities assumed were as follows at the acquisition date:
Purchase Allocation
Cash$81,442 
Property and equipment56,011 
Intellectual property8,406,743 
Non-compete agreement100,819 
Deferred tax liability(1,362,667)
Accrued expenses and other current liabilities(564,039)
SBA loan (PPP funds)(65,000)
$6,653,309 
The purchase price was paid as follows:
Series D Preferred Stock (1,432,244 shares)
$6,653,309 
$6,653,309 
A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Accounts receivable$1,408,682 
Property and equipment111,789 
Customer list3,840,000 
Non-compete agreement120,000 
Goodwill6,426,786 
Other asset91,000 
Accounts payable(786,151)
Accrued expenses and other current liabilities(53,857)
Contract liabilities(3,637,122)
Notes payable(64,733)
$7,456,394 
The purchase price was paid as follows:
Class A Common Stock (281,223 shares)
$1,102,394 
Cash6,354,000 
$7,456,394 
Purchase Allocation
Accounts receivable$397,441 
Inventory2,621,653 
Property and equipment1,739,441 
Customer list1,250,000 
Proprietary technology3,670,000 
Non-compete agreement20,000 
Goodwill4,410,564 
Other assets390,502 
Accounts payable(397,441)
Accrued expenses and other current liabilities(411,830)
Contract liabilities(1,754,290)
Notes payable(33,363)
$11,902,677 
The purchase price was paid as follows:
Class A Common Stock (361,847 shares)
$1,432,677 
Cash10,470,000 
$11,902,677 
A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Accounts receivable$90,858 
Other asset27,469 
Proprietary technology1,650,000 
Tradename210,000 
Goodwill1,913,310 
Non-compete agreement90,000 
Accrued expenses and other current liabilities(363,856)
$3,617,781 
The purchase price was paid as follows:
Cash$35 
Class A Common Stock (888,881 shares)
3,617,746 
$3,617,781 
Purchase Allocation
Cash$27,466 
Accounts receivable30,000 
Inventory95,000 
Proprietary technology 5,890,000 
Non-compete agreement200,000 
Goodwill6,496,343 
Deferred tax liability(1,562,074)
Accrued expenses and other current liabilities(113,742)
$11,062,993 
The purchase price was paid as follows:
Cash$6,500,000 
Class A Common Stock (1,803,279)
4,562,993 
$11,062,993 
A summary of the finalized purchase price allocation at fair value is presented below:
Purchase Allocation
Accounts receivable$3,409,230 
Other current assets1,259,556 
Inventory12,477,872 
Property and equipment761,370 
Customer list6,300,000 
Trademark620,000 
Non-compete agreement690,000 
Goodwill1,355,728 
ROU asset1,196,764 
Accounts payable(951,302)
Accrued expenses and other current liabilities(677,720)
Customer deposits(153,201)
Operating lease liability(1,226,128)
Line of credit(4,710,768)
$20,351,401 
The purchase price was paid as follows:
Cash$14,000,000 
Class A Common Stock (1,587,301 shares)
3,682,538 
Warrants (396,825 shares)
668,863 
Seller notes2,000,000 
$20,351,401 
Business And Asset Acquisition, Pro Forma Information The following are the unaudited pro forma results of operations for the years ended December 31, 2022 and 2021, as if Excel, IA, Vayu, TDI, Alt Labs, Identified Technology, ElecJet, and RCA had been acquired on January 1, 2021. 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)
Years Ended December 31,
20222021
Sales$104,563,002 $98,321,144 
Cost of goods sold82,848,600 75,523,745 
Gross profit21,714,402 22,797,399 
Operating expenses32,470,186 38,643,670 
Loss from operations(10,755,784)(15,846,271)
Net loss from continuing operations(12,875,313)(12,144,338)
Loss per share(0.07)(0.06)

v3.23.2
Equity Investments (Tables)
6 Months Ended
Jun. 30, 2023
Investments, Debt and Equity Securities [Abstract]  
Equity Securities Without Readily Determinable Fair Value
The membership interest was paid for as follows:
Accounts receivable owed from Amplifei$1,000,000 
Cash350,000 
Total$1,350,000 

v3.23.2
Income Taxes (Tables)
6 Months Ended
Jun. 30, 2023
Income Tax Disclosure [Abstract]  
Schedule of Effective Income Tax Rate Reconciliation
The components of the Company's income tax provision are as follows:
Year Ended December 31, 2022Year Ended December 31, 2021
Current expense (benefit)
Federal$— $— 
State139,020 — 
139,020 — 
Deferred benefit
Federal$(650,283)$(1,616,916)
State(222,731)(326,825)
(873,014)(1,943,741)
Provision for income tax benefit$(733,994)$(1,943,741)
A reconciliation of the provision for income taxes with the expected provision for income taxes computed by applying the federal statutory income tax rate of 21% to the net loss before provision for income taxes is as follows:
Year Ended December 31, 2022Year Ended December 31, 2021
AmountPercentageAmountPercentage
Pre-tax book loss$(13,609,307)$(21,426,879)
Federal income tax at statutory rate(2,857,954)21.0 %(4,499,644)21.0 %
State income tax benefit(530,084)3.9 %(163,677)0.8 %
Change in valuation allowance2,760,687 (20.3)%3,559,163 (16.6)%
Permanent items21,281 (0.2)%(839,583)3.9 %
Other(127,924)1.4 %— — %
Provision for income tax benefit$(733,994)5.4 %$(1,943,741)9.1 %
Schedule of Deferred Tax Assets and Liabilities Significant components of the Company's net deferred income taxes are as follows:
Year Ended December 31, 2022Year Ended December 31, 2021
Deferred tax asset:
Accrued expenses and other$696,419 $347,645 
Lease Liability8,176,101 — 
Loss carryforwards14,295,781 13,124,197 
Stock based compensation211,499 90,293 
Research and experimental expenditures202,199 — 
Inventory625,937 — 
Interest634,445 615,260 
Total deferred tax asset24,842,381 14,177,395 
Valuation allowance(13,492,773)(9,887,550)
Net deferred tax assets11,349,608 4,289,845 
Deferred tax liabilities:
Fixed assets(3,266,395)(365,922)
Intangible assets and goodwill(4,865,970)(5,785,088)
ROU asset(4,205,393)— 
Total deferred tax liabilities(12,337,758)(6,151,010)
Net non-current deferred tax liability$(988,150)$(1,861,165)
Schedule of Unrecognized Tax Benefits Roll Forward
The following table summarizes the activity related to the Company's gross unrecognized tax liabilities:
December 31, 2022December 31, 2021
Unrecognized tax liabilities, beginning of the year$1,169,028 $— 
Increase related to current year tax positions480,911 1,169,028 
Unrecognized tax liabilities, end of year$1,649,939 $1,169,028 

v3.23.2
Industry Segments (Tables)
6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment
Years Ended December 31,
20222021
Revenue
A4 Construction Services - MSM$18,290,019 $16,191,284 
A4 Construction Services - Excel1,761,572 1,803,739 
A4 Manufacturing - QCA16,763,989 14,258,084 
A4 Manufacturing - Alt Labs12,889,992 11,674,220 
A4 Defense - TDI10,046,658 4,467,376 
A4 Technologies - RCA40,092,612 1,454,451 
A4 Technologies - ElecJet1,098,534 89,018 
A4 Aerospace - Vayu81,100 — 
All Other3,538,526 1,702,641 
$104,563,002 $51,640,813 
Gross profit
A4 Construction Services - MSM$1,374,517 $(385,266)
A4 Construction Services - Excel3,681 (92,765)
A4 Manufacturing - QCA3,258,082 2,763,213 
A4 Manufacturing - Alt Labs2,343,368 3,749,878 
A4 Defense - TDI3,082,844 1,073,636 
A4 Technologies - RCA10,687,202 379,740 
A4 Technologies - ElecJet(236,636)76,818 
A4 Aerospace - Vayu13,087 — 
All Other1,188,257 132,744 
$21,714,402 $7,697,998 
Income (loss) from operations
A4 Construction Services - MSM$(883,922)$(4,247,240)
A4 Construction Services - Excel(973,934)(1,969,535)
A4 Manufacturing - QCA702,875 1,426,141 
A4 Manufacturing - Alt Labs2,284,308 (3,027,203)
A4 Defense - TDI1,072,306 (282,882)
A4 Technologies - RCA2,525,619 (100,328)
A4 Technologies - ElecJet(1,107,254)(62,163)
A4 Aerospace - Vayu(3,336,279)(4,875,829)
All Other(11,039,503)(8,983,320)
$(10,755,784)$(22,122,359)
Depreciation and amortization
A4 Construction Services - MSM$684,563 $846,808 
A4 Construction Services - Excel267,966 291,556 
A4 Manufacturing - QCA417,172 377,868 
A4 Manufacturing - Alt Labs983,931 611,079 
A4 Defense - TDI288,950 191,740 
A4 Technologies - RCA979,206 49,299 
A4 Technologies - ElecJet414,333 33,833 
A4 Aerospace - Vayu1,025,412 1,093,995 
All Other1,113,005 658,181 
$6,174,538 $4,154,359 
Interest Expenses
A4 Construction Services - MSM$421,287 $706,607 
A4 Construction Services - Excel245,855 291,263 
A4 Manufacturing - QCA262,551 230,044 
A4 Manufacturing - Alt Labs351,503 72,060 
A4 Defense - TDI11,975 825 
A4 Technologies - RCA159,878 15,347 
A4 Technologies - ElecJet— — 
A4 Aerospace - Vayu10,677 
All Other1,660,406 1,973,078 
$3,124,132 $3,289,233 
Net income (loss)
A4 Construction Services - MSM$(1,246,295)$(1,481,382)
A4 Construction Services - Excel(1,219,789)(1,899,512)
A4 Manufacturing - QCA367,760 1,774,139 
A4 Manufacturing - Alt Labs2,054,958 (2,643,752)
A4 Defense - TDI1,060,331 (270,289)
A4 Technologies - RCA2,365,741 (115,675)
A4 Technologies - ElecJet(1,110,727)(62,163)
A4 Aerospace - Vayu(3,346,956)(4,852,182)
All Other(11,800,336)(9,932,322)
$(12,875,313)$(19,483,138)
As of
December 31, 2022
As of
December 31, 2021
Total Assets
A4 Construction Services - MSM$11,309,049 $10,935,355 
A4 Construction Services - Excel3,359,818 3,050,206 
A4 Manufacturing - QCA20,988,492 11,869,711 
A4 Manufacturing - Alt Labs26,636,905 23,173,298 
A4 Defense - TDI13,497,381 11,982,580 
A4 Technologies - RCA27,191,977 28,174,091 
A4 Technologies - ElecJet12,897,440 12,904,267 
A4 Aerospace - Vayu14,632,530 14,702,838 
All Other$15,118,622 $17,831,504 
$145,632,214 $134,623,850 
Goodwill
A4 Construction Services - MSM$113,592 $113,592 
A4 Construction Services - Excel— — 
A4 Manufacturing - QCA1,963,761 1,963,761 
A4 Manufacturing - Alt Labs4,410,564 4,410,564 
A4 Defense - TDI6,426,786 6,426,786 
A4 Technologies - RCA1,355,728 1,355,728 
A4 Technologies - ElecJet6,496,343 6,496,343 
A4 Aerospace - Vayu— — 
All Other1,913,310 1,913,310 
$22,680,084 $22,680,084 
Accounts receivable, net
A4 Construction Services - MSM$5,188,521 $3,906,271 
A4 Construction Services - Excel288,243 286,972 
A4 Manufacturing - QCA3,867,141 2,339,597 
A4 Manufacturing - Alt Labs1,833,502 406,333 
A4 Defense - TDI1,905,314 1,371,184 
A4 Technologies - RCA3,232,559 2,961,201 
A4 Technologies - ElecJet12,888 37,744 
A4 Aerospace - Vayu— — 
All Other811,776 565,874 
$17,139,944 $11,875,176 
Three Months Ended March 31,
20232022
Revenue
A4 Construction Services - MSM$3,813,140 $3,767,390 
A4 Construction Services - Excel332,864 288,814 
A4 Manufacturing - QCA4,191,643 4,318,860 
A4 Manufacturing - Alt Labs4,226,914 3,824,138 
A4 Defense - TDI2,970,087 2,687,981 
A4 Technologies - RCA7,453,423 9,237,259 
A4 Technologies - ElecJet102,495 556,729 
A4 Aerospace - Vayu— 25,000 
All Other1,271,147 $885,983 
$24,361,713 $25,592,154 
Gross profit
A4 Construction Services - MSM$231,888 $463,806 
A4 Construction Services - Excel(150,008)(98,974)
A4 Manufacturing - QCA897,715 1,027,184 
A4 Manufacturing - Alt Labs948,752 901,479 
A4 Defense - TDI616,582 843,189 
A4 Technologies - RCA2,374,178 2,184,328 
A4 Technologies - ElecJet(73,809)(62,029)
A4 Aerospace - Vayu(2,410)25,000 
All Other373,568 $353,474 
$5,216,456 $5,637,457 
Income (loss) from operations
A4 Construction Services - MSM$(404,413)$(315,698)
A4 Construction Services - Excel(432,081)(319,990)
A4 Manufacturing - QCA19,097 414,448 
A4 Manufacturing - Alt Labs(559,125)(987,483)
A4 Defense - TDI181,534 423,140 
A4 Technologies - RCA475,864 566,290 
A4 Technologies - ElecJet(245,421)(304,346)
A4 Aerospace - Vayu(820,967)(806,897)
All Other(3,354,961)(2,425,619)
$(5,140,473)$(3,756,155)
Depreciation and amortization
A4 Construction Services - MSM$174,298 $166,404 
A4 Construction Services - Excel67,525 — 
A4 Manufacturing - QCA116,879 100,479 
A4 Manufacturing - Alt Labs208,554 307,035 
A4 Defense - TDI72,433 72,090 
A4 Technologies - RCA244,804 170,046 
A4 Technologies - ElecJet105,666 101,500 
A4 Aerospace - Vayu258,911 274,669 
All Other278,713 277,441 
$1,527,783 $1,469,664 
Interest expense
A4 Construction Services - MSM$113,710 $103,025 
A4 Construction Services - Excel60,570 61,985 
A4 Manufacturing - QCA163,645 36,289 
A4 Manufacturing - Alt Labs64,680 57,116 
A4 Defense - TDI17,347 — 
A4 Technologies - RCA85,956 54,817 
A4 Technologies - ElecJet— — 
A4 Aerospace - Vayu5,958 — 
All Other487,004 295,729 
$998,870 $608,961 
Net income (loss)
A4 Construction Services - MSM$(480,600)$(362,367)
A4 Construction Services - Excel(492,651)(381,975)
A4 Manufacturing - QCA(144,187)373,867 
A4 Manufacturing - Alt Labs(658,756)(1,111,462)
A4 Defense - TDI164,187 423,140 
A4 Technologies - RCA389,908 511,473 
A4 Technologies - ElecJet(245,421)(304,346)
A4 Aerospace - Vayu(826,925)(806,897)
All Other(3,474,698)(2,340,993)
$(5,769,143)$(3,999,560)
The Company’s reportable segments as of March 31, 2023, and December 31, 2022, were as follows:
As of
March 31, 2023
As of
December 31, 2022
Total assets
A4 Construction Services - MSM$10,699,259 $11,309,049 
A4 Construction Services - Excel3,390,848 3,359,818 
A4 Manufacturing - QCA21,046,251 20,988,492 
A4 Manufacturing - Alt Labs27,083,918 26,636,905 
A4 Defense - TDI13,748,110 13,497,381 
A4 Technologies - RCA23,339,534 27,191,977 
A4 Technologies - ElecJet12,972,480 12,897,440 
A4 Aerospace - Vayu13,594,000 14,632,530 
All Other16,070,325 15,118,622 
$141,944,725 $145,632,214 
Goodwill
A4 Construction Services - MSM$113,592 $113,592 
A4 Construction Services - Excel— — 
A4 Manufacturing - QCA1,963,761 1,963,761 
A4 Manufacturing - Alt Labs4,410,564 4,410,564 
A4 Defense - TDI6,426,786 6,426,786 
A4 Technologies - RCA1,355,728 1,355,728 
A4 Technologies - ElecJet6,496,343 6,496,343 
A4 Aerospace - Vayu— — 
All Other1,913,310 1,913,310 
$22,680,084 $22,680,084 
Accounts receivable, net
A4 Construction Services - MSM$3,790,520 $5,188,521 
A4 Construction Services - Excel222,895 288,243 
A4 Manufacturing - QCA3,397,802 3,867,141 
A4 Manufacturing - Alt Labs1,994,703 1,833,502 
A4 Defense - TDI2,367,869 1,905,314 
A4 Technologies - RCA2,845,356 3,232,559 
A4 Technologies - ElecJet22,959 12,888 
A4 Aerospace - Vayu(491)— 
All Other898,915 811,776 
$15,540,528 $17,139,944 

v3.23.2
Commitment and Contingencies (Tables)
6 Months Ended
Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Annual Payments for Warranty Services
DTI entered into a warranty service agreement to provide certain warranty services for a lighting supplier through December 31, 2024, except for one class of customer through 2030. In exchange for these services DTI receives annual payments as follows:
Years Ending December 31,
2023$66,626 
202459,964 
Total$126,590 

v3.23.2
Summary of Significant Accounting Policies (Tables)
6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Schedule of Inventory Inventory as of December 31, 2022 and 2021 consisted of:
December 31,
2022
December 31,
2021
Raw materials$9,116,824 $8,253,104 
Work in process3,165,876 2,480,979 
Finished goods12,975,669 13,685,571 
Inventory$25,258,369 $24,419,654 
Inventory at March 31, 2023, and December 31, 2022, consists of:
March 31, 2023December 31, 2022
Raw materials$10,083,241 $9,116,824 
Work in process3,236,331 3,165,876 
Finished goods11,943,087 12,975,669 
Inventory25,262,659 25,258,369 
Schedule of Computation of Basic and Diluted EPS
For the Year Ended December 31, 2022
For the Year Ended December 31, 2021
Net lossSharesPer Share AmountNet lossSharesPer Share Amount
Basic EPS
Loss available to stockholders$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
Effect of Dilutive Securities
Stock options and warrants— — — — — — 
Dilute EPS
Loss available to stockholders plus assumed conversions$(12,875,313)190,779,052 $(0.07)$(19,483,138)164,216,808 $(0.12)
The following table illustrates the computation of basic and diluted
earnings per share (“EPS”) inclusive of all classes of common stock as the only difference between the classes of common stock are related to the voting rights for the three months ended March 31, 2023 and 2022:
For the Three Months Ended March 31, 2023
For the Three Months Ended March 31, 2022
Net LossSharesPer Share AmountNet LossSharesPer Share Amount
Basic EPS
Net loss$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Effect of Dilutive Securities
Stock options and warrants— — — — — — 
Dilute EPS
Total
$(5,769,143)24,901,733 $(0.23)$(3,999,560)22,879,056 $(0.17)
Disaggregation of Revenue
Year ended December 31,
20222021
Sale of goods
Circuit boards and cables$18,780,769 $15,700,902 
Supplements12,889,992 11,674,220 
Electronics41,191,146 1,543,469 
Total sale of goods72,861,907 28,918,591 
Sale of services
Construction contracts30,098,249 22,462,399 
Drone 3D mapping1,602,846 259,823 
Total sale of services31,701,095 22,722,222 
Total revenues$104,563,002 $51,640,813 
The following tables presents our revenues disaggregated by type for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31, 2023
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$— $9,320,821 $— $7,555,918 $— $16,876,739 
Sale of services4,146,004 — 2,970,087 — 368,883 7,484,974 
Total revenues
$4,146,004 $9,320,821 $2,970,087 $7,555,918 $368,883 $24,361,713 
Three Months Ended March 31, 2022
Construction ServicesManufacturingDefenseTechnologiesAerospaceTotal
Sale of goods$— $8,648,095 $— $9,793,988 $— $18,442,083 
Sale of services4,056,204 — 2,687,981 — 405,886 7,150,071 
Total revenues
$4,056,204 $8,648,095 $2,687,981 $9,793,988 $405,886 $25,592,154 
Schedule of Accounts Receivable, Allowance for Credit Loss The consolidated statement of income for the three months ended March 31, 2023, reflects the measurement of credit losses for newly recognized financial assets as well as any changes to historical financial assets.
Allowance for Doubtful Accounts
Balance as of December 31, 2022$52,531 
Additions charged to expense153,243 
Accounts written-off(18,937)
Balance as of March 31, 2023
$186,837 

v3.23.2
Leases (Tables)
6 Months Ended
Jun. 30, 2023
Leases [Abstract]  
Finance Lease, Liability, Fiscal Year Maturity
As of December 31, 2022, the future minimum finance and operating lease payments are as follows:
Years Ending December 31,
Finance
Leases
Operating
Leases
2023$1,925,840 $2,287,038 
20241,952,462 2,443,909 
20251,880,402 1,960,387 
20261,867,799 1,805,158 
20271,910,388 1,770,300 
Thereafter14,952,719 13,253,279 
Total payments24,489,610 23,520,071 
Less: imputed interest(9,171,495)(6,938,692)
Total obligation15,318,115 16,581,379 
Less: current portion(725,302)(1,318,885)
Non-current capital leases obligations$14,592,813 $15,262,494 
As of March 31, 2023, the future minimum finance and operating lease payments were as follows:
Twelve Months Ending March 31,
Finance
Leases
Operating
Leases
2024$1,931,757 $2,398,681 
20251,962,353 2,423,929 
20261,852,006 1,823,638 
20271,880,265 1,814,303 
20281,923,136 1,708,631 
Thereafter14,368,333 12,855,124 
Total payments23,917,850 23,024,306 
Less: imputed interest(8,778,767)(6,698,331)
Total obligation15,139,083 16,325,975 
Less: current portion(743,157)(1,484,846)
Non-current financing leases obligations$14,395,926 $14,841,129 
Lessee, Operating Lease, Liability, Maturity
As of December 31, 2022, the future minimum finance and operating lease payments are as follows:
Years Ending December 31,
Finance
Leases
Operating
Leases
2023$1,925,840 $2,287,038 
20241,952,462 2,443,909 
20251,880,402 1,960,387 
20261,867,799 1,805,158 
20271,910,388 1,770,300 
Thereafter14,952,719 13,253,279 
Total payments24,489,610 23,520,071 
Less: imputed interest(9,171,495)(6,938,692)
Total obligation15,318,115 16,581,379 
Less: current portion(725,302)(1,318,885)
Non-current capital leases obligations$14,592,813 $15,262,494 
As of March 31, 2023, the future minimum finance and operating lease payments were as follows:
Twelve Months Ending March 31,
Finance
Leases
Operating
Leases
2024$1,931,757 $2,398,681 
20251,962,353 2,423,929 
20261,852,006 1,823,638 
20271,880,265 1,814,303 
20281,923,136 1,708,631 
Thereafter14,368,333 12,855,124 
Total payments23,917,850 23,024,306 
Less: imputed interest(8,778,767)(6,698,331)
Total obligation15,139,083 16,325,975 
Less: current portion(743,157)(1,484,846)
Non-current financing leases obligations$14,395,926 $14,841,129 
Schedule of Right of Use Assets and Lease Liabilities
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheet:
Classification on Balance SheetDecember 31,
2022
December 31,
2021
Assets
Operating lease assetsOperating lease right of use assets$16,407,566 $1,460,206 
Total lease assets$16,407,566 $1,460,206 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,318,885 $428,596 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability15,262,494 1,066,562 
Total lease liability$16,581,379 $1,495,158 
The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of March 31, 2023, and December 31, 2022:
March 31,
2023
December 31,
2022
Assets 
Operating lease assetsOperating lease right of use assets$15,949,731 $16,407,566 
Total lease assets$15,949,731 $16,407,566 
Liabilities
Current liabilities
Operating lease liabilityCurrent operating lease liability$1,484,846 $1,318,885 
Noncurrent liabilities
Operating lease liabilityLong-term operating lease liability14,841,129 15,262,494 
Total lease liability$16,325,975 $16,581,379 

v3.23.2
Debt (Tables)
6 Months Ended
Jun. 30, 2023
Debt Disclosure [Abstract]  
Schedule of Notes Payable
The outstanding balances for the loans as of December 31, 2022 and 2021 were as follows:
December 31,
2022
December 31,
2021
Lines of credit, current portion$7,426,814 $4,473,489 
Equipment loans, current portion68,410 61,640 
Term notes, current portion3,132,726 5,628,884 
Total current10,627,950 10,164,013 
Line of credit, net of current portion7,215,520 5,640,051 
Long-term portion of equipment loans and term notes4,266,350 8,426,105 
Total notes payable$22,109,820 $24,230,169 
The outstanding balances for the loans as of March 31, 2023, and December 31, 2022, were as follows:
March 31,
2023
December 31,
2022
Lines of credit, current portion$8,970,460 $7,426,814 
Equipment loans, current portion82,787 68,410 
Related Party term notes, current portion535,000 — 
Term notes, current portion5,915,560 3,132,726 
Total current 15,503,807 10,627,950 
Lines of credit, net of current portion3,928,105 7,215,520 
Long-term portion of equipment loans and term notes2,229,684 4,266,350 
Total notes payable and line of Credit$21,661,596 $22,109,820 
Schedule of Maturities of Long-term Debt
Future scheduled maturities of outstanding debt are as follows:
Twelve Months Ending March 31,
2024$15,503,807 
20251,785,069 
2026709,653 
20273,562,900 
202826,035 
Thereafter74,132 
Total$21,661,596 

v3.23.2
Stockholders' Equity (Tables)
6 Months Ended
Jun. 30, 2023
Equity [Abstract]  
Share-based Payment Arrangement, Option, Activity
The following summarizes the stock option activity for the years ended December 31, 2022 and 2021:
OptionsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
1,790,000 $0.19 7.09$6,176,855 
Granted— 
Forfeited— 
Exercised— 
Outstanding at December 31, 2021
1,790,000 $0.19 6.09$3,098,055 
Granted2,084,620 $0.77 
Forfeited(781,712)$0.32 
Exercised— $— 
Outstanding at December 31, 2022
3,092,908 $0.55 7.94$463,494 
Vested and expected to vest at December 31, 2022
3,092,909 $0.55 7.94$463,494 
Exercisable at December 31, 2022
1,084,500 $0.14 5.37$463,494 
The following summarizes the stock option activity for the three months ended March 31, 2023:
OptionsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2022
386,751 $4.39 7.94$463,495 
Granted— — 
Forfeited(7,689)6.16 
Exercised— — 
Outstanding at March 31, 2023
379,062 $4.35 7.67$444,942 
Vested and expected to vest at March 31, 2023
379,062 $4.35 7.67$444,942 
Exercisable at March 31, 2023
135,567 $1.11 5.12$444,942 
Share-based Payment Arrangement, Option, Exercise Price Range
The following table summarizes information about options outstanding and exercisable as of December 31, 2022:
Options OutstandingOptions Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$0.05 891,500 5.38$0.05 891,500 $0.05 
0.10 85,000 5.280.10 85,000 0.10 
0.13 — 4.580.13 — 0.13 
0.77 2,008,409 9.330.77 — 0.77 
0.90 108,000 4.270.90 108,000 0.90 
3,092,909 1,084,500 
The fair value of the 416,667, 428,571, and the 396,825 warrants issued to the placement agent in connection with a registered direct offering, and to the RCA sellers in connection with the DTI/RCA acquisition (discussed below in Note 7) during the year ended December 31, 2021, are $2,498,637, $902,414, and $668,863 respectively and was determined using the Black-Scholes option pricing model. The fair value of the 14,492,754 warrants issued to the placement agent during the year ended December 31, 2022, are $7,083,038, and was determined using the Black-Scholes option pricing model. All of these warrants were determined using the following assumptions:
Stock price
$0.62 - 7.03
Risk-free interest rate
0.01 - 1.02%
Expected life of the options
1.5-5 years
Expected volatility
157-347%
Expected dividend yield%
The following table summarizes information about options outstanding and exercisable as of March 31, 2023:
Options OutstandingOptions Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$0.05 111,438 5.26$0.40 111,438 $0.40 
0.10 10,625 5.030.80 10,625 0.80 
0.77 243,495 9.086.16 — — 
0.90 13,504 4.027.20 13,504 7.20 
379,062 135,567 
Schedule of Stockholders' Equity Note, Warrants or Rights
The following summarizes the warrant activity for the years ended December 31, 2022, and 2021:
WarrantsWeighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
275,000 $1.01 0.23$723,250 
Granted5,527,778 3.32
Forfeited(275,000)1.01
Exercised— — 
Outstanding at December 31, 2021
5,527,778 $3.32 4.62$— 
Granted14,492,754 0.69
Forfeited— — 
Exercised(1,449,276)0.69 
Outstanding at December 31, 2022
18,571,256 $1.47 4.31$— 
Vested and expected to vest at December 31, 2022
18,571,256 $1.47 4.31$— 
Exercisable at December 31, 2022
18,571,256 $1.47 4.31$— 
The following summarizes the warrants activity for the three months ended March 31, 2023:
WarrantsWeighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2022
2,321,411 $11.78 4.31$— 
Granted— — 0
Forfeited— — 
Exercised— — 
Outstanding at March 31, 2023
2,321,411 $11.78 4.02$— 
Vested and expected to vest at March 31, 2023
2,321,411 $11.78 4.02$— 
Exercisable at March 31, 2023
2,321,411 $11.78 4.02$— 
Schedule of Warrants Outstanding and Exercisable
The following table summarizes information about warrants outstanding and exercisable as of December 31, 2022:
Warrants OutstandingWarrants Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$6.60 416,667 2.13$6.60 416,667 $6.60 
2.52 396,825 1.942.52 396,825 2.52 
3.10 4,285,715 3.93.10 4,285,715 3.1 
3.08 428,571 3.93.08 428,571 3.08 
0.6913,043,478 4.60.6913,043,478 0.69 
18,571,256 18,571,256 
The following table summarizes information about warrants outstanding and exercisable as of March 31, 2023:
Warrants OutstandingWarrants Exercisable
Exercise
Price
Number
of Shares
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
of Shares
Weighted
Average
Exercise
Price
$52.80 52,084 1.89$52.80 52,084 $52.80 
20.16 49,604 1.7020.16 49,604 20.16
24.80 535,716 3.6624.80 535,716 24.80
24.64 53,572 3.6524.64 53,572 24.64
5.52 1,630,435 4.29$5.52 1,630,435 5.52
 2,321,411 2,321,411 

v3.23.2
Segment Reporting (Tables)
6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment
Years Ended December 31,
20222021
Revenue
A4 Construction Services - MSM$18,290,019 $16,191,284 
A4 Construction Services - Excel1,761,572 1,803,739 
A4 Manufacturing - QCA16,763,989 14,258,084 
A4 Manufacturing - Alt Labs12,889,992 11,674,220 
A4 Defense - TDI10,046,658 4,467,376 
A4 Technologies - RCA40,092,612 1,454,451 
A4 Technologies - ElecJet1,098,534 89,018 
A4 Aerospace - Vayu81,100 — 
All Other3,538,526 1,702,641 
$104,563,002 $51,640,813 
Gross profit
A4 Construction Services - MSM$1,374,517 $(385,266)
A4 Construction Services - Excel3,681 (92,765)
A4 Manufacturing - QCA3,258,082 2,763,213 
A4 Manufacturing - Alt Labs2,343,368 3,749,878 
A4 Defense - TDI3,082,844 1,073,636 
A4 Technologies - RCA10,687,202 379,740 
A4 Technologies - ElecJet(236,636)76,818 
A4 Aerospace - Vayu13,087 — 
All Other1,188,257 132,744 
$21,714,402 $7,697,998 
Income (loss) from operations
A4 Construction Services - MSM$(883,922)$(4,247,240)
A4 Construction Services - Excel(973,934)(1,969,535)
A4 Manufacturing - QCA702,875 1,426,141 
A4 Manufacturing - Alt Labs2,284,308 (3,027,203)
A4 Defense - TDI1,072,306 (282,882)
A4 Technologies - RCA2,525,619 (100,328)
A4 Technologies - ElecJet(1,107,254)(62,163)
A4 Aerospace - Vayu(3,336,279)(4,875,829)
All Other(11,039,503)(8,983,320)
$(10,755,784)$(22,122,359)
Depreciation and amortization
A4 Construction Services - MSM$684,563 $846,808 
A4 Construction Services - Excel267,966 291,556 
A4 Manufacturing - QCA417,172 377,868 
A4 Manufacturing - Alt Labs983,931 611,079 
A4 Defense - TDI288,950 191,740 
A4 Technologies - RCA979,206 49,299 
A4 Technologies - ElecJet414,333 33,833 
A4 Aerospace - Vayu1,025,412 1,093,995 
All Other1,113,005 658,181 
$6,174,538 $4,154,359 
Interest Expenses
A4 Construction Services - MSM$421,287 $706,607 
A4 Construction Services - Excel245,855 291,263 
A4 Manufacturing - QCA262,551 230,044 
A4 Manufacturing - Alt Labs351,503 72,060 
A4 Defense - TDI11,975 825 
A4 Technologies - RCA159,878 15,347 
A4 Technologies - ElecJet— — 
A4 Aerospace - Vayu10,677 
All Other1,660,406 1,973,078 
$3,124,132 $3,289,233 
Net income (loss)
A4 Construction Services - MSM$(1,246,295)$(1,481,382)
A4 Construction Services - Excel(1,219,789)(1,899,512)
A4 Manufacturing - QCA367,760 1,774,139 
A4 Manufacturing - Alt Labs2,054,958 (2,643,752)
A4 Defense - TDI1,060,331 (270,289)
A4 Technologies - RCA2,365,741 (115,675)
A4 Technologies - ElecJet(1,110,727)(62,163)
A4 Aerospace - Vayu(3,346,956)(4,852,182)
All Other(11,800,336)(9,932,322)
$(12,875,313)$(19,483,138)
As of
December 31, 2022
As of
December 31, 2021
Total Assets
A4 Construction Services - MSM$11,309,049 $10,935,355 
A4 Construction Services - Excel3,359,818 3,050,206 
A4 Manufacturing - QCA20,988,492 11,869,711 
A4 Manufacturing - Alt Labs26,636,905 23,173,298 
A4 Defense - TDI13,497,381 11,982,580 
A4 Technologies - RCA27,191,977 28,174,091 
A4 Technologies - ElecJet12,897,440 12,904,267 
A4 Aerospace - Vayu14,632,530 14,702,838 
All Other$15,118,622 $17,831,504 
$145,632,214 $134,623,850 
Goodwill
A4 Construction Services - MSM$113,592 $113,592 
A4 Construction Services - Excel— — 
A4 Manufacturing - QCA1,963,761 1,963,761 
A4 Manufacturing - Alt Labs4,410,564 4,410,564 
A4 Defense - TDI6,426,786 6,426,786 
A4 Technologies - RCA1,355,728 1,355,728 
A4 Technologies - ElecJet6,496,343 6,496,343 
A4 Aerospace - Vayu— — 
All Other1,913,310 1,913,310 
$22,680,084 $22,680,084 
Accounts receivable, net
A4 Construction Services - MSM$5,188,521 $3,906,271 
A4 Construction Services - Excel288,243 286,972 
A4 Manufacturing - QCA3,867,141 2,339,597 
A4 Manufacturing - Alt Labs1,833,502 406,333 
A4 Defense - TDI1,905,314 1,371,184 
A4 Technologies - RCA3,232,559 2,961,201 
A4 Technologies - ElecJet12,888 37,744 
A4 Aerospace - Vayu— — 
All Other811,776 565,874 
$17,139,944 $11,875,176 
Three Months Ended March 31,
20232022
Revenue
A4 Construction Services - MSM$3,813,140 $3,767,390 
A4 Construction Services - Excel332,864 288,814 
A4 Manufacturing - QCA4,191,643 4,318,860 
A4 Manufacturing - Alt Labs4,226,914 3,824,138 
A4 Defense - TDI2,970,087 2,687,981 
A4 Technologies - RCA7,453,423 9,237,259 
A4 Technologies - ElecJet102,495 556,729 
A4 Aerospace - Vayu— 25,000 
All Other1,271,147 $885,983 
$24,361,713 $25,592,154 
Gross profit
A4 Construction Services - MSM$231,888 $463,806 
A4 Construction Services - Excel(150,008)(98,974)
A4 Manufacturing - QCA897,715 1,027,184 
A4 Manufacturing - Alt Labs948,752 901,479 
A4 Defense - TDI616,582 843,189 
A4 Technologies - RCA2,374,178 2,184,328 
A4 Technologies - ElecJet(73,809)(62,029)
A4 Aerospace - Vayu(2,410)25,000 
All Other373,568 $353,474 
$5,216,456 $5,637,457 
Income (loss) from operations
A4 Construction Services - MSM$(404,413)$(315,698)
A4 Construction Services - Excel(432,081)(319,990)
A4 Manufacturing - QCA19,097 414,448 
A4 Manufacturing - Alt Labs(559,125)(987,483)
A4 Defense - TDI181,534 423,140 
A4 Technologies - RCA475,864 566,290 
A4 Technologies - ElecJet(245,421)(304,346)
A4 Aerospace - Vayu(820,967)(806,897)
All Other(3,354,961)(2,425,619)
$(5,140,473)$(3,756,155)
Depreciation and amortization
A4 Construction Services - MSM$174,298 $166,404 
A4 Construction Services - Excel67,525 — 
A4 Manufacturing - QCA116,879 100,479 
A4 Manufacturing - Alt Labs208,554 307,035 
A4 Defense - TDI72,433 72,090 
A4 Technologies - RCA244,804 170,046 
A4 Technologies - ElecJet105,666 101,500 
A4 Aerospace - Vayu258,911 274,669 
All Other278,713 277,441 
$1,527,783 $1,469,664 
Interest expense
A4 Construction Services - MSM$113,710 $103,025 
A4 Construction Services - Excel60,570 61,985 
A4 Manufacturing - QCA163,645 36,289 
A4 Manufacturing - Alt Labs64,680 57,116 
A4 Defense - TDI17,347 — 
A4 Technologies - RCA85,956 54,817 
A4 Technologies - ElecJet— — 
A4 Aerospace - Vayu5,958 — 
All Other487,004 295,729 
$998,870 $608,961 
Net income (loss)
A4 Construction Services - MSM$(480,600)$(362,367)
A4 Construction Services - Excel(492,651)(381,975)
A4 Manufacturing - QCA(144,187)373,867 
A4 Manufacturing - Alt Labs(658,756)(1,111,462)
A4 Defense - TDI164,187 423,140 
A4 Technologies - RCA389,908 511,473 
A4 Technologies - ElecJet(245,421)(304,346)
A4 Aerospace - Vayu(826,925)(806,897)
All Other(3,474,698)(2,340,993)
$(5,769,143)$(3,999,560)
The Company’s reportable segments as of March 31, 2023, and December 31, 2022, were as follows:
As of
March 31, 2023
As of
December 31, 2022
Total assets
A4 Construction Services - MSM$10,699,259 $11,309,049 
A4 Construction Services - Excel3,390,848 3,359,818 
A4 Manufacturing - QCA21,046,251 20,988,492 
A4 Manufacturing - Alt Labs27,083,918 26,636,905 
A4 Defense - TDI13,748,110 13,497,381 
A4 Technologies - RCA23,339,534 27,191,977 
A4 Technologies - ElecJet12,972,480 12,897,440 
A4 Aerospace - Vayu13,594,000 14,632,530 
All Other16,070,325 15,118,622 
$141,944,725 $145,632,214 
Goodwill
A4 Construction Services - MSM$113,592 $113,592 
A4 Construction Services - Excel— — 
A4 Manufacturing - QCA1,963,761 1,963,761 
A4 Manufacturing - Alt Labs4,410,564 4,410,564 
A4 Defense - TDI6,426,786 6,426,786 
A4 Technologies - RCA1,355,728 1,355,728 
A4 Technologies - ElecJet6,496,343 6,496,343 
A4 Aerospace - Vayu— — 
All Other1,913,310 1,913,310 
$22,680,084 $22,680,084 
Accounts receivable, net
A4 Construction Services - MSM$3,790,520 $5,188,521 
A4 Construction Services - Excel222,895 288,243 
A4 Manufacturing - QCA3,397,802 3,867,141 
A4 Manufacturing - Alt Labs1,994,703 1,833,502 
A4 Defense - TDI2,367,869 1,905,314 
A4 Technologies - RCA2,845,356 3,232,559 
A4 Technologies - ElecJet22,959 12,888 
A4 Aerospace - Vayu(491)— 
All Other898,915 811,776 
$15,540,528 $17,139,944 

v3.23.2
Organization and Basis of Presentation (Details)
3 Months Ended 12 Months Ended
Mar. 31, 2023
USD ($)
company
Mar. 31, 2022
USD ($)
Dec. 31, 2022
USD ($)
company
Dec. 31, 2021
USD ($)
company
May 31, 2023
USD ($)
Nov. 29, 2021
shareholder
Oct. 20, 2021
Schedule of Investments [Line Items]              
Number of shareholders | shareholder           3  
Number of companies owned | company 14   14        
Net loss $ 5,769,143 $ 3,999,560 $ 12,875,313 $ 19,483,138      
Net cash flow used in operations 32,242 $ 5,900,762 19,578,196 25,423,742      
Working capital 4,000,000.0   15,600,000        
Maximum borrowing capacity     33,000,000.0        
Line of credit, current portion 8,970,460   7,426,814 $ 4,473,489      
Number of operating companies acquired | company       6      
Global Autonomous Corporation              
Schedule of Investments [Line Items]              
Ownership percentage   71.43%          
Two Lines Of Credit Maturing 2023              
Schedule of Investments [Line Items]              
Business combination, contingent consideration, liability, current     7,500,000        
Two Lines Of Credit Maturing 2023 | Line of Credit              
Schedule of Investments [Line Items]              
Line of credit, current portion     8,000,000        
Identified Technologies Corporation              
Schedule of Investments [Line Items]              
Voting interest acquired (as a percent)             100.00%
Revolving Credit Facility              
Schedule of Investments [Line Items]              
Maximum borrowing capacity         $ 2,500,000    
Revolving Credit Facility | Line of Credit              
Schedule of Investments [Line Items]              
Maximum borrowing capacity 33,000,000.0            
Remaining borrowing capacity 3,800,000   3,800,000        
Revolving Credit Facility | Four Revolving Lines of Credit | Line of Credit              
Schedule of Investments [Line Items]              
Maximum borrowing capacity 33,000,000   33,000,000.0        
Revolving Credit Facility | Capital Expenditure Line of Credit | Line of Credit              
Schedule of Investments [Line Items]              
Maximum borrowing capacity $ 100,000   $ 500,000        

v3.23.2
Summary of Significant Accounting Policies - Cash (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]      
Cash equivalents $ 0 $ 0 $ 0
Bank balances 800,000 3,200,000 3,500,000
Uninsured cash $ 100,000 $ 2,000,000 $ 2,000,000

v3.23.2
Summary of Significant Accounting Policies - Major Customers (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Mar. 31, 2023
Product Information [Line Items]        
Accounts receivable, net   $ 17,139,944 $ 11,875,176 $ 15,540,528
A4 Technologies - RCA        
Product Information [Line Items]        
Accounts receivable, net   $ 1,200,000    
QCA        
Product Information [Line Items]        
Accounts receivable, net     1,000,000  
Alt Labs        
Product Information [Line Items]        
Accounts receivable, net     $ 0  
Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer One        
Product Information [Line Items]        
Concentration risk, percentage 13.00% 14.00%    
Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer One | A4 Technologies - RCA        
Product Information [Line Items]        
Concentration risk, percentage   14.00%    
Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer Two        
Product Information [Line Items]        
Concentration risk, percentage     11.00%  
Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Government Contracts        
Product Information [Line Items]        
Concentration risk, percentage   9.00%    

v3.23.2
Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($)
12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]    
Allowance for bad debt $ 52,531 $ 199,936
Write off of allowance for credit loss $ 202,761 $ 3,028,757

v3.23.2
Summary of Significant Accounting Policies - Schedule of Inventory (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]      
Raw materials $ 10,083,241 $ 9,116,824 $ 8,253,104
Work in process 3,236,331 3,165,876 2,480,979
Finished goods 11,943,087 12,975,669 13,685,571
Inventory $ 25,262,659 $ 25,258,369 $ 24,419,654

v3.23.2
Summary of Significant Accounting Policies - Schedule of Property and Equipment, Estimated Useful Lives (Details)
12 Months Ended
Dec. 31, 2022
Minimum  
Property, Plant and Equipment [Line Items]  
Property equipment, useful life 5 years
Maximum  
Property, Plant and Equipment [Line Items]  
Property equipment, useful life 39 years
Automobiles and trucks | Minimum  
Property, Plant and Equipment [Line Items]  
Property equipment, useful life 5 years
Automobiles and trucks | Maximum  
Property, Plant and Equipment [Line Items]  
Property equipment, useful life 7 years
Machinery and equipment  
Property, Plant and Equipment [Line Items]  
Property equipment, useful life 10 years
Office furniture and fixtures  
Property, Plant and Equipment [Line Items]  
Property equipment, useful life 5 years
Buildings and improvements  
Property, Plant and Equipment [Line Items]  
Property equipment, useful life 39 years

v3.23.2
Summary of Significant Accounting Policies - Schedule of Components of Property and Equipment (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Property, Plant and Equipment [Line Items]        
Total Property and equipment     $ 27,804,787 $ 33,925,420
Less: Accumulated depreciation     (8,301,302) (5,823,949)
Property and equipment, net     19,503,485 28,101,471
Depreciation $ 739,771 $ 733,459 3,026,483 2,396,966
Automobiles and trucks        
Property, Plant and Equipment [Line Items]        
Total Property and equipment     1,056,551 1,251,187
Machinery and equipment        
Property, Plant and Equipment [Line Items]        
Total Property and equipment     9,864,846 8,876,402
Office furniture and fixtures        
Property, Plant and Equipment [Line Items]        
Total Property and equipment     186,464 167,581
Buildings and improvements        
Property, Plant and Equipment [Line Items]        
Total Property and equipment     16,696,926 $ 23,630,250
Buildings and improvements | Deluxe        
Property, Plant and Equipment [Line Items]        
Finance lease, right-of-use assets     9,000,000  
Buildings and improvements | Excel        
Property, Plant and Equipment [Line Items]        
Finance lease, right-of-use assets     $ 2,000,000  

v3.23.2
Summary of Significant Accounting Policies - Schedule of Finite Lived Intangible Assets, Estimated Useful Lives (Details)
12 Months Ended
Dec. 31, 2022
Minimum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset, useful life 1 year
Maximum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset, useful life 17 years
Software  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset, useful life 5 years
Non-compete agreements | Minimum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset, useful life 1 year
Non-compete agreements | Maximum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset, useful life 15 years
Customer list | Minimum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset, useful life 3 years
Customer list | Maximum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset, useful life 16 years
Patents, trademarks, and licenses | Minimum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset, useful life 3 years
Patents, trademarks, and licenses | Maximum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset, useful life 17 years
Proprietary technology  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset, useful life 15 years

v3.23.2
Summary of Significant Accounting Policies - Schedule of Intangible Assets (Details) - USD ($)
12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]    
Weighted Average Amortization Period 12 years 10 months 24 days  
Finite-lived intangible assets, gross $ 41,560,088 $ 41,310,088
Finite-lived intangible assets, accumulated amortization (5,277,479) (2,129,424)
Intangibles assets, net $ 36,282,609 39,180,664
Software    
Finite-Lived Intangible Assets [Line Items]    
Weighted Average Amortization Period 2 years  
Finite-lived intangible assets, gross $ 128,474 128,474
Finite-lived intangible assets, accumulated amortization $ (77,084) (64,757)
Non-compete agreements    
Finite-Lived Intangible Assets [Line Items]    
Weighted Average Amortization Period 6 years 3 months 18 days  
Finite-lived intangible assets, gross $ 1,426,276 1,378,772
Finite-lived intangible assets, accumulated amortization $ (478,510) (210,465)
Customer list    
Finite-Lived Intangible Assets [Line Items]    
Weighted Average Amortization Period 11 years 10 months 24 days  
Finite-lived intangible assets, gross $ 13,011,187 13,011,187
Finite-lived intangible assets, accumulated amortization $ (1,711,327) (1,112,797)
Patents, trademarks, and licenses    
Finite-Lived Intangible Assets [Line Items]    
Weighted Average Amortization Period 13 years 10 months 24 days  
Finite-lived intangible assets, gross $ 7,127,408 7,174,912
Finite-lived intangible assets, accumulated amortization $ (962,258) (8,444)
Proprietary technology    
Finite-Lived Intangible Assets [Line Items]    
Weighted Average Amortization Period 13 years 6 months  
Finite-lived intangible assets, gross $ 19,866,743 19,616,743
Finite-lived intangible assets, accumulated amortization $ (2,048,300) $ (732,961)

v3.23.2
Summary of Significant Accounting Policies - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]        
2023     $ 3,152,048  
2024     3,152,048  
2025     2,919,686  
2026     2,900,686  
2027     2,762,686  
Thereafter     21,395,455  
Intangibles assets, net     36,282,609 $ 39,180,664
Amortization $ 788,013 $ 736,205 $ 3,148,055 $ 1,757,393

v3.23.2
Summary of Significant Accounting Policies - Schedule of Other Assets, Noncurrent (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]      
Deposits   $ 578,545 $ 149,517
Other   1,277,060 207,601
Other non-current assets $ 1,991,363 $ 1,855,605 $ 357,118

v3.23.2
Summary of Significant Accounting Policies - Impairment of Long-lived Assets (Details)
12 Months Ended
Dec. 31, 2021
USD ($)
Customer list | Excel  
Finite-Lived Intangible Assets [Line Items]  
Impairment of long-lived asset $ 359,890

v3.23.2
Summary of Significant Accounting Policies - Goodwill (Details)
12 Months Ended
Dec. 31, 2021
USD ($)
Excel  
Goodwill [Line Items]  
Impairment of goodwill $ 7,629

v3.23.2
Summary of Significant Accounting Policies - Equity Investments (Details) - USD ($)
12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]    
Impairment loss on equity investment $ 0 $ 1,350,000
Total interest paid $ 0 $ 1,350,000

v3.23.2
Summary of Significant Accounting Policies - Research and Development (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]        
Research and development $ 113,906 $ 191,930 $ 876,542 $ 1,464,918

v3.23.2
Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]        
Receivable for retainage     $ 2,000,000 $ 1,600,000
Disaggregation of Revenue [Line Items]        
Revenues, net $ 24,361,713 $ 25,592,154 104,563,002 51,640,813
Product        
Disaggregation of Revenue [Line Items]        
Revenues, net 16,876,739 18,442,083 72,861,907 28,918,591
Product | Circuit boards and cables        
Disaggregation of Revenue [Line Items]        
Revenues, net     18,780,769 15,700,902
Product | Supplements        
Disaggregation of Revenue [Line Items]        
Revenues, net     12,889,992 11,674,220
Product | Electronics        
Disaggregation of Revenue [Line Items]        
Revenues, net     41,191,146 1,543,469
Service        
Disaggregation of Revenue [Line Items]        
Revenues, net $ 7,484,974 $ 7,150,071 31,701,095 22,722,222
Service | Construction contracts        
Disaggregation of Revenue [Line Items]        
Revenues, net     30,098,249 22,462,399
Service | Drone 3D mapping        
Disaggregation of Revenue [Line Items]        
Revenues, net     $ 1,602,846 $ 259,823

v3.23.2
Summary of Significant Accounting Policies - Schedule of Computation of Basic and Diluted EPS (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]        
Antidilutive securities (in shares) 2,700,473 837,472 21,664,165 7,317,778
Basic EPS        
Loss available to stockholders $ (5,769,143) $ (3,999,560) $ (12,875,313) $ (19,483,138)
Loss available to stockholders (in shares) 24,901,733 22,879,056 190,779,052 164,216,808
Loss available to stockholders (in dollars per share) $ (0.23) $ (0.17) $ (0.07) $ (0.12)
Dilute EPS        
Effect of dilutive securities stock options and warrants $ 0 $ 0 $ 0 $ 0
Effect of dilutive securities stock options and warrants (in shares) 0 0 0 0
Loss available to stockholders plus assumed conversions $ (5,769,143) $ (3,999,560) $ (12,875,313) $ (19,483,138)
Loss available to stockholders plus assumed conversions (in shares) 24,901,733 22,879,056 190,779,052 164,216,808
Net income (loss) (in dollars per share) $ (0.23) $ (0.17) $ (0.07) $ (0.12)

v3.23.2
Leases - Schedule of Future Minimum Lease Payments (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Finance Leases      
2024 $ 1,931,757 $ 1,925,840  
2025 1,962,353 1,952,462  
2026 1,852,006 1,880,402  
2027 1,880,265 1,867,799  
2028 1,923,136 1,910,388  
Thereafter 14,368,333 14,952,719  
Total payments 23,917,850 24,489,610  
Less: imputed interest (8,778,767) (9,171,495)  
Total obligation 15,139,083 15,318,115  
Less: current portion (743,157) (725,302) $ (649,343)
Financing lease obligations, net of current portion 14,395,926 14,592,813 15,319,467
Operating Leases      
2024 2,398,681 2,287,038  
2025 2,423,929 2,443,909  
2026 1,823,638 1,960,387  
2027 1,814,303 1,805,158  
2028 1,708,631 1,770,300  
Thereafter 12,855,124 13,253,279  
Total payments 23,024,306 23,520,071  
Less: imputed interest (6,698,331) (6,938,692)  
Total obligation 16,325,975 16,581,379 1,495,158
Less: current portion (1,484,846) (1,318,885) (428,596)
Operating lease obligations, net of current portion $ 14,841,129 $ 15,262,494 $ 1,066,562

v3.23.2
Leases - Narrative (Details)
1 Months Ended 3 Months Ended 12 Months Ended
Sep. 09, 2022
USD ($)
Jun. 26, 2022
USD ($)
ft²
Jun. 23, 2022
USD ($)
Jun. 13, 2022
USD ($)
Dec. 31, 2021
USD ($)
Aug. 27, 2021
USD ($)
Mar. 31, 2023
USD ($)
Mar. 31, 2022
USD ($)
Jul. 31, 2021
USD ($)
Dec. 31, 2022
USD ($)
Dec. 31, 2021
USD ($)
May 03, 2021
USD ($)
Finance Leases                        
Finance lease, right-of-use asset, amortization             $ 312,954 $ 312,954   $ 1,251,817 $ 1,244,059  
Finance lease, interest expense             $ 305,262 317,905   $ 1,255,231 1,301,842  
Finance lease, weighted average remaining lease term             11 years 8 months 12 days     11 years 11 months 12 days    
Finance lease, weighted average discount rate             8.01%     8.01%    
Operating Leases                        
Right of use assets         $ 1,460,206   $ 15,949,731     $ 16,407,566 1,460,206  
Operating lease liability         $ 1,495,158   16,325,975     16,581,379 1,495,158  
Operating lease, cost             598,590 126,561   1,006,683 386,056  
Operating lease, payments             $ 540,833 124,654   $ 1,087,951 402,688  
Operating lease, weighted average remaining lease term             11 years 8 months 12 days     11 years 9 months 29 days    
Operating lease, weighted average discount rate (as a percent)             6.01%     6.00%    
Cost of Sales                        
Finance Leases                        
Finance lease, right-of-use asset, amortization             $ 44,503 0   $ 151,398 422,259  
Operating Leases                        
Operating lease, cost             $ 216,754 $ 0   329,938 0  
General and Administrative Expense                        
Operating Leases                        
Operating lease, cost                   $ 676,745 $ 386,056  
RCA Office And Warehouse Space                        
Operating Leases                        
Operating lease term         89 months           89 months  
Right of use assets         $ 1,196,764           $ 1,196,764  
Operating lease liability         $ 1,226,128           $ 1,226,128  
Operating lease, discount rate (as a percent)         4.00%           4.00%  
Ft. Myers, Florida                        
Operating Leases                        
Operating lease term     180 months                 72 months
Monthly operating lease obligation           $ 58,333            
Right of use assets $ 1,179,091   $ 8,725,000                 $ 3,689,634
Operating lease liability $ 1,179,091   $ 8,725,000                 $ 3,689,634
Operating lease, discount rate (as a percent) 6.25%   7.00%                 3.96%
Ann Arbor, Michigan                        
Operating Leases                        
Right of use assets   $ 543,595                    
Operating lease liability   $ 543,595                    
Operating lease, discount rate (as a percent)   5.13%                    
Number of additional area (sq.ft) | ft²   12,800                    
San Jose, California                        
Operating Leases                        
Right of use assets       $ 5,506,357                
Operating lease liability       $ 5,506,357                
Operating lease, discount rate (as a percent)       4.00%                
Minimum | RCA Office And Warehouse Space                        
Operating Leases                        
Monthly operating lease obligation         $ 31,350              
Minimum | Ft. Myers, Florida                        
Operating Leases                        
Monthly operating lease obligation $ 21,637   $ 67,708           $ 40,833      
Minimum | Ann Arbor, Michigan                        
Operating Leases                        
Monthly operating lease obligation   $ 16,000                    
Minimum | San Jose, California                        
Operating Leases                        
Monthly operating lease obligation       $ 49,156                
Maximum | RCA Office And Warehouse Space                        
Operating Leases                        
Monthly operating lease obligation         $ 35,207              
Maximum | Ft. Myers, Florida                        
Operating Leases                        
Monthly operating lease obligation $ 23,682   $ 89,306           $ 49,583      
Maximum | Ann Arbor, Michigan                        
Operating Leases                        
Monthly operating lease obligation   $ 16,800                    
Maximum | San Jose, California                        
Operating Leases                        
Monthly operating lease obligation       $ 66,062                

v3.23.2
Leases - Schedule of Right of Use Assets and Lease Liabilities (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Assets      
Operating lease assets $ 15,949,731 $ 16,407,566 $ 1,460,206
Liabilities      
Current operating lease liability 1,484,846 1,318,885 428,596
Non-current operating lease liability 14,841,129 15,262,494 1,066,562
Total obligation $ 16,325,975 $ 16,581,379 $ 1,495,158

v3.23.2
Debt - Narrative (Details)
1 Months Ended 3 Months Ended 12 Months Ended
Jun. 23, 2022
USD ($)
Aug. 27, 2021
USD ($)
Apr. 08, 2021
USD ($)
shares
May 23, 2020
USD ($)
Feb. 22, 2018
USD ($)
Sep. 30, 2022
USD ($)
May 31, 2022
USD ($)
Apr. 30, 2022
USD ($)
lineOfCredit
Mar. 31, 2022
USD ($)
Jan. 31, 2022
USD ($)
Sep. 30, 2021
USD ($)
Jan. 31, 2021
USD ($)
May 31, 2020
USD ($)
loan
debtInstrument
Feb. 29, 2020
USD ($)
Nov. 30, 2019
USD ($)
debtInstrument
Oct. 31, 2019
USD ($)
Jan. 31, 2019
USD ($)
debtInstrument
Mar. 31, 2023
USD ($)
lineOfCredit
Dec. 31, 2022
USD ($)
installment
Dec. 31, 2021
USD ($)
debtInstrument
loan
May 31, 2023
USD ($)
May 31, 2021
USD ($)
Debt Instrument [Line Items]                                            
Long-term debt                                   $ 21,661,596 $ 22,109,820      
Gain on extinguishment of debt                                     0 $ 803,079    
Gain on forgiveness of debt                                     0 3,896,108    
Proceeds from sale of buildings $ 13,200,000                                          
Gain (loss) on sale of properties 5,822,450                                   5,938,150 0    
Settlement of mortgage from gain on sale $ 4,642,043                                          
Maximum borrowing capacity                                     33,000,000.0      
Alt Labs                                            
Debt Instrument [Line Items]                                            
Principal amount                   $ 500,000                 414,498      
Periodic payments                   $ 9,186                        
Interest rate                   3.85%                        
Morris May 2022 Equipment Finance Note | Morris                                            
Debt Instrument [Line Items]                                            
Principal amount             $ 61,000                       53,595      
Periodic payments             $ 1,314                              
Interest rate             10.00%                              
Morris January 2022 Equipment Finance Note | Morris                                            
Debt Instrument [Line Items]                                            
Principal amount                   $ 89,153                 74,644      
Periodic payments                   $ 1,722                        
Interest rate                   5.86%                        
Morris March 2022 Equipment Finance Note | Morris                                            
Debt Instrument [Line Items]                                            
Principal amount                 $ 93,433                   79,653      
Periodic payments                 $ 1,804                          
Interest rate                 5.86%                          
Revolving Credit Facility                                            
Debt Instrument [Line Items]                                            
Maximum borrowing capacity                                         $ 2,500,000  
Notes Payable                                            
Debt Instrument [Line Items]                                            
Principal amount                           $ 2,300,000                
Interest rate (as a percent)                           4.25%                
Debt instrument term                           48 months                
Long-term debt                                     2,062,318 2,062,318    
Daily late charge                                   575        
Gain on extinguishment of debt                                       803,079    
Notes Payable | VWES Promissory Note                                            
Debt Instrument [Line Items]                                            
Principal amount         $ 3,000,000                                  
Interest rate (as a percent)         7.00%                                  
Periodic payments         $ 150,000                                  
Debt instrument term         3 years                                  
Long-term debt                                     2,857,500 2,857,500    
Interest payable, current                                     $ 1,710,577 1,170,861    
Default rate (as a percent)                                     10.00%      
Daily late charge                                     $ 575      
Notes Payable | Subordinated Secured Promissory Notes, $3,100,000                                            
Debt Instrument [Line Items]                                            
Principal amount                                 $ 3,100,000          
Interest rate (as a percent)                                 4.25%          
Periodic payments                                 $ 31,755          
Debt instrument term                                 3 years          
Number of secured promissory notes | debtInstrument                                 3          
Monthly payment term                                 35 months          
Notes Payable | Supplemental Subordinated Secured Promissory Notes                                            
Debt Instrument [Line Items]                                            
Principal amount                                 $ 350,000          
Interest rate (as a percent)                                 4.25%   6.00%      
Periodic payments                       $ 13,882             $ 10,000      
Debt instrument term                                 1 year          
Number of secured promissory notes | debtInstrument                         3       3          
Number of monthly installments | installment                                     8      
Notes Payable | Supplemental Subordinated Secured Promissory Notes, Note One                                            
Debt Instrument [Line Items]                                            
Principal amount                         $ 116,667             119,370    
Debt instrument, accrued interest                         2,703                  
Initial payment       $ 30,000                                    
Notes Payable | Supplemental Subordinated Secured Promissory Notes, Note Two                                            
Debt Instrument [Line Items]                                            
Principal amount                         116,667             119,370    
Debt instrument, accrued interest                         2,703                  
Initial payment       30,000                                    
Notes Payable | Supplemental Subordinated Secured Promissory Notes, Note Three                                            
Debt Instrument [Line Items]                                            
Principal amount                         116,667             119,370    
Debt instrument, accrued interest                         2,703                  
Initial payment       $ 30,000                                    
Notes Payable | Subordinated Secured Promissory Notes                                            
Debt Instrument [Line Items]                                            
Number of secured promissory notes | debtInstrument                             2              
Notes Payable | Subordinated Secured Promissory Note1                                            
Debt Instrument [Line Items]                                            
Principal amount                             $ 1,900,000              
Interest rate (as a percent)                             4.25%              
Periodic payments                             $ 19,463              
Debt instrument term                             3 years              
Monthly payment term                             35 months              
Debt amount converted     $ 1,883,418                                      
Repayments of debt     $ 887,000                                      
Shares issued in debt conversion (in shares) | shares     1,617,067                                      
Notes Payable | Subordinated Secured Promissory Note2                                            
Debt Instrument [Line Items]                                            
Principal amount                             $ 496,343              
Interest rate (as a percent)                             8.75%              
Notes Payable | Subordinated Secured Promissory Notes, $2,000,000                                            
Debt Instrument [Line Items]                                            
Principal amount                                       $ 2,000,000    
Interest rate (as a percent)                                       3.75%    
Periodic payments                                       $ 19,590    
Number of secured promissory notes | debtInstrument                                       2    
Amortization period                                       10 years    
Secured Debt                                            
Debt Instrument [Line Items]                                            
Principal amount   $ 4,700,000                           $ 107,997            
Interest rate (as a percent)   3.95%                           9.40%            
Periodic payments   $ 24,722                                        
Debt instrument term   10 years                           48 months            
Secured Debt | Morris                                            
Debt Instrument [Line Items]                                            
Principal amount                                     $ 23,405 $ 52,504    
Unsecured Debt | Paycheck Protection Program Loans                                            
Debt Instrument [Line Items]                                            
Principal amount                         $ 3,896,108             $ 1,799,725    
Interest rate (as a percent)                                       1.00%    
Debt instrument term                                       24 months    
Number of secured promissory notes | loan                         7             4    
SBA loan (PPP funds)                                       $ 65,000    
Number of loans forgiven | debtInstrument                                       10    
Gain on forgiveness of debt                                     0 $ 3,896,108    
Unsecured Debt | Paycheck Protection Program Loans | Impossible Aerospace                                            
Debt Instrument [Line Items]                                            
Repayments of debt                                       88,160    
Debt forgiven                                       356,690    
Line of Credit | Alt Labs                                            
Debt Instrument [Line Items]                                            
Maximum borrowing capacity                                     1,840,000      
Line of credit facility, capacity available for drawn                                     17,000      
Remaining borrowing capacity                                       750,000    
Line of Credit | Morris                                            
Debt Instrument [Line Items]                                            
Maximum borrowing capacity                                     2,490,000 1,730,000    
Line of credit facility, capacity available for drawn                                     7,000      
Line of Credit | QCA                                            
Debt Instrument [Line Items]                                            
Maximum borrowing capacity                                     5,000,000 2,000,000    
Line of credit facility, capacity available for drawn                                     51,000      
Line of Credit | RCA                                            
Debt Instrument [Line Items]                                            
Maximum borrowing capacity                                     5,540,000 5,640,000    
Line of credit facility, capacity available for drawn                                     3,800,000      
Remaining borrowing capacity                                       $ 10,000,000    
Line of Credit | WSJ Prime Rate | Alt Labs                                            
Debt Instrument [Line Items]                                            
Basis spread on variable rate (as a percent)               2.50%                            
Line of Credit | WSJ Prime Rate | QCA                                            
Debt Instrument [Line Items]                                            
Basis spread on variable rate (as a percent)                     2.50%                      
Line of Credit | Minimum | Alt Labs                                            
Debt Instrument [Line Items]                                            
Number of lines of credit | lineOfCredit               2                            
Line of Credit | Maximum | Alt Labs                                            
Debt Instrument [Line Items]                                            
Number of lines of credit | lineOfCredit               3                            
Line of Credit | Revolving Credit Facility                                            
Debt Instrument [Line Items]                                            
Maximum borrowing capacity                                   $ 33,000,000.0        
Number of lines of credit | lineOfCredit                                   4        
Remaining borrowing capacity                                   $ 3,800,000 $ 3,800,000      
Line of Credit | Revolving Credit Facility | Alt Labs                                            
Debt Instrument [Line Items]                                            
Maximum borrowing capacity               $ 5,000,000                            
Number of lines of credit | lineOfCredit               3                            
Line of Credit | Revolving Credit Facility | Morris                                            
Debt Instrument [Line Items]                                            
Interest rate (as a percent)                                           7.50%
Maximum borrowing capacity                                           $ 2,500,000
Line of Credit | Revolving Credit Facility | QCA                                            
Debt Instrument [Line Items]                                            
Maximum borrowing capacity                     $ 5,500,000                      
Line of Credit | Revolving Credit Facility | Prime Rate | Alt Labs                                            
Debt Instrument [Line Items]                                            
Basis spread on variable rate (as a percent)               10.00%                            
Line of Credit | Revolving Credit Facility | Prime Rate | QCA                                            
Debt Instrument [Line Items]                                            
Basis spread on variable rate (as a percent)                                     10.00%      
Line of Credit | Revolving Credit Facility | SOFR | RCA                                            
Debt Instrument [Line Items]                                            
Maximum borrowing capacity           $ 20,000,000                                
Basis spread on variable rate (as a percent)           1.75%                                
Line of Credit | Revolving Credit Facility | Minimum                                            
Debt Instrument [Line Items]                                            
Debt instrument term                                   1 year        
Line of Credit | Revolving Credit Facility | Minimum | Prime Rate                                            
Debt Instrument [Line Items]                                            
Basis spread on variable rate (as a percent)                                   2.50%        
Line of Credit | Revolving Credit Facility | Maximum                                            
Debt Instrument [Line Items]                                            
Debt instrument term                                   5 years        
Line of Credit | Revolving Credit Facility | Maximum | Prime Rate                                            
Debt Instrument [Line Items]                                            
Basis spread on variable rate (as a percent)                                   4.25%        
Line of Credit | Revolving Credit Facility | Capital Expenditure Line of Credit                                            
Debt Instrument [Line Items]                                            
Maximum borrowing capacity                                   $ 100,000 $ 500,000      
Number of lines of credit | lineOfCredit                                   1        
Line of Credit | Revolving Credit Facility | Capital Expenditure Line of Credit | QCA                                            
Debt Instrument [Line Items]                                            
Maximum borrowing capacity                     $ 500,000                      

v3.23.2
Debt - Schedule of Notes Payable (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Debt Instrument [Line Items]      
Total current $ 15,503,807 $ 10,627,950 $ 10,164,013
Total 21,661,596 22,109,820  
Long-term Debt, Excluding Convertible Debt      
Debt Instrument [Line Items]      
Total   22,109,820 24,230,169
Line of Credit | Revolving Credit Facility      
Debt Instrument [Line Items]      
Total current 8,970,460 7,426,814 4,473,489
Long-term debt 3,928,105 7,215,520 5,640,051
Secured Debt and Notes Payable      
Debt Instrument [Line Items]      
Long-term debt 2,229,684 4,266,350 8,426,105
Secured Debt      
Debt Instrument [Line Items]      
Total current 82,787 68,410 61,640
Notes Payable      
Debt Instrument [Line Items]      
Total current $ 5,915,560 3,132,726 5,628,884
Total   $ 2,062,318 $ 2,062,318

v3.23.2
Debt - Future Scheduled Maturities of Outstanding Notes Payable (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Debt Instrument [Line Items]      
2023 $ 1,785,069    
2024 709,653    
2025 3,562,900    
2026 26,035    
Total $ 21,661,596 $ 22,109,820  
Long-term Debt, Excluding Convertible Debt      
Debt Instrument [Line Items]      
2023   10,627,950  
2024   5,104,159  
2025   155,254  
2026   734,607  
2027   5,422,850  
Thereafter   65,000  
Total   $ 22,109,820 $ 24,230,169

v3.23.2
Preferred Stock Subject to Redemption (Details)
1 Months Ended 12 Months Ended
Jan. 31, 2023
shares
Nov. 30, 2022
shares
Oct. 31, 2022
shares
Sep. 30, 2022
shares
Jan. 31, 2022
shares
Dec. 31, 2022
USD ($)
debtInstrument
day
vote
$ / shares
shares
Dec. 31, 2021
USD ($)
$ / shares
shares
Dec. 31, 2020
USD ($)
shares
Mar. 31, 2023
$ / shares
shares
Class of Stock [Line Items]                  
Preferred stock, shares authorized (in shares)           5,000,000 5,000,000   5,000,000
Preferred stock, par value (in dollars per share) | $ / shares           $ 0.0001 $ 0.0001   $ 0.0001
Issuance of shares for acquisition | $             $ 15,067,211    
Impossible Aerospace                  
Class of Stock [Line Items]                  
Acquisition assets | $               $ 5,848,013  
Vayu                  
Class of Stock [Line Items]                  
Acquisition assets | $             $ 6,653,309    
Series C Preferred Stock                  
Class of Stock [Line Items]                  
Preferred stock, shares authorized (in shares)           2,028,572      
Preferred stock, par value (in dollars per share) | $ / shares           $ 3.50      
Dividends | $           $ 0      
Liquidation preference period prior to payment           45 days      
Preferred stock, convertible, conversion price ( In dollars per share) | $ / shares           $ 3.50      
Number of business days | debtInstrument           3      
Redemption price per share | $ / shares           $ 3.50      
Stock converted (in shares)         10,149        
Preferred stock, shares outstanding (in shares)           0 10,149    
Series C Preferred Stock | Impossible Aerospace                  
Class of Stock [Line Items]                  
Issuance of shares of series C preferred stock for acquisition (in shares)               1,714,286  
Series C Preferred Stock | Vayu                  
Class of Stock [Line Items]                  
Issuance of shares of series C preferred stock for acquisition (in shares)             1,432,224    
Class A Common Stock                  
Class of Stock [Line Items]                  
Preferred stock voting conversion basis | vote           1      
Period of trading days           5 days      
Sale of shares, holders percentage           25.00%      
Period of holder, automatic conversion           90 days      
Class A Common Stock | Impossible Aerospace                  
Class of Stock [Line Items]                  
Stock converted (in shares)           1,714,286 1,704,137    
Accretion expense | $           $ 0 $ 69,661    
Class A Common Stock | Vayu                  
Class of Stock [Line Items]                  
Stock converted (in shares)             1,353,570    
Accretion expense | $           $ 0 $ 615,170    
Class C Common Stock                  
Class of Stock [Line Items]                  
Sale of shares, holders percentage           25.00%      
Period of holder, automatic conversion           120 days      
Stock converted (in shares) 1,428 22,662 201,806 37,500          
Series D Preferred Stock                  
Class of Stock [Line Items]                  
Preferred stock, shares authorized (in shares)           1,628,572      
Preferred stock, par value (in dollars per share) | $ / shares           $ 3.50      
Dividends | $           $ 0      
Preferred stock voting conversion basis | vote           1      
Liquidation preference period prior to payment           45 days      
Preferred stock, convertible, conversion price ( In dollars per share) | $ / shares           $ 3.50      
Period of trading days           5 days      
Number of business days | day           3      
Redemption price per share | $ / shares           $ 3.50      
Stock converted (in shares)         78,674        
Series D Preferred Stock | Vayu                  
Class of Stock [Line Items]                  
Preferred stock, shares outstanding (in shares)           78,674 0    

v3.23.2
Stockholders' Equity - Narrative (Details)
1 Months Ended 2 Months Ended 3 Months Ended 12 Months Ended
Aug. 11, 2022
USD ($)
shares
Jul. 11, 2022
USD ($)
shares
Apr. 29, 2022
USD ($)
shares
Dec. 29, 2021
shares
Dec. 20, 2021
shares
Dec. 13, 2021
USD ($)
shares
Nov. 29, 2021
USD ($)
shares
Nov. 26, 2021
USD ($)
shares
Nov. 15, 2021
shares
Nov. 09, 2021
shares
Oct. 20, 2021
USD ($)
shares
May 17, 2021
shares
May 10, 2021
USD ($)
shares
May 05, 2021
USD ($)
shares
Apr. 30, 2021
shares
Mar. 17, 2021
USD ($)
shares
Feb. 11, 2021
USD ($)
$ / shares
shares
Apr. 30, 2023
shares
Jan. 31, 2023
shares
Nov. 30, 2022
shares
Oct. 31, 2022
shares
Sep. 30, 2022
shares
Jul. 31, 2022
USD ($)
$ / shares
shares
Mar. 31, 2022
USD ($)
shares
Jan. 31, 2022
shares
Feb. 28, 2021
USD ($)
shares
Jun. 30, 2022
USD ($)
shares
Mar. 31, 2023
USD ($)
$ / shares
shares
Dec. 31, 2022
USD ($)
vote
debtInstrument
$ / shares
shares
Dec. 31, 2021
USD ($)
$ / shares
shares
May 12, 2023
shares
May 11, 2023
shares
Aug. 31, 2022
$ / shares
Jan. 30, 2022
shares
Dec. 31, 2020
USD ($)
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Preferred stock, shares issued (in shares)                                                         5,000,000            
Preferred stock, par value (in dollars per share) | $ / shares                                                       $ 0.0001 $ 0.0001 $ 0.0001          
Preferred stock, shares authorized (in shares)                                                       5,000,000 5,000,000 5,000,000          
Preferred stock, voting percentage                                                         200.00%            
Issuance of shares of common stock for cash | $                                                           $ 76,492,993          
Common stock, at a combined price per share and warrant (in dollar per share) | $ / shares                                                                 $ 0.69    
Proceeds from warrant exercises | $ $ 1,000,000                                                                    
Repurchase of class C common stock | $                                                           185,850          
Issuance of shares for acquisition | $                                                           $ 15,067,211          
Share-based compensation expense not yet recognized, options | $                                                       $ 900,000 $ 1,053,547            
Number of options outstanding (in shares)                                                       379,062 386,751 1,790,000         1,790,000
Weighted average exercise price (in dollars per share) | $ / shares                                                       $ 4.35 $ 4.39 $ 0.19         $ 0.19
Exercisable (in shares)                                                       135,567 1,084,500            
Granted (in shares)                                                       0 2,084,620 0          
Private Placement                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Sale of stock, consideration received on transaction | $   $ 9,175,000                                                                  
Management                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares of common stock for cash (in shares)     171,850                                                                
Issuance of shares of common stock for cash | $     $ 132,325                                               $ 55,144                
Purchase Agreement                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Sale of stock, number of shares issued in transaction (in shares)                                 8,333,333                                    
Sale of stock, consideration received on transaction | $                                 $ 50,000,000                                    
Percentage of received cash fee                                 7.00%                                    
Warrant percentage of purchase shares to number shares sold                                 5.00%                                    
Sale of stock exercise price ( in dollars per share) | $ / shares                                 $ 6.60                                    
Proceeds from issuance or sale of equity | $                                 $ 45,000,000                                    
Purchase Agreement | Investor                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Sale of stock, consideration received on transaction | $               $ 22,189,152                                                      
ElecJet                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Vesting period (in years)                                                         3 years            
Share-based compensation expense | $                                                         $ 299,555 $ 0          
Series B Preferred Stock                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Preferred stock, shares issued (in shares)                                                       4 5 5          
Preferred stock, par value (in dollars per share) | $ / shares                                                       $ 1.00 $ 1.00 $ 1.00          
Preferred stock, shares authorized (in shares)                                                       100 100 100          
Preferred stock, voting percentage                                                         200.00%            
Preferred stock, shares outstanding (in shares)                                                       4 5 5          
Series B Preferred Stock | Officer                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Preferred stock, shares issued (in shares)                                                           5          
Preferred stock, shares outstanding (in shares)                                                         5            
Class A Common Stock                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Preferred stock, conversion basis                                                         one            
Number of vote per share | vote                                                         1            
Conversion of stock, shares issued (in shares)                                   1,300,001 1,428 22,662 201,806 37,500     72,152                    
Common stock, shares authorized (in shares)                                                 295,000,000     200,000,000 200,000,000   200,000,000 295,000,000   195,000,000  
Issuance of shares for services (in shares)                                               39,386                      
Issuance of shares for services | $                                               $ 99,252                      
Issuance of shares of common stock for cash (in shares)         100,000                                                            
Conversion of class C to class A (in shares)                             1,617,067                                        
Conversion of class B to class A (in shares)                 125,000     350,000                                              
Conversion of series D to class A (in shares)                   2,409,248                                                  
Conversion of convertible securities (in shares)                                                           7,384,018          
Stock issued for debt conversion, amount | $                                                           $ 1,886,898          
Class A Common Stock | Private Placement                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Sale of stock, number of shares issued in transaction (in shares)   14,492,754                                                                  
Class A Common Stock | ATM Offering                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares of common stock for cash (in shares)                                             60,600                        
Issuance of shares of common stock for cash | $                                             $ 42,318                        
Class A Common Stock | Management                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares of common stock for cash (in shares)                                                     76,119                
Class A Common Stock | Investor                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares of common stock for cash (in shares)                                                   1,524,064                  
Issuance of shares of common stock for cash | $                                                   $ 9,300,000                  
Class A Common Stock | Purchase Agreement | Investor                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Sale of stock, number of shares issued in transaction (in shares)               8,571,430                                                      
Class A Common Stock | TDI                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares of series C preferred stock for acquisition (in shares)                           281,223                                          
Issuance of shares for acquisition | $                           $ 1,102,394                                          
Common stock and warrants issued (in shares)                           281,223                                          
Class A Common Stock | Alt Labs                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares of series C preferred stock for acquisition (in shares)                         361,787                                            
Issuance of shares for acquisition | $                         $ 1,432,677                                            
Common stock and warrants issued (in shares)                         361,847                                            
Class A Common Stock | Identified Technology                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares of series C preferred stock for acquisition (in shares)                     888,881                                                
Issuance of shares for acquisition | $                     $ 3,617,746                                                
Common stock and warrants issued (in shares)                     888,881                                                
Class A Common Stock | ElecJet                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares for acquisition | $             $ 2,488,599                                                        
Common stock and warrants issued (in shares)             983,636                                                        
Class A Common Stock | DTI Services                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares for services (in shares)       99,018                                                              
Issuance of shares of series C preferred stock for acquisition (in shares)           1,587,301                                                          
Issuance of shares for acquisition | $           $ 3,682,539                                                          
Common stock and warrants issued (in shares)           1,587,301                                                          
Class B Common Stock                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Number of vote per share | vote                                                         10            
Stock converted (in shares)                                   1,300,000                                  
Common stock, shares authorized (in shares)                                                       10,000,000 10,000,000            
Conversion of class B to class A (in shares)                 125,000     350,000                                              
Class C Common Stock                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Number of vote per share | vote                                                         5            
Percentage of holders shares                                                         25.00%            
Stock converted (in shares)                                     1,428 22,662 201,806 37,500                          
Common stock, shares authorized (in shares)                                                       15,000,000 15,000,000            
Repurchase of class C common stock (in shares)                               45,000                                      
Repurchase of class C common stock | $                               $ 185,850                                      
Series C Preferred Stock                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Preferred stock, par value (in dollars per share) | $ / shares                                                         $ 3.50            
Preferred stock, shares authorized (in shares)                                                         2,028,572            
Preferred stock, shares outstanding (in shares)                                                         0 10,149          
Stock converted (in shares)                                                 10,149                    
Conversion of series D to class A (in shares)                   1,353,570                                                  
Series D Preferred Stock                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Preferred stock, par value (in dollars per share) | $ / shares                                                         $ 3.50            
Preferred stock, shares authorized (in shares)                                                         1,628,572            
Stock converted (in shares)                                                 78,674                    
Conversion of series D to class A (in shares)                   1,704,137                                                  
Common Stock                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Number of classes | debtInstrument                                                         3            
Common Stock | Class A Common Stock                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares of common stock for cash (in shares)                                                           18,428,827          
Issuance of shares of common stock for cash | $                                                           $ 1,844          
Issuance of shares of series C preferred stock for acquisition (in shares)                                                           4,922,471          
Issuance of shares for acquisition | $                                                           $ 492          
Conversion of convertible securities (in shares)                                                       1,428 7,384,018            
Common Stock | Class A Common Stock | ElecJet                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares of series C preferred stock for acquisition (in shares)             1,803,279                                                        
Issuance of shares for acquisition | $             $ 4,562,996                                                        
Common Stock | Class C Common Stock                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Repurchase of class C common stock (in shares)                                                           45,000          
Repurchase of class C common stock | $                                                           $ 5          
Conversion of convertible securities (in shares)                                                       (1,428)              
Warrant                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Stock issued during period, shares, warrants exercised (in shares) 1,449,276                                                                    
Number of options outstanding (in shares)                                                       2,321,411 2,321,411 5,527,778         275,000
Weighted average exercise price (in dollars per share) | $ / shares                                                       $ 11.78 $ 11.78 $ 3.32         $ 1.01
Exercisable (in shares)                                                       2,321,411 18,571,256            
Granted (in shares)                                                       0 14,492,754 5,527,778          
Fair value of warrants issued | $                                                         $ 2,498,637 $ 902,414         $ 668,863
Warrant | Exercise price $6.60                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Number of options outstanding (in shares)                                                       52,084 416,667            
Weighted average exercise price (in dollars per share) | $ / shares                                                       $ 52.80 $ 6.60            
Exercisable (in shares)                                                       52,084 416,667            
Warrant | Exercise price $3.08                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Number of options outstanding (in shares)                                                       53,572 428,571            
Weighted average exercise price (in dollars per share) | $ / shares                                                       $ 24.64 $ 3.08            
Exercisable (in shares)                                                       53,572 428,571            
Warrant | Exercise price $2.25                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Number of options outstanding (in shares)                                                       49,604 396,825            
Weighted average exercise price (in dollars per share) | $ / shares                                                       $ 20.16 $ 2.52            
Exercisable (in shares)                                                       49,604 396,825            
Warrant | Exercise price $0.69                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Number of options outstanding (in shares)                                                       1,630,435 13,043,478            
Weighted average exercise price (in dollars per share) | $ / shares                                                       $ 5.52 $ 0.69            
Exercisable (in shares)                                                       1,630,435 13,043,478            
Warrant | Private Placement                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Sale of stock, number of shares issued in transaction (in shares)   14,492,754                                                                  
Common stock, at a combined price per share and warrant (in dollar per share) | $ / shares                                             $ 0.69                        
Warrant term (in years)                                             5 years                        
Warrant | Purchase Agreement | Investor                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Sale of stock, number of shares issued in transaction (in shares)               4,285,715                                                      
Warrant | DTI Services                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Fair value of warrants issued | $                                                         $ 7,083,038            
Stock options                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Share-based compensation expense | $                                                         $ 473,159 $ 36,538          
Stock options | Two Thousand Twenty One Employee Equity Incentive Plan                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Stock issued during period, shares, employee stock ownership plan (in shares)                                                         2,084,620            
Exercise price (in dollars per share) | $ / shares                                                         $ 0.77            
Number of options outstanding (in shares)                                                         2,084,620            
Share Based Compensation Arrangement by Share Based Payment Arrangement, Options, Granted, Fair Value | $                                                         $ 1,534,401            
Time-Based Award | ElecJet                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares for acquisition | $                                                         $ 829,536            
Common stock and warrants issued (in shares)                                                         327,878            
Performance Based Award | ElecJet                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Common stock and warrants issued (in shares)             655,758                                                        
Management Based Award | ElecJet                                                                      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                                                                      
Issuance of shares for acquisition | $             $ 1,659,063                                                        

v3.23.2
Stockholders' Equity - Stock Option Activity (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Options        
Options outstanding, beginning balance (in shares) 386,751 1,790,000 1,790,000  
Granted (in shares) 0 2,084,620 0  
Forfeited (in shares) (7,689) (781,712) 0  
Exercised (in shares) 0 0 0  
Options outstanding, ending balance (in shares) 379,062 386,751 1,790,000 1,790,000
Vested and expected to vest (in shares) 379,062 3,092,909    
Exercisable (in shares) 135,567 1,084,500    
Weighted Average Exercise Price        
Weighted average beginning balance (in dollars per share) $ 4.39 $ 0.19 $ 0.19  
Weighted average grants (in dollars per share) 0 0.77 3.32  
Weighted average forfeitures (in dollars per share) 6.16 0.32    
Weighted average ending balance (in dollars per share) 4.35 4.39 $ 0.19 $ 0.19
Weighted average vested and expected to vest (in dollars per share) 4.35 0.55    
Exercisable (in dollars per share) $ 1.11 $ 0.14    
Weighted Average Remaining Contractual Life (Years)        
Weighted average remaining contractual term options, outstanding 7 years 8 months 1 day 7 years 11 months 8 days 6 years 1 month 2 days 7 years 1 month 2 days
Weighted average remaining contractual term, options, vested and expected to vest 7 years 8 months 1 day 7 years 11 months 8 days    
Weighted average remaining contractual term, options, exercisable 5 years 1 month 13 days 5 years 4 months 13 days    
Aggregate Intrinsic Value        
Options, outstanding intrinsic value $ 444,942 $ 463,495 $ 3,098,055 $ 6,176,855
Options, vested and expected to vest, outstanding, aggregate intrinsic value 444,942 463,494    
Options, exercisable, intrinsic value $ 444,942 $ 463,494    

v3.23.2
Stockholders' Equity - Options Outstanding and Exercisable (Details) - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2023
Dec. 31, 2022
Options Outstanding    
Number of shares (in shares) 379,062 3,092,909
Options Exercisable    
Number of shares (in shares) 135,567 1,084,500
Exercise Price $0.05    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Exercise Price $ 0.05 $ 0.05
Exercise Price $ 0.05 $ 0.05
Options Outstanding    
Number of shares (in shares) 111,438 891,500
Weighted Average Remaining Life (Years) 5 years 3 months 3 days 5 years 4 months 17 days
Weighted average exercise price (in dollars per share) $ 0.40 $ 0.05
Options Exercisable    
Number of shares (in shares) 111,438 891,500
Weighted average exercise price (in dollars per share) $ 0.40 $ 0.05
Exercise Price $0.10    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Exercise Price 0.10 0.10
Exercise Price $ 0.10 $ 0.10
Options Outstanding    
Number of shares (in shares) 10,625 85,000
Weighted Average Remaining Life (Years) 5 years 10 days 5 years 3 months 10 days
Weighted average exercise price (in dollars per share) $ 0.80 $ 0.10
Options Exercisable    
Number of shares (in shares) 10,625 85,000
Weighted average exercise price (in dollars per share) $ 0.80 $ 0.10
Exercise Price $0.13    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Exercise Price 0.77 0.13
Exercise Price $ 0.77 $ 0.13
Options Outstanding    
Number of shares (in shares) 243,495 0
Weighted Average Remaining Life (Years) 9 years 29 days 4 years 6 months 29 days
Weighted average exercise price (in dollars per share) $ 6.16 $ 0.13
Options Exercisable    
Number of shares (in shares) 0 0
Weighted average exercise price (in dollars per share) $ 0 $ 0.13
Exercise Price $0.26    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Exercise Price 0.90 0.77
Exercise Price $ 0.90 $ 0.77
Options Outstanding    
Number of shares (in shares) 13,504 2,008,409
Weighted Average Remaining Life (Years) 4 years 7 days 9 years 3 months 29 days
Weighted average exercise price (in dollars per share) $ 7.20 $ 0.77
Options Exercisable    
Number of shares (in shares) 13,504 0
Weighted average exercise price (in dollars per share) $ 7.20 $ 0.77
Exercise Price $0.90    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Exercise Price   0.90
Exercise Price   $ 0.90
Options Outstanding    
Number of shares (in shares)   108,000
Weighted Average Remaining Life (Years)   4 years 3 months 7 days
Weighted average exercise price (in dollars per share)   $ 0.90
Options Exercisable    
Number of shares (in shares)   108,000
Weighted average exercise price (in dollars per share)   $ 0.90

v3.23.2
Stockholders' Equity - Valuation Assumptions (Details)
12 Months Ended
Dec. 31, 2022
$ / shares
Stock options  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock price (in dollars per share) $ 0.77
Risk-free interest rate (as a percent) 2.90%
Expected life of the options 6 years 3 months
Expected volatility (as a percent) 158.00%
Expected dividend yield (as a percent) 0.00%
Warrant  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Risk-free interest rate, minimum (as a percent) 0.01%
Risk-free interest rate, maximum (as a percent) 1.02%
Expected dividend yield (as a percent) 0.00%
Warrant | Minimum  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock price (in dollars per share) $ 0.62
Expected life of the options 1 year 6 months
Expected volatility (as a percent) 157.00%
Warrant | Maximum  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock price (in dollars per share) $ 7.03
Expected life of the options 5 years
Expected volatility (as a percent) 347.00%

v3.23.2
Stockholders' Equity - Warrants Activity (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Warrants        
Options outstanding, beginning balance (in shares) 386,751 1,790,000 1,790,000  
Granted (in shares) 0 2,084,620 0  
Forfeited (in shares) (7,689) (781,712) 0  
Exercised (in shares) 0 0 0  
Options outstanding, ending balance (in shares) 379,062 386,751 1,790,000 1,790,000
Vested and expected to vest (in shares) 379,062 3,092,909    
Exercisable (in shares) 135,567 1,084,500    
Weighted Average Exercise Price        
Weighted average beginning balance (in dollars per share) $ 4.39 $ 0.19 $ 0.19  
Weighted average grants (in dollars per share) 0 0.77 3.32  
Weighted average forfeitures (in dollars per share) 6.16 0.32    
Exercised (in dollars per share) 0      
Weighted average ending balance (in dollars per share) 4.35 4.39 $ 0.19 $ 0.19
Weighted average vested and expected to vest (in dollars per share) 4.35 0.55    
Exercisable (in dollars per share) $ 1.11 $ 0.14    
Weighted Average Remaining Contractual Life (Years)        
Weighted average remaining contractual term options, outstanding 7 years 8 months 1 day 7 years 11 months 8 days 6 years 1 month 2 days 7 years 1 month 2 days
Weighted average remaining contractual term, options, vested and expected to vest 7 years 8 months 1 day 7 years 11 months 8 days    
Weighted average remaining contractual term, options, exercisable 5 years 1 month 13 days 5 years 4 months 13 days    
Aggregate Intrinsic Value        
Options, outstanding intrinsic value $ 444,942 $ 463,495 $ 3,098,055 $ 6,176,855
Options, vested and expected to vest, outstanding, aggregate intrinsic value 444,942 463,494    
Options, exercisable, intrinsic value $ 444,942 $ 463,494    
Previously Reported        
Warrants        
Options outstanding, beginning balance (in shares) 3,092,908      
Options outstanding, ending balance (in shares)   3,092,908    
Weighted Average Exercise Price        
Weighted average beginning balance (in dollars per share) $ 0.55      
Weighted average ending balance (in dollars per share)   $ 0.55    
Weighted Average Remaining Contractual Life (Years)        
Weighted average remaining contractual term options, outstanding   7 years 11 months 8 days    
Aggregate Intrinsic Value        
Options, outstanding intrinsic value   $ 463,494    
Warrant        
Warrants        
Options outstanding, beginning balance (in shares) 2,321,411 5,527,778 275,000  
Granted (in shares) 0 14,492,754 5,527,778  
Forfeited (in shares) 0 0 (275,000)  
Exercised (in shares) 0 (1,449,276) 0  
Options outstanding, ending balance (in shares) 2,321,411 2,321,411 5,527,778 275,000
Vested and expected to vest (in shares) 2,321,411 18,571,256    
Exercisable (in shares) 2,321,411 18,571,256    
Weighted Average Exercise Price        
Weighted average beginning balance (in dollars per share) $ 11.78 $ 3.32 $ 1.01  
Weighted average grants (in dollars per share) 0 0.69    
Weighted average forfeitures (in dollars per share) 0 0 1.01  
Exercised (in dollars per share) 0 0.69 0  
Weighted average ending balance (in dollars per share) 11.78 11.78 $ 3.32 $ 1.01
Weighted average vested and expected to vest (in dollars per share) 11.78 1.47    
Exercisable (in dollars per share) $ 11.78 $ 1.47    
Weighted Average Remaining Contractual Life (Years)        
Weighted average remaining contractual term options, outstanding 4 years 7 days 4 years 3 months 21 days 4 years 7 months 13 days 2 months 23 days
Weighted average remaining contractual term, options, vested and expected to vest 4 years 7 days 4 years 3 months 21 days    
Weighted average remaining contractual term, options, exercisable 4 years 7 days 4 years 3 months 21 days    
Aggregate Intrinsic Value        
Options, outstanding intrinsic value $ 0 $ 0 $ 0 $ 723,250
Options, vested and expected to vest, outstanding, aggregate intrinsic value 0 0    
Options, exercisable, intrinsic value $ 0 $ 0    
Warrant | Previously Reported        
Warrants        
Options outstanding, beginning balance (in shares) 18,571,256      
Options outstanding, ending balance (in shares)   18,571,256    
Weighted Average Exercise Price        
Weighted average beginning balance (in dollars per share) $ 1.47      
Weighted average ending balance (in dollars per share)   $ 1.47    
Weighted Average Remaining Contractual Life (Years)        
Weighted average remaining contractual term options, outstanding   4 years 3 months 21 days    
Aggregate Intrinsic Value        
Options, outstanding intrinsic value   $ 0    

v3.23.2
Stockholders' Equity - Warrants Outstanding and Exercisable (Details) - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Number of options outstanding (in shares) 379,062 386,751 1,790,000 1,790,000
Weighted average remaining contractual term options, outstanding 7 years 8 months 1 day 7 years 11 months 8 days 6 years 1 month 2 days 7 years 1 month 2 days
Weighted average exercise price (in dollars per share) $ 4.35 $ 4.39 $ 0.19 $ 0.19
Exercisable (in shares) 135,567 1,084,500    
Exercisable (in dollars per share) $ 1.11 $ 0.14    
Warrant        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Number of options outstanding (in shares) 2,321,411 2,321,411 5,527,778 275,000
Weighted average remaining contractual term options, outstanding 4 years 7 days 4 years 3 months 21 days 4 years 7 months 13 days 2 months 23 days
Weighted average exercise price (in dollars per share) $ 11.78 $ 11.78 $ 3.32 $ 1.01
Exercisable (in shares) 2,321,411 18,571,256    
Exercisable (in dollars per share) $ 11.78 $ 1.47    
Warrant | Exercise price $6.60        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Exercise price (in dollars per share) $ 52.80 $ 6.60    
Number of options outstanding (in shares) 52,084 416,667    
Weighted average remaining contractual term options, outstanding 1 year 10 months 20 days 2 years 1 month 17 days    
Weighted average exercise price (in dollars per share) $ 52.80 $ 6.60    
Exercisable (in shares) 52,084 416,667    
Exercisable (in dollars per share) $ 52.80 $ 6.60    
Warrant | Exercise price $2.25        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Exercise price (in dollars per share) $ 20.16 $ 2.52    
Number of options outstanding (in shares) 49,604 396,825    
Weighted average remaining contractual term options, outstanding 1 year 8 months 12 days 1 year 11 months 8 days    
Weighted average exercise price (in dollars per share) $ 20.16 $ 2.52    
Exercisable (in shares) 49,604 396,825    
Exercisable (in dollars per share) $ 20.16 $ 2.52    
Warrant | Exercise price $3.10        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Exercise price (in dollars per share) $ 24.80 $ 3.10    
Number of options outstanding (in shares) 535,716 4,285,715    
Weighted average remaining contractual term options, outstanding 3 years 7 months 28 days 3 years 10 months 24 days    
Weighted average exercise price (in dollars per share) $ 24.80 $ 3.10    
Exercisable (in shares) 535,716 4,285,715    
Exercisable (in dollars per share) $ 24.80 $ 3.1    
Warrant | Exercise price $3.08        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Exercise price (in dollars per share) $ 24.64 $ 3.08    
Number of options outstanding (in shares) 53,572 428,571    
Weighted average remaining contractual term options, outstanding 3 years 7 months 24 days 3 years 10 months 24 days    
Weighted average exercise price (in dollars per share) $ 24.64 $ 3.08    
Exercisable (in shares) 53,572 428,571    
Exercisable (in dollars per share) $ 24.64 $ 3.08    
Warrant | Exercise price $0.69        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Exercise price (in dollars per share) $ 5.52 $ 0.69    
Number of options outstanding (in shares) 1,630,435 13,043,478    
Weighted average remaining contractual term options, outstanding 4 years 3 months 14 days 4 years 7 months 6 days    
Weighted average exercise price (in dollars per share) $ 5.52 $ 0.69    
Exercisable (in shares) 1,630,435 13,043,478    
Exercisable (in dollars per share) $ 5.52 $ 0.69    

v3.23.2
Business Combinations - Narrative (Details)
Dec. 31, 2021
USD ($)
Minimum  
Business Acquisition [Line Items]  
Transaction costs $ 0
Maximum  
Business Acquisition [Line Items]  
Transaction costs $ 40,000

v3.23.2
Business Combinations - Asset Acquisitions (Details) - Vayu
Feb. 08, 2021
USD ($)
shares
Asset Acquisition [Line Items]  
Asset acquisition, concentrated amount of intellectual property (as a percent) 95.00%
Cash $ 81,442
Property and equipment 56,011
Intellectual property 8,406,743
Non-compete agreement 100,819
Deferred tax liability (1,362,667)
Accrued expenses and other current liabilities (564,039)
SBA loan (PPP funds) (65,000)
Asset acquisition, assets acquired and liabilities assumed, net 6,653,309
Total purchase price $ 6,653,309
Series D Preferred Stock  
Asset Acquisition [Line Items]  
Common stock and warrants issued (in shares) | shares 1,432,244
Asset acquisition, preferred stock issued $ 6,653,309

v3.23.2
Business Combinations - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($)
12 Months Ended
Dec. 13, 2021
Nov. 29, 2021
Oct. 20, 2021
May 10, 2021
May 05, 2021
May 04, 2021
Dec. 31, 2022
Dec. 31, 2021
Mar. 31, 2023
Nov. 29, 2022
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Goodwill             $ 22,680,084 $ 22,680,084 $ 22,680,084  
Business Combination, Consideration Transferred [Abstract]                    
Cash             $ 0 $ 37,324,035    
Royalty agreement                   $ 0
TDI                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Accounts receivable         $ 1,408,682          
Other assets         91,000          
Property and equipment         111,789          
Goodwill         6,426,786          
Accounts payable         (786,151)          
Accrued expenses and other current liabilities         (53,857)          
Contract liabilities         (3,637,122)          
Notes payable         (64,733)          
Total purchase price         7,456,394          
Business Combination, Consideration Transferred [Abstract]                    
Cash         6,354,000          
Total purchase price         7,456,394          
TDI | Customer list                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets         3,840,000          
TDI | Non-compete agreements                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets         $ 120,000          
TDI | Class A Common Stock                    
Business Combination, Consideration Transferred [Abstract]                    
Common stock and warrants issued (in shares)         281,223          
Equity interests issued         $ 1,102,394          
Alt Labs                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Accounts receivable       $ 397,441            
Other assets       390,502            
Inventory       2,621,653            
Property and equipment       1,739,441            
Goodwill       4,410,564            
Accounts payable       (397,441)            
Accrued expenses and other current liabilities       (411,830)            
Contract liabilities       (1,754,290)            
Notes payable       (33,363)            
Total purchase price       11,902,677            
Business Combination, Consideration Transferred [Abstract]                    
Cash       10,470,000            
Total purchase price       11,902,677            
Alt Labs | Customer list                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets       1,250,000            
Alt Labs | Proprietary technology                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets       3,670,000            
Alt Labs | Non-compete agreements                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets       $ 20,000            
Alt Labs | Class A Common Stock                    
Business Combination, Consideration Transferred [Abstract]                    
Common stock and warrants issued (in shares)       361,847            
Equity interests issued       $ 1,432,677            
Cleveland LLC                    
Business Combination, Consideration Transferred [Abstract]                    
Voting interest acquired (as a percent)           100.00%        
Bargain purchase gain           $ 7,000,000        
Identified Technology                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Accounts receivable     $ 90,858              
Other assets     27,469              
Goodwill     1,913,310              
Accrued expenses and other current liabilities     (363,856)              
Total purchase price     3,617,781              
Business Combination, Consideration Transferred [Abstract]                    
Cash     35              
Total purchase price     3,617,781              
Identified Technology | Proprietary technology                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets     1,650,000              
Identified Technology | Non-compete agreements                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets     90,000              
Identified Technology | Tradename                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets     $ 210,000              
Identified Technology | Class A Common Stock                    
Business Combination, Consideration Transferred [Abstract]                    
Common stock and warrants issued (in shares)     888,881              
Equity interests issued     $ 3,617,746              
ElectJet                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Cash   $ 27,466                
Accounts receivable   30,000                
Inventory   95,000                
Goodwill   6,496,343                
Deferred tax liability   (1,562,074)                
Accrued expenses and other current liabilities   (113,742)                
Total purchase price   11,062,993                
Business Combination, Consideration Transferred [Abstract]                    
Cash   6,500,000                
Total purchase price   11,062,993                
ElectJet | Proprietary technology                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets   5,890,000                
ElectJet | Non-compete agreements                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets   $ 200,000                
ElectJet | Class A Common Stock                    
Business Combination, Consideration Transferred [Abstract]                    
Common stock and warrants issued (in shares)   1,803,279                
Equity interests issued   $ 4,562,993                
DTI Services                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Accounts receivable $ 3,409,230                  
Other assets 1,259,556                  
Inventory 12,477,872                  
Property and equipment 761,370                  
Goodwill 1,355,728                  
ROU asset 1,196,764                  
Accounts payable (951,302)                  
Accrued expenses and other current liabilities (677,720)                  
Customer deposits (153,201)                  
Operating lease liability (1,226,128)                  
Line of credit (4,710,768)                  
Total purchase price 20,351,401                  
Business Combination, Consideration Transferred [Abstract]                    
Cash 14,000,000                  
Seller notes 2,000,000                  
Total purchase price 20,351,401                  
DTI Services | Customer list                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets 6,300,000                  
DTI Services | Non-compete agreements                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets 690,000                  
DTI Services | Trademarks                    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]                    
Intangible assets $ 620,000                  
DTI Services | Warrant                    
Business Combination, Consideration Transferred [Abstract]                    
Common stock and warrants issued (in shares) 396,825                  
Equity interests issued $ 668,863                  
DTI Services | Class A Common Stock                    
Business Combination, Consideration Transferred [Abstract]                    
Common stock and warrants issued (in shares) 1,587,301                  
Equity interests issued $ 3,682,538                  

v3.23.2
Business Combinations - Schedule of Pro Forma Information (Details) - USD ($)
12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Business Combination and Asset Acquisition [Abstract]    
Sales $ 104,563,002 $ 98,321,144
Cost of goods sold 82,848,600 75,523,745
Gross profit 21,714,402 22,797,399
Operating expenses 32,470,186 38,643,670
Loss from operations (10,755,784) (15,846,271)
Net loss from continuing operations $ (12,875,313) $ (12,144,338)
Loss per share (in dollars per share) $ (0.07) $ (0.06)

v3.23.2
Equity Investments (Details) - USD ($)
12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Sep. 15, 2021
Debt and Equity Securities, FV-NI [Line Items]      
Membership interest in equity securities (as a percent)     9.00%
Impairment loss on equity investment $ 0 $ 1,350,000  
Total interest paid $ 0 1,350,000  
Accounts receivable owed from Amplifei      
Debt and Equity Securities, FV-NI [Line Items]      
Total interest paid   1,000,000  
Cash      
Debt and Equity Securities, FV-NI [Line Items]      
Total interest paid   $ 350,000  

v3.23.2
Income Taxes - Components of Income Tax Benefit (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Current expense (benefit)        
Federal     $ 0 $ 0
State     139,020 0
Current expense (benefit)     139,020 0
Deferred benefit        
Federal     (650,283) (1,616,916)
State     (222,731) (326,825)
Income tax benefit     (873,014) (1,943,741)
Provision for income tax benefit $ (327,000) $ (332,837) $ (733,994) $ (1,943,741)

v3.23.2
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Income Tax Disclosure [Abstract]        
Pre-tax book loss     $ (13,609,307) $ (21,426,879)
Amount        
Federal income tax at statutory rate     (2,857,954) (4,499,644)
State income tax benefit     (530,084) (163,677)
Change in valuation allowance     2,760,687 3,559,163
Permanent items     21,281 (839,583)
Other     (127,924) 0
Provision for income tax benefit $ (327,000) $ (332,837) $ (733,994) $ (1,943,741)
Percentage        
Federal income tax at statutory rate     21.00% 21.00%
State income tax benefit     3.90% 0.80%
Change in valuation allowance     (20.30%) (16.60%)
Permanent items     (0.20%) 3.90%
Other     1.40% 0.00%
Provision for income tax benefit     5.40% 9.10%

v3.23.2
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Deferred tax asset:      
Accrued expenses and other   $ 696,419 $ 347,645
Lease Liability   8,176,101 0
Loss carryforwards   14,295,781 13,124,197
Stock based compensation   211,499 90,293
Research and experimental expenditures   202,199 0
Inventory   625,937 0
Interest   634,445 615,260
Total deferred tax asset   24,842,381 14,177,395
Valuation allowance   (13,492,773) (9,887,550)
Net deferred tax assets   11,349,608 4,289,845
Deferred tax liabilities:      
Fixed assets   (3,266,395) (365,922)
Intangible assets and goodwill   (4,865,970) (5,785,088)
ROU asset   (4,205,393) 0
Total deferred tax liabilities   (12,337,758) (6,151,010)
Deferred tax liability $ (625,617) $ (988,150) $ (1,861,165)

v3.23.2
Income Taxes - Narrative (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Income Tax Contingency [Line Items]    
Valuation allowance $ 13.5 $ 9.9
Federal net operating losses $ 11.3  
Offset future taxable income, period 20 years  
Taxable income carried forward remaining, amount $ 59.7  
Limitation of taxable income, percentage 80.00%  
Interest limitation $ 2.5  
Domestic Tax Authority    
Income Tax Contingency [Line Items]    
Operating loss carryforwards 71.0  
State and Local Jurisdiction    
Income Tax Contingency [Line Items]    
Operating loss carryforwards $ 20.1  

v3.23.2
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($)
12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]    
Unrecognized tax liabilities, beginning of the year $ 1,169,028 $ 0
Increase related to current year tax positions 480,911 1,169,028
Unrecognized tax liabilities, end of year $ 1,649,939 $ 1,169,028

v3.23.2
Industry Segments (Details)
3 Months Ended 12 Months Ended
Mar. 31, 2023
USD ($)
segment
Mar. 31, 2022
USD ($)
Dec. 31, 2022
USD ($)
segment
Dec. 31, 2021
USD ($)
Segment Reporting [Abstract]        
Number of operating segments | segment 8   8  
Segment Reporting Information [Line Items]        
Revenues, net $ 24,361,713 $ 25,592,154 $ 104,563,002 $ 51,640,813
Gross profit 5,216,456 5,637,457 21,714,402 7,697,998
Income (loss) from operations (5,140,473) (3,756,155) (10,755,784) (22,122,359)
Depreciation and amortization 1,527,783 1,469,664    
Interest Expenses 998,870 608,961 3,124,132 3,289,233
Net income (loss) (5,769,143) (3,999,560) (12,875,313) (19,483,138)
Total Assets 141,944,725   145,632,214 134,623,850
Goodwill 22,680,084   22,680,084 22,680,084
Accounts receivable, net     17,139,944 11,875,176
Operating Segments        
Segment Reporting Information [Line Items]        
Income (loss) from operations     (10,755,784) (22,122,359)
Depreciation and amortization     6,174,538 4,154,359
All Other        
Segment Reporting Information [Line Items]        
Revenues, net 1,271,147 885,983    
Gross profit 373,568 353,474    
Income (loss) from operations (3,354,961) (2,425,619)    
Depreciation and amortization 278,713 277,441    
Interest Expenses 487,004 295,729    
Net income (loss) (3,474,698) (2,340,993)    
Total Assets 16,070,325   15,118,622  
Goodwill 1,913,310   1,913,310  
A4 Construction Services - MSM        
Segment Reporting Information [Line Items]        
Revenues, net     18,290,019 16,191,284
Gross profit     1,374,517 (385,266)
Goodwill     113,592 113,592
Accounts receivable, net     5,188,521 3,906,271
A4 Construction Services - MSM | Operating Segments        
Segment Reporting Information [Line Items]        
Income (loss) from operations     (883,922) (4,247,240)
Depreciation and amortization     684,563 846,808
Interest Expenses     421,287 706,607
Net income (loss)     (1,246,295) (1,481,382)
Total Assets     11,309,049 10,935,355
A4 Construction Services - Excel        
Segment Reporting Information [Line Items]        
Revenues, net     1,761,572 1,803,739
Gross profit     3,681 (92,765)
Goodwill     0 0
Accounts receivable, net     288,243 286,972
A4 Construction Services - Excel | Operating Segments        
Segment Reporting Information [Line Items]        
Income (loss) from operations     (973,934) (1,969,535)
Depreciation and amortization     267,966 291,556
Interest Expenses     245,855 291,263
Net income (loss)     (1,219,789) (1,899,512)
Total Assets     3,359,818 3,050,206
A4 Manufacturing - QCA        
Segment Reporting Information [Line Items]        
Revenues, net     16,763,989 14,258,084
Gross profit     3,258,082 2,763,213
Goodwill     1,963,761 1,963,761
Accounts receivable, net     3,867,141 2,339,597
A4 Manufacturing - QCA | Operating Segments        
Segment Reporting Information [Line Items]        
Income (loss) from operations     702,875 1,426,141
Depreciation and amortization     417,172 377,868
Interest Expenses     262,551 230,044
Net income (loss)     367,760 1,774,139
Total Assets     20,988,492 11,869,711
A4 Manufacturing - Alt Labs        
Segment Reporting Information [Line Items]        
Revenues, net     12,889,992 11,674,220
Gross profit     2,343,368 3,749,878
Goodwill     4,410,564 4,410,564
Accounts receivable, net     1,833,502 406,333
A4 Manufacturing - Alt Labs | Operating Segments        
Segment Reporting Information [Line Items]        
Income (loss) from operations     2,284,308 (3,027,203)
Depreciation and amortization     983,931 611,079
Interest Expenses     351,503 72,060
Net income (loss)     2,054,958 (2,643,752)
Total Assets     26,636,905 23,173,298
A4 Defense - TDI        
Segment Reporting Information [Line Items]        
Revenues, net $ 2,970,087 $ 2,687,981 10,046,658 4,467,376
Gross profit     3,082,844 1,073,636
Goodwill     6,426,786 6,426,786
Accounts receivable, net     1,905,314 1,371,184
A4 Defense - TDI | Operating Segments        
Segment Reporting Information [Line Items]        
Income (loss) from operations     1,072,306 (282,882)
Depreciation and amortization     288,950 191,740
Interest Expenses     11,975 825
Net income (loss)     1,060,331 (270,289)
Total Assets     13,497,381 11,982,580
A4 Technologies - RCA        
Segment Reporting Information [Line Items]        
Revenues, net     40,092,612 1,454,451
Gross profit     10,687,202 379,740
Goodwill     1,355,728 1,355,728
Accounts receivable, net     3,232,559 2,961,201
A4 Technologies - RCA | Operating Segments        
Segment Reporting Information [Line Items]        
Income (loss) from operations     2,525,619 (100,328)
Depreciation and amortization     979,206 49,299
Interest Expenses     159,878 15,347
Net income (loss)     2,365,741 (115,675)
Total Assets     27,191,977 28,174,091
A4 Technologies - ElecJet        
Segment Reporting Information [Line Items]        
Revenues, net     1,098,534 89,018
Gross profit     (236,636) 76,818
Goodwill     6,496,343 6,496,343
Accounts receivable, net     12,888 37,744
A4 Technologies - ElecJet | Operating Segments        
Segment Reporting Information [Line Items]        
Income (loss) from operations     (1,107,254) (62,163)
Depreciation and amortization     414,333 33,833
Interest Expenses     0 0
Net income (loss)     (1,110,727) (62,163)
Total Assets     12,897,440 12,904,267
A4 Aerospace - Vayu        
Segment Reporting Information [Line Items]        
Revenues, net     81,100 0
Gross profit     13,087 0
Goodwill     0 0
Accounts receivable, net     0 0
A4 Aerospace - Vayu | Operating Segments        
Segment Reporting Information [Line Items]        
Income (loss) from operations     (3,336,279) (4,875,829)
Depreciation and amortization     1,025,412 1,093,995
Interest Expenses     10,677 9
Net income (loss)     (3,346,956) (4,852,182)
Total Assets     14,632,530 14,702,838
All Other        
Segment Reporting Information [Line Items]        
Revenues, net     3,538,526 1,702,641
Gross profit     1,188,257 132,744
Goodwill     1,913,310 1,913,310
Accounts receivable, net     811,776 565,874
All Other | All Other        
Segment Reporting Information [Line Items]        
Income (loss) from operations     (11,039,503) (8,983,320)
Depreciation and amortization     1,113,005 658,181
Interest Expenses     1,660,406 1,973,078
Net income (loss)     (11,800,336) (9,932,322)
Total Assets     $ 15,118,622 $ 17,831,504

v3.23.2
Commitment and Contingencies - Narrative (Details)
1 Months Ended
Jan. 19, 2022
lawsuit
Nov. 28, 2021
USD ($)
May 31, 2023
USD ($)
Feb. 28, 2023
USD ($)
Dec. 31, 2022
USD ($)
Nov. 30, 2022
USD ($)
Jul. 31, 2022
USD ($)
shares
Jun. 30, 2022
USD ($)
Oct. 31, 2021
complaint
Aug. 31, 2020
USD ($)
Mar. 31, 2023
USD ($)
Other Commitments [Line Items]                      
Loss contingency, damages sought, value     $ 610,000 $ 100,000 $ 500,000 $ 2,300,000   $ 213,000      
Horizon Well Testing Case                      
Other Commitments [Line Items]                      
Loss contingency, damages sought, value                   $ 3,300,000  
Loss contingency interest rate (as a percent)                   8.00%  
Daily late fees                   $ 575  
Complaints In Discount Court of Oklahoma Country State of Oklahoma                      
Other Commitments [Line Items]                      
Loss contingency, number of claims 3               3    
Complaints In Discount Court of Oklahoma Country State of Oklahoma | Settled Litigation                      
Other Commitments [Line Items]                      
Litigation settlement amount             $ 24,375        
Number of shares settled (in shares) | shares             37,500        
Licensing Agreement                      
Other Commitments [Line Items]                      
Royalty fee         2.50%            
Minimum annual payment, year one     600,000   $ 420,000           $ 440,000
Minimum annual payment, year two     620,000   420,000           460,000
Minimum annual payment, year three     660,000   440,000           $ 480,000
Minimum annual payment, year four     $ 700,000   460,000            
Minimum annual payment, year five         $ 480,000            
Royalty Agreements                      
Other Commitments [Line Items]                      
Payment as a percentage of net sales   1.50%                  
Royalty agreement, term   10 years                  
Total royalty payment   $ 50,000,000                  

v3.23.2
Commitment and Contingencies - Annual Payments For Warranty Services (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]    
2023 $ 66,626 $ 66,626
2024 $ 59,964 59,964
Total   $ 126,590

v3.23.2
Subsequent Events (Details) - USD ($)
1 Months Ended
May 31, 2023
Apr. 30, 2023
Feb. 28, 2023
Jan. 31, 2023
Dec. 31, 2022
Nov. 30, 2022
Oct. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Jan. 31, 2022
Subsequent Event [Line Items]                    
Loss contingency, damages sought, value $ 610,000   $ 100,000   $ 500,000 $ 2,300,000     $ 213,000  
Battery Materials Company                    
Subsequent Event [Line Items]                    
Equity investment     $ 300,000 $ 250,000            
Noncontrolling interest, ownership percentage     10.00% 10.00%            
Class B Common Stock                    
Subsequent Event [Line Items]                    
Stock converted (in shares)   1,300,000                
Preferred Class B                    
Subsequent Event [Line Items]                    
Stock converted (in shares)   1                
Class A Common Stock                    
Subsequent Event [Line Items]                    
Conversion of stock, shares issued (in shares)   1,300,001   1,428   22,662 201,806 37,500   72,152

v3.23.2
Organization and Basis of Presentation (Details)
1 Months Ended 3 Months Ended 12 Months Ended
Feb. 28, 2023
USD ($)
Jan. 31, 2023
USD ($)
Mar. 31, 2023
USD ($)
company
Mar. 31, 2022
USD ($)
Dec. 31, 2022
USD ($)
company
Dec. 31, 2021
USD ($)
May 31, 2023
USD ($)
Schedule of Investments [Line Items]              
Number of companies owned | company     14   14    
Net loss     $ 5,769,143 $ 3,999,560 $ 12,875,313 $ 19,483,138  
Net cash used in operating activities     32,242 $ 5,900,762 19,578,196 25,423,742  
Working capital     4,000,000.0   15,600,000    
Decrease in working capital     11,500,000        
Maximum borrowing capacity         33,000,000.0    
Line of credit     11,700,000        
Line of credit, current portion     8,970,460   7,426,814 $ 4,473,489  
Revolving Credit Facility              
Schedule of Investments [Line Items]              
Maximum borrowing capacity             $ 2,500,000
Revolving Credit Facility | Line of Credit              
Schedule of Investments [Line Items]              
Maximum borrowing capacity     33,000,000.0        
Remaining borrowing capacity     3,800,000   3,800,000    
Revolving Credit Facility | Four Revolving Lines of Credit | Line of Credit              
Schedule of Investments [Line Items]              
Maximum borrowing capacity     33,000,000   33,000,000.0    
Revolving Credit Facility | Capital Expenditure Line of Credit | Line of Credit              
Schedule of Investments [Line Items]              
Maximum borrowing capacity     $ 100,000   $ 500,000    
Battery Materials Company              
Schedule of Investments [Line Items]              
Equity investment $ 300,000 $ 250,000          
Noncontrolling interest, ownership percentage 10.00% 10.00%          

v3.23.2
Summary of Significant Accounting Policies - Cash (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]      
Cash equivalents $ 0 $ 0 $ 0
Bank balances 800,000 3,200,000 3,500,000
Uninsured cash $ 100,000 $ 2,000,000 $ 2,000,000

v3.23.2
Summary of Significant Accounting Policies - Major Customers & Vendors (Details)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Revenue | Customer Concentration Risk | Customer One      
Product Information [Line Items]      
Concentration risk, percentage   13.00% 14.00%
Revenue | Customer Concentration Risk | Prime Contractors      
Product Information [Line Items]      
Concentration risk, percentage 12.00% 11.00%  
Cost of Goods and Service | Vendor Concentration Risk | A4 Technologies - RCA Segment      
Product Information [Line Items]      
Concentration risk, percentage   17.00%  

v3.23.2
Summary of Significant Accounting Policies - Schedule of Inventory (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]      
Raw materials $ 10,083,241 $ 9,116,824 $ 8,253,104
Work in process 3,236,331 3,165,876 2,480,979
Finished goods 11,943,087 12,975,669 13,685,571
Inventory $ 25,262,659 $ 25,258,369 $ 24,419,654

v3.23.2
Summary of Significant Accounting Policies - Research and Development (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]        
Research and development $ 113,906 $ 191,930 $ 876,542 $ 1,464,918

v3.23.2
Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]        
Antidilutive securities (in shares) 2,700,473 837,472 21,664,165 7,317,778
Earnings Per Share, Basic [Abstract]        
Loss available to stockholders $ (5,769,143) $ (3,999,560) $ (12,875,313) $ (19,483,138)
Loss available to stockholders (in shares) 24,901,733 22,879,056 190,779,052 164,216,808
Loss available to stockholders (in dollars per share) $ (0.23) $ (0.17) $ (0.07) $ (0.12)
Effect of Dilutive Securities        
Effect of dilutive securities stock options and warrants $ 0 $ 0 $ 0 $ 0
Effect of dilutive securities stock options and warrants (in shares) 0 0 0 0
Earnings Per Share, Diluted [Abstract]        
Net income (loss) $ (5,769,143) $ (3,999,560) $ (12,875,313) $ (19,483,138)
Net income (loss) (in shares) 24,901,733 22,879,056 190,779,052 164,216,808
Net income (loss) (in dollars per share) $ (0.23) $ (0.17) $ (0.07) $ (0.12)

v3.23.2
Summary of Significant Accounting Policies - Schedule of Disaggregation of Revenue (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Disaggregation of Revenue [Line Items]        
Total revenues $ 24,361,713 $ 25,592,154 $ 104,563,002 $ 51,640,813
Construction Services        
Disaggregation of Revenue [Line Items]        
Total revenues 4,146,004 4,056,204    
Manufacturing        
Disaggregation of Revenue [Line Items]        
Total revenues 9,320,821 8,648,095    
Defense        
Disaggregation of Revenue [Line Items]        
Total revenues 2,970,087 2,687,981 10,046,658 4,467,376
Technologies        
Disaggregation of Revenue [Line Items]        
Total revenues 7,555,918 9,793,988    
Aerospace        
Disaggregation of Revenue [Line Items]        
Total revenues 368,883 405,886    
Product        
Disaggregation of Revenue [Line Items]        
Total revenues 16,876,739 18,442,083 72,861,907 28,918,591
Product | Construction Services        
Disaggregation of Revenue [Line Items]        
Total revenues 0 0    
Product | Manufacturing        
Disaggregation of Revenue [Line Items]        
Total revenues 9,320,821 8,648,095    
Product | Defense        
Disaggregation of Revenue [Line Items]        
Total revenues 0 0    
Product | Technologies        
Disaggregation of Revenue [Line Items]        
Total revenues 7,555,918 9,793,988    
Product | Aerospace        
Disaggregation of Revenue [Line Items]        
Total revenues 0 0    
Service        
Disaggregation of Revenue [Line Items]        
Total revenues 7,484,974 7,150,071 $ 31,701,095 $ 22,722,222
Service | Construction Services        
Disaggregation of Revenue [Line Items]        
Total revenues 4,146,004 4,056,204    
Service | Manufacturing        
Disaggregation of Revenue [Line Items]        
Total revenues 0 0    
Service | Defense        
Disaggregation of Revenue [Line Items]        
Total revenues 2,970,087 2,687,981    
Service | Technologies        
Disaggregation of Revenue [Line Items]        
Total revenues 0 0    
Service | Aerospace        
Disaggregation of Revenue [Line Items]        
Total revenues $ 368,883 $ 405,886    

v3.23.2
Summary of Significant Accounting Policies - Schedule of Accounts Receivable, Allowance for Credit Loss (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Accounts Receivable, Allowance for Credit Loss [Roll Forward]        
Beginning balance $ 52,531 $ 199,936 $ 199,936  
Additions charged to expense 134,306 $ 113,727 202,761 $ 3,028,757
Accounts written-off     (202,761) (3,028,757)
Ending balance     52,531 $ 199,936
Accounting Standards Update 2016-13        
Accounts Receivable, Allowance for Credit Loss [Roll Forward]        
Beginning balance 52,531      
Additions charged to expense 153,243      
Accounts written-off 18,937      
Ending balance $ 186,837   $ 52,531  

v3.23.2
Leases - Schedule of Future Minimum Lease Payments (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Finance Leases      
2024 $ 1,931,757 $ 1,925,840  
2025 1,962,353 1,952,462  
2026 1,852,006 1,880,402  
2027 1,880,265 1,867,799  
2028 1,923,136 1,910,388  
Thereafter 14,368,333 14,952,719  
Total payments 23,917,850 24,489,610  
Less: imputed interest (8,778,767) (9,171,495)  
Total obligation 15,139,083 15,318,115  
Less: current portion (743,157) (725,302) $ (649,343)
Financing lease obligations, net of current portion 14,395,926 14,592,813 15,319,467
Operating Leases      
2024 2,398,681 2,287,038  
2025 2,423,929 2,443,909  
2026 1,823,638 1,960,387  
2027 1,814,303 1,805,158  
2028 1,708,631 1,770,300  
Thereafter 12,855,124 13,253,279  
Total payments 23,024,306 23,520,071  
Less: imputed interest (6,698,331) (6,938,692)  
Total obligation 16,325,975 16,581,379 1,495,158
Less: current portion (1,484,846) (1,318,885) (428,596)
Operating lease obligations, net of current portion $ 14,841,129 $ 15,262,494 $ 1,066,562

v3.23.2
Leases - Narrative (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
Finance Leases        
Finance lease, right-of-use asset, amortization $ 312,954 $ 312,954 $ 1,251,817 $ 1,244,059
Finance lease, interest expense $ 305,262 317,905 $ 1,255,231 1,301,842
Finance lease, weighted average remaining lease term 11 years 8 months 12 days   11 years 11 months 12 days  
Finance lease, weighted average discount rate 8.01%   8.01%  
Operating Leases        
Operating lease, cost $ 598,590 126,561 $ 1,006,683 386,056
Operating lease, payments $ 540,833 124,654 $ 1,087,951 402,688
Operating lease, weighted average remaining lease term 11 years 8 months 12 days   11 years 9 months 29 days  
Operating lease, weighted average discount rate (as a percent) 6.01%   6.00%  
Cost of Sales        
Finance Leases        
Finance lease, right-of-use asset, amortization $ 44,503 0 $ 151,398 422,259
Operating Leases        
Operating lease, cost $ 216,754 $ 0 $ 329,938 $ 0

v3.23.2
Leases - Schedule of Right of Use Assets and Lease Liabilities (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Assets      
Operating lease assets $ 15,949,731 $ 16,407,566 $ 1,460,206
Liabilities      
Current operating lease liability 1,484,846 1,318,885 428,596
Non-current operating lease liability 14,841,129 15,262,494 1,066,562
Total obligation $ 16,325,975 $ 16,581,379 $ 1,495,158

v3.23.2
Debt - Schedule of Notes Payable (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Debt Instrument [Line Items]      
Total current $ 15,503,807 $ 10,627,950 $ 10,164,013
Total 21,661,596 22,109,820  
Line of Credit | Revolving Credit Facility      
Debt Instrument [Line Items]      
Total current 8,970,460 7,426,814 4,473,489
Long-term debt 3,928,105 7,215,520 5,640,051
Secured Debt and Notes Payable      
Debt Instrument [Line Items]      
Long-term debt 2,229,684 4,266,350 8,426,105
Secured Debt      
Debt Instrument [Line Items]      
Total current 82,787 68,410 61,640
Related Party term notes, current portion      
Debt Instrument [Line Items]      
Total current 535,000 0  
Notes Payable      
Debt Instrument [Line Items]      
Total current $ 5,915,560 3,132,726 5,628,884
Total   $ 2,062,318 $ 2,062,318

v3.23.2
Debt - Future Scheduled Maturities of Outstanding Notes Payable (Details) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Debt Disclosure [Abstract]    
2024 $ 15,503,807  
2025 1,785,069  
Long-Term Debt, Maturity, Year Two 709,653  
2027 3,562,900  
2028 26,035  
Thereafter 74,132  
Total $ 21,661,596 $ 22,109,820

v3.23.2
Debt - Narrative (Details)
1 Months Ended 3 Months Ended 12 Months Ended
May 31, 2023
USD ($)
Feb. 28, 2023
USD ($)
Jan. 31, 2023
USD ($)
Feb. 29, 2020
USD ($)
Mar. 31, 2023
USD ($)
lineOfCredit
Dec. 31, 2022
USD ($)
Dec. 31, 2021
USD ($)
Mar. 31, 2022
USD ($)
Debt Instrument [Line Items]                
Note balance         $ 21,661,596 $ 22,109,820    
Notes payable, related party   $ 500,000 $ 500,000   535,000 0    
Maximum borrowing capacity           33,000,000.0    
Net proceeds from lines of credit           4,795,213 $ 2,575,552  
Notes Payable to Banks                
Debt Instrument [Line Items]                
Debt instrument, face amount $ 200,000 $ 1,300,000 $ 1,300,000          
Interest rate (as a percent) 15.00% 30.00% 30.00%          
Debt instrument term 9 months 6 months 6 months          
Revolving Credit Facility                
Debt Instrument [Line Items]                
Maximum borrowing capacity $ 2,500,000              
Minimum | Notes Payable to Banks                
Debt Instrument [Line Items]                
Debt instrument, face amount   $ 10,000 $ 10,000          
Maximum | Notes Payable to Banks                
Debt Instrument [Line Items]                
Debt instrument, face amount   $ 200,000 $ 200,000          
Notes Payable                
Debt Instrument [Line Items]                
Note balance           2,062,318 $ 2,062,318  
Daily late charge         $ 575      
Debt instrument, face amount       $ 2,300,000        
Interest rate (as a percent)       4.25%        
Debt instrument term       48 months        
Line of Credit | Revolving Credit Facility                
Debt Instrument [Line Items]                
Number of lines of credit | lineOfCredit         4      
Maximum borrowing capacity         $ 33,000,000.0      
Net proceeds from lines of credit         12,900,000      
Remaining borrowing capacity         $ 3,800,000 3,800,000    
Line of Credit | Revolving Credit Facility | Capital Expenditure Line of Credit                
Debt Instrument [Line Items]                
Number of lines of credit | lineOfCredit         1      
Maximum borrowing capacity         $ 100,000 $ 500,000    
Line of Credit | Minimum | Revolving Credit Facility                
Debt Instrument [Line Items]                
Debt instrument term         1 year      
Line of Credit | Minimum | Revolving Credit Facility | Prime Rate                
Debt Instrument [Line Items]                
Basis spread on variable rate (as a percent)         2.50%      
Line of Credit | Maximum | Revolving Credit Facility                
Debt Instrument [Line Items]                
Debt instrument term         5 years      
Line of Credit | Maximum | Revolving Credit Facility | Prime Rate                
Debt Instrument [Line Items]                
Basis spread on variable rate (as a percent)         4.25%      
Alan Martin | Notes Payable                
Debt Instrument [Line Items]                
Note balance         $ 2,900,000     $ 2,900,000
Interest payable, current         $ 1,800,000     $ 1,200,000
Default rate (as a percent)         10.00%      

v3.23.2
Stockholders' Equity - Narrative (Details) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Apr. 30, 2023
Jan. 31, 2023
Nov. 30, 2022
Oct. 31, 2022
Sep. 30, 2022
Jan. 31, 2022
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Dec. 31, 2021
May 12, 2023
May 11, 2023
Jan. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                          
Employee stock compensation             $ 182,589 $ 192,449 $ 704,736 $ 298,063      
Share-based compensation expense not yet recognized, options             $ 900,000   $ 1,053,547        
Class A Common Stock                          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                          
Common stock, shares authorized (in shares)           295,000,000 200,000,000   200,000,000   200,000,000 295,000,000 195,000,000
Common stock, shares issued (in shares)             22,304,761   22,303,333   22,504,669 180,037,350  
Common stock, shares outstanding (in shares)             22,304,761   22,303,333   22,504,669 180,037,350  
Conversion of stock, shares issued (in shares) 1,300,001 1,428 22,662 201,806 37,500 72,152              
Class C Common Stock                          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                          
Common stock, shares authorized (in shares)             15,000,000   15,000,000        
Common stock, shares issued (in shares)             1,528,460   1,529,888        
Common stock, shares outstanding (in shares)             1,528,460   1,529,888        
Stock converted (in shares)   1,428 22,662 201,806 37,500                

v3.23.2
Stockholders' Equity - Stock Option Activity (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Options        
Options outstanding, beginning balance (in shares) 386,751 1,790,000 1,790,000  
Granted (in shares) 0 2,084,620 0  
Forfeited (in shares) (7,689) (781,712) 0  
Exercised (in shares) 0 0 0  
Options outstanding, ending balance (in shares) 379,062 386,751 1,790,000 1,790,000
Vested and expected to vest (in shares) 379,062 3,092,909    
Exercisable (in shares) 135,567 1,084,500    
Weighted Average Exercise Price        
Weighted average beginning balance (in dollars per share) $ 4.39 $ 0.19 $ 0.19  
Weighted average grants (in dollars per share) 0 0.77 3.32  
Weighted average forfeitures (in dollars per share) 6.16 0.32    
Exercised (in dollars per share) 0      
Weighted average ending balance (in dollars per share) 4.35 4.39 $ 0.19 $ 0.19
Weighted average vested and expected to vest (in dollars per share) 4.35 0.55    
Exercisable (in dollars per share) $ 1.11 $ 0.14    
Weighted Average Remaining Contractual Life (Years)        
Weighted average remaining contractual term options, outstanding 7 years 8 months 1 day 7 years 11 months 8 days 6 years 1 month 2 days 7 years 1 month 2 days
Weighted average remaining contractual term, options, vested and expected to vest 7 years 8 months 1 day 7 years 11 months 8 days    
Weighted average remaining contractual term, options, exercisable 5 years 1 month 13 days 5 years 4 months 13 days    
Aggregate Intrinsic Value        
Options, outstanding intrinsic value $ 444,942 $ 463,495 $ 3,098,055 $ 6,176,855
Options, vested and expected to vest, outstanding, aggregate intrinsic value 444,942 463,494    
Options, exercisable, intrinsic value $ 444,942 $ 463,494    

v3.23.2
Stockholders' Equity - Options Outstanding and Exercisable (Details) - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2023
Dec. 31, 2022
Options Outstanding    
Number of shares (in shares) 379,062 3,092,909
Options Exercisable    
Number of shares (in shares) 135,567 1,084,500
Exercise Price $0.05    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Exercise Price $ 0.05 $ 0.05
Exercise Price $ 0.05 $ 0.05
Options Outstanding    
Number of shares (in shares) 111,438 891,500
Weighted Average Remaining Life (Years) 5 years 3 months 3 days 5 years 4 months 17 days
Weighted average exercise price (in dollars per share) $ 0.40 $ 0.05
Options Exercisable    
Number of shares (in shares) 111,438 891,500
Weighted average exercise price (in dollars per share) $ 0.40 $ 0.05
Exercise Price $0.10    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Exercise Price 0.10 0.10
Exercise Price $ 0.10 $ 0.10
Options Outstanding    
Number of shares (in shares) 10,625 85,000
Weighted Average Remaining Life (Years) 5 years 10 days 5 years 3 months 10 days
Weighted average exercise price (in dollars per share) $ 0.80 $ 0.10
Options Exercisable    
Number of shares (in shares) 10,625 85,000
Weighted average exercise price (in dollars per share) $ 0.80 $ 0.10
Exercise Price $0.13    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Exercise Price 0.77 0.13
Exercise Price $ 0.77 $ 0.13
Options Outstanding    
Number of shares (in shares) 243,495 0
Weighted Average Remaining Life (Years) 9 years 29 days 4 years 6 months 29 days
Weighted average exercise price (in dollars per share) $ 6.16 $ 0.13
Options Exercisable    
Number of shares (in shares) 0 0
Weighted average exercise price (in dollars per share) $ 0 $ 0.13
Exercise Price $0.26    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Exercise Price 0.90 0.77
Exercise Price $ 0.90 $ 0.77
Options Outstanding    
Number of shares (in shares) 13,504 2,008,409
Weighted Average Remaining Life (Years) 4 years 7 days 9 years 3 months 29 days
Weighted average exercise price (in dollars per share) $ 7.20 $ 0.77
Options Exercisable    
Number of shares (in shares) 13,504 0
Weighted average exercise price (in dollars per share) $ 7.20 $ 0.77

v3.23.2
Stockholders' Equity - Warrants Activity (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Warrants        
Options outstanding, beginning balance (in shares) 386,751 1,790,000 1,790,000  
Granted (in shares) 0 2,084,620 0  
Forfeited (in shares) (7,689) (781,712) 0  
Exercised (in shares) 0 0 0  
Options outstanding, ending balance (in shares) 379,062 386,751 1,790,000 1,790,000
Vested and expected to vest (in shares) 379,062 3,092,909    
Exercisable (in shares) 135,567 1,084,500    
Weighted Average Exercise Price        
Weighted average beginning balance (in dollars per share) $ 4.39 $ 0.19 $ 0.19  
Weighted average grants (in dollars per share) 0 0.77 3.32  
Weighted average forfeitures (in dollars per share) 6.16 0.32    
Exercised (in dollars per share) 0      
Weighted average ending balance (in dollars per share) 4.35 4.39 $ 0.19 $ 0.19
Weighted average vested and expected to vest (in dollars per share) 4.35 0.55    
Exercisable (in dollars per share) $ 1.11 $ 0.14    
Weighted Average Remaining Contractual Life (Years)        
Weighted average remaining contractual term options, outstanding 7 years 8 months 1 day 7 years 11 months 8 days 6 years 1 month 2 days 7 years 1 month 2 days
Weighted average remaining contractual term, options, vested and expected to vest 7 years 8 months 1 day 7 years 11 months 8 days    
Weighted average remaining contractual term, options, exercisable 5 years 1 month 13 days 5 years 4 months 13 days    
Aggregate Intrinsic Value        
Options, outstanding intrinsic value $ 444,942 $ 463,495 $ 3,098,055 $ 6,176,855
Options, vested and expected to vest, outstanding, aggregate intrinsic value 444,942 463,494    
Options, exercisable, intrinsic value $ 444,942 $ 463,494    
Warrant        
Warrants        
Options outstanding, beginning balance (in shares) 2,321,411 5,527,778 275,000  
Granted (in shares) 0 14,492,754 5,527,778  
Forfeited (in shares) 0 0 (275,000)  
Exercised (in shares) 0 (1,449,276) 0  
Options outstanding, ending balance (in shares) 2,321,411 2,321,411 5,527,778 275,000
Vested and expected to vest (in shares) 2,321,411 18,571,256    
Exercisable (in shares) 2,321,411 18,571,256    
Weighted Average Exercise Price        
Weighted average beginning balance (in dollars per share) $ 11.78 $ 3.32 $ 1.01  
Weighted average grants (in dollars per share) 0 0.69    
Weighted average forfeitures (in dollars per share) 0 0 1.01  
Exercised (in dollars per share) 0 0.69 0  
Weighted average ending balance (in dollars per share) 11.78 11.78 $ 3.32 $ 1.01
Weighted average vested and expected to vest (in dollars per share) 11.78 1.47    
Exercisable (in dollars per share) $ 11.78 $ 1.47    
Weighted Average Remaining Contractual Life (Years)        
Weighted average remaining contractual term options, outstanding 4 years 7 days 4 years 3 months 21 days 4 years 7 months 13 days 2 months 23 days
Granted 0 years      
Weighted average remaining contractual term, options, vested and expected to vest 4 years 7 days 4 years 3 months 21 days    
Weighted average remaining contractual term, options, exercisable 4 years 7 days 4 years 3 months 21 days    
Aggregate Intrinsic Value        
Options, outstanding intrinsic value $ 0 $ 0 $ 0 $ 723,250
Options, vested and expected to vest, outstanding, aggregate intrinsic value 0 0    
Options, exercisable, intrinsic value $ 0 $ 0    

v3.23.2
Stockholders' Equity - Warrants Outstanding and Exercisable (Details) - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Number of options outstanding (in shares) 379,062 386,751 1,790,000 1,790,000
Warrants Outstanding, Weighted Average Remaining Life (Years) 7 years 8 months 1 day 7 years 11 months 8 days 6 years 1 month 2 days 7 years 1 month 2 days
Weighted average exercise price (in dollars per share) $ 4.35 $ 4.39 $ 0.19 $ 0.19
Warrants Exercisable, Number of Shares (in shares) 135,567 1,084,500    
Warrants Exercisable, Weighted Average Exercise Price (in dollars per share) $ 1.11 $ 0.14    
Warrant        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Number of options outstanding (in shares) 2,321,411 2,321,411 5,527,778 275,000
Warrants Outstanding, Weighted Average Remaining Life (Years) 4 years 7 days 4 years 3 months 21 days 4 years 7 months 13 days 2 months 23 days
Weighted average exercise price (in dollars per share) $ 11.78 $ 11.78 $ 3.32 $ 1.01
Warrants Exercisable, Number of Shares (in shares) 2,321,411 18,571,256    
Warrants Exercisable, Weighted Average Exercise Price (in dollars per share) $ 11.78 $ 1.47    
Warrant | Exercise price $6.60        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Exercise price (in dollars per share) $ 52.80 $ 6.60    
Number of options outstanding (in shares) 52,084 416,667    
Warrants Outstanding, Weighted Average Remaining Life (Years) 1 year 10 months 20 days 2 years 1 month 17 days    
Weighted average exercise price (in dollars per share) $ 52.80 $ 6.60    
Warrants Exercisable, Number of Shares (in shares) 52,084 416,667    
Warrants Exercisable, Weighted Average Exercise Price (in dollars per share) $ 52.80 $ 6.60    
Warrant | Exercise price $2.25        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Exercise price (in dollars per share) $ 20.16 $ 2.52    
Number of options outstanding (in shares) 49,604 396,825    
Warrants Outstanding, Weighted Average Remaining Life (Years) 1 year 8 months 12 days 1 year 11 months 8 days    
Weighted average exercise price (in dollars per share) $ 20.16 $ 2.52    
Warrants Exercisable, Number of Shares (in shares) 49,604 396,825    
Warrants Exercisable, Weighted Average Exercise Price (in dollars per share) $ 20.16 $ 2.52    
Warrant | Exercise price $3.10        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Exercise price (in dollars per share) $ 24.80 $ 3.10    
Number of options outstanding (in shares) 535,716 4,285,715    
Warrants Outstanding, Weighted Average Remaining Life (Years) 3 years 7 months 28 days 3 years 10 months 24 days    
Weighted average exercise price (in dollars per share) $ 24.80 $ 3.10    
Warrants Exercisable, Number of Shares (in shares) 535,716 4,285,715    
Warrants Exercisable, Weighted Average Exercise Price (in dollars per share) $ 24.80 $ 3.1    
Warrant | Exercise price $3.08        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Exercise price (in dollars per share) $ 24.64 $ 3.08    
Number of options outstanding (in shares) 53,572 428,571    
Warrants Outstanding, Weighted Average Remaining Life (Years) 3 years 7 months 24 days 3 years 10 months 24 days    
Weighted average exercise price (in dollars per share) $ 24.64 $ 3.08    
Warrants Exercisable, Number of Shares (in shares) 53,572 428,571    
Warrants Exercisable, Weighted Average Exercise Price (in dollars per share) $ 24.64 $ 3.08    
Warrant | Exercise price $0.69        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Exercise price (in dollars per share) $ 5.52 $ 0.69    
Number of options outstanding (in shares) 1,630,435 13,043,478    
Warrants Outstanding, Weighted Average Remaining Life (Years) 4 years 3 months 14 days 4 years 7 months 6 days    
Weighted average exercise price (in dollars per share) $ 5.52 $ 0.69    
Warrants Exercisable, Number of Shares (in shares) 1,630,435 13,043,478    
Warrants Exercisable, Weighted Average Exercise Price (in dollars per share) $ 5.52 $ 0.69    

v3.23.2
Segment Reporting (Details)
3 Months Ended 12 Months Ended
Mar. 31, 2023
USD ($)
segment
Mar. 31, 2022
USD ($)
Dec. 31, 2022
USD ($)
segment
Dec. 31, 2021
USD ($)
Segment Reporting [Abstract]        
Number of operating segments | segment 8   8  
Segment Reporting Information [Line Items]        
Revenues, net $ 24,361,713 $ 25,592,154 $ 104,563,002 $ 51,640,813
Gross profit 5,216,456 5,637,457 21,714,402 7,697,998
Income (loss) from operations (5,140,473) (3,756,155) (10,755,784) (22,122,359)
Depreciation and amortization 1,527,783 1,469,664    
Interest Expenses 998,870 608,961 3,124,132 3,289,233
Net income (loss) (5,769,143) (3,999,560) (12,875,313) (19,483,138)
Total Assets 141,944,725   145,632,214 134,623,850
Goodwill 22,680,084   22,680,084 22,680,084
Accounts receivable, net 15,540,528   17,139,944 11,875,176
Operating Segments        
Segment Reporting Information [Line Items]        
Income (loss) from operations     (10,755,784) (22,122,359)
Depreciation and amortization     6,174,538 $ 4,154,359
All Other        
Segment Reporting Information [Line Items]        
Revenues, net 1,271,147 885,983    
Gross profit 373,568 353,474    
Income (loss) from operations (3,354,961) (2,425,619)    
Depreciation and amortization 278,713 277,441    
Interest Expenses 487,004 295,729    
Net income (loss) (3,474,698) (2,340,993)    
Total Assets 16,070,325   15,118,622  
Goodwill 1,913,310   1,913,310  
Accounts receivable, net 898,915   811,776  
A4 Construction Services - MSM Segment | Operating Segments        
Segment Reporting Information [Line Items]        
Revenues, net 3,813,140 3,767,390    
Gross profit 231,888 463,806    
Income (loss) from operations (404,413) (315,698)    
Depreciation and amortization 174,298 166,404    
Interest Expenses 113,710 103,025    
Net income (loss) (480,600) (362,367)    
Total Assets 10,699,259   11,309,049  
Goodwill 113,592   113,592  
Accounts receivable, net 3,790,520   5,188,521  
A4 Construction Services - Excel Segment | Operating Segments        
Segment Reporting Information [Line Items]        
Revenues, net 332,864 288,814    
Gross profit (150,008) (98,974)    
Income (loss) from operations (432,081) (319,990)    
Depreciation and amortization 67,525 0    
Interest Expenses 60,570 61,985    
Net income (loss) (492,651) (381,975)    
Total Assets 3,390,848   3,359,818  
Goodwill 0   0  
Accounts receivable, net 222,895   288,243  
A4 Manufacturing - QCA Segment | Operating Segments        
Segment Reporting Information [Line Items]        
Revenues, net 4,191,643 4,318,860    
Gross profit 897,715 1,027,184    
Income (loss) from operations 19,097 414,448    
Depreciation and amortization 116,879 100,479    
Interest Expenses 163,645 36,289    
Net income (loss) (144,187) 373,867    
Total Assets 21,046,251   20,988,492  
Goodwill 1,963,761   1,963,761  
Accounts receivable, net 3,397,802   3,867,141  
A4 Manufacturing - Alt Labs Segment | Operating Segments        
Segment Reporting Information [Line Items]        
Revenues, net 4,226,914 3,824,138    
Gross profit 948,752 901,479    
Income (loss) from operations (559,125) (987,483)    
Depreciation and amortization 208,554 307,035    
Interest Expenses 64,680 57,116    
Net income (loss) (658,756) (1,111,462)    
Total Assets 27,083,918   26,636,905  
Goodwill 4,410,564   4,410,564  
Accounts receivable, net 1,994,703   1,833,502  
A4 Defense - TDI Segment | Operating Segments        
Segment Reporting Information [Line Items]        
Revenues, net 2,970,087 2,687,981    
Gross profit 616,582 843,189    
Income (loss) from operations 181,534 423,140    
Depreciation and amortization 72,433 72,090    
Interest Expenses 17,347 0    
Net income (loss) 164,187 423,140    
Total Assets 13,748,110   13,497,381  
Goodwill 6,426,786   6,426,786  
Accounts receivable, net 2,367,869   1,905,314  
A4 Technologies - RCA Segment | Operating Segments        
Segment Reporting Information [Line Items]        
Revenues, net 7,453,423 9,237,259    
Gross profit 2,374,178 2,184,328    
Income (loss) from operations 475,864 566,290    
Depreciation and amortization 244,804 170,046    
Interest Expenses 85,956 54,817    
Net income (loss) 389,908 511,473    
Total Assets 23,339,534   27,191,977  
Goodwill 1,355,728   1,355,728  
Accounts receivable, net 2,845,356   3,232,559  
A4 Technologies - ElecJet Sgement | Operating Segments        
Segment Reporting Information [Line Items]        
Revenues, net 102,495 556,729    
Gross profit (73,809) (62,029)    
Income (loss) from operations (245,421) (304,346)    
Depreciation and amortization 105,666 101,500    
Interest Expenses 0 0    
Net income (loss) (245,421) (304,346)    
Total Assets 12,972,480   12,897,440  
Goodwill 6,496,343   6,496,343  
Accounts receivable, net 22,959   12,888  
A4 Aerospace - Vayu Segment | Operating Segments        
Segment Reporting Information [Line Items]        
Revenues, net 0 25,000    
Gross profit (2,410) 25,000    
Income (loss) from operations (820,967) (806,897)    
Depreciation and amortization 258,911 274,669    
Interest Expenses 5,958 0    
Net income (loss) (826,925) $ (806,897)    
Total Assets 13,594,000   14,632,530  
Goodwill 0   0  
Accounts receivable, net $ (491)   $ 0  

v3.23.2
Commitment and Contingencies (Details)
1 Months Ended
Jan. 19, 2022
lawsuit
Nov. 28, 2021
USD ($)
May 31, 2023
USD ($)
Feb. 28, 2023
USD ($)
Dec. 31, 2022
USD ($)
Nov. 30, 2022
USD ($)
Jul. 31, 2022
USD ($)
shares
Jun. 30, 2022
USD ($)
Oct. 31, 2021
complaint
Aug. 31, 2020
USD ($)
Mar. 31, 2023
USD ($)
Other Commitments [Line Items]                      
2023         $ 66,626           $ 66,626
2024         59,964           59,964
Loss contingency, damages sought, value     $ 610,000 $ 100,000 $ 500,000 $ 2,300,000   $ 213,000      
Notes Payable                      
Other Commitments [Line Items]                      
Daily late charge                     575
Horizon Well Testing Case                      
Other Commitments [Line Items]                      
Loss contingency, damages sought, value                   $ 3,300,000  
Loss contingency interest rate (as a percent)                   8.00%  
Complaints In Discount Court of Oklahoma Country State of Oklahoma                      
Other Commitments [Line Items]                      
Loss contingency, number of claims 3               3    
Complaints In Discount Court of Oklahoma Country State of Oklahoma | Settled Litigation                      
Other Commitments [Line Items]                      
Litigation settlement amount             $ 24,375        
Number of shares settled (in shares) | shares             37,500        
Licensing Agreement                      
Other Commitments [Line Items]                      
Royalty fee         2.50%            
Minimum annual payment, year one     600,000   $ 420,000           440,000
Minimum annual payment, year two     620,000   420,000           460,000
Minimum annual payment, year three     $ 660,000   $ 440,000           $ 480,000
Royalty Agreements                      
Other Commitments [Line Items]                      
Payment as a percentage of net sales   1.50%                  
Royalty agreement, term   10 years                  
Total royalty payment   $ 50,000,000                  

v3.23.2
Subsequent Events (Details) - USD ($)
1 Months Ended
May 31, 2023
Apr. 30, 2023
Feb. 28, 2023
Jan. 31, 2023
Dec. 31, 2022
Nov. 30, 2022
Oct. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Jan. 31, 2022
Jun. 15, 2023
Jun. 14, 2023
May 12, 2023
May 11, 2023
Mar. 31, 2023
Jan. 30, 2022
Subsequent Event [Line Items]                                
Maximum borrowing capacity         $ 33,000,000.0                      
Loss contingency, damages sought, value $ 610,000   $ 100,000   $ 500,000 $ 2,300,000     $ 213,000              
Operating Segments | A4 Manufacturing - QCA Segment                                
Subsequent Event [Line Items]                                
Debt instrument, face amount                     $ 5,000,000 $ 7,000,000        
Revolving Credit Facility                                
Subsequent Event [Line Items]                                
Maximum borrowing capacity $ 2,500,000                              
Restricted Stock                                
Subsequent Event [Line Items]                                
Shares granted (in shares) 13,750                              
Convertible Notes Payable                                
Subsequent Event [Line Items]                                
Debt instrument term 1 year                              
Debt instrument, face amount $ 400,000                              
Interest rate (as a percent) 12.00%                              
Convertible Notes Payable | Restricted Stock                                
Subsequent Event [Line Items]                                
Shares granted (in shares) 196,250                              
Notes Payable to Banks                                
Subsequent Event [Line Items]                                
Debt instrument term 9 months   6 months 6 months                        
Debt instrument, face amount $ 200,000   $ 1,300,000 $ 1,300,000                        
Interest rate (as a percent) 15.00%   30.00% 30.00%                        
Notes Payable to Banks | Minimum                                
Subsequent Event [Line Items]                                
Debt instrument, face amount     $ 10,000 $ 10,000                        
Notes Payable to Banks | Maximum                                
Subsequent Event [Line Items]                                
Debt instrument, face amount     $ 200,000 $ 200,000                        
Licensing Agreement                                
Subsequent Event [Line Items]                                
Royalty fee         2.50%                      
Other Commitment, to be Paid, Remainder of Fiscal Year $ 550,000                              
Minimum annual payment, year one 600,000       $ 420,000                   $ 440,000  
Minimum annual payment, year two 620,000       420,000                   460,000  
Minimum annual payment, year three 660,000       440,000                   $ 480,000  
Minimum annual payment, year four $ 700,000       $ 460,000                      
Licensing Agreement | Minimum                                
Subsequent Event [Line Items]                                
Royalty fee                             2.50%  
Licensing Agreement | Maximum                                
Subsequent Event [Line Items]                                
Royalty fee                             3.50%  
Class B Common Stock                                
Subsequent Event [Line Items]                                
Stock converted (in shares)   1,300,000                            
Common stock, shares authorized (in shares)         10,000,000                   10,000,000  
Common stock, shares outstanding (in shares)         1,068,512                   1,068,512  
Common stock, shares issued (in shares)         1,068,512                   1,068,512  
Preferred Class B                                
Subsequent Event [Line Items]                                
Stock converted (in shares)   1                            
Class A Common Stock                                
Subsequent Event [Line Items]                                
Conversion of stock, shares issued (in shares)   1,300,001   1,428   22,662 201,806 37,500   72,152            
Common stock, shares authorized (in shares)         200,000,000         295,000,000     200,000,000 295,000,000 200,000,000 195,000,000
Common stock, shares outstanding (in shares)         22,303,333               22,504,669 180,037,350 22,304,761  
Common stock, shares issued (in shares)         22,303,333               22,504,669 180,037,350 22,304,761  

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