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EX-32 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES - ALPINE 4 HOLDINGS, INC.exh32.htm
EX-31 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES - ALPINE 4 HOLDINGS, INC.exh31.htm
EX-3.5 - CERTIFICATE OF AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, D - ALPINE 4 HOLDINGS, INC.exh3_5.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 
[X]                ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
       For the fiscal year ended December 31, 2017

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from _______ to __________
 
Commission file number:  000-55205
Alpine 4 Technologies Ltd.
(Exact name of registrant as specified in its charter)

Delaware
46-5482689
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
 
 
4742 N. 24th Street Suite 300
 
Phoenix, AZ
85016
(Address of Principal Executive Offices)
(Zip Code)
 
Registrant's telephone number, including area code: 855-777-0077 ext 801

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

Securities Registered pursuant to Section 12(b) of the Act: None
 
Securities Registered pursuant to Section 12(g) of the Act: Class A Common Stock, $0.0001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes  No

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

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

Indicate by check mark if disclosure of delinquent filings pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.



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

Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
   
Emerging Growth Company
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes        No
 
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.  As of June 30, 2017, the aggregate market value of the voting and non-voting common equity held by non-affiliates, computed based on the average bid and asked price of the Class A common stock, was $2,499,935.
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:  As of April 10, 2018, the issuer had 24,507,853 shares of its Class A common stock issued and outstanding and 1,600,000 shares of its Class B common stock issued and outstanding.


DOCUMENTS INCORPORATED BY REFERENCE

None.
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ALPINE 4 TECHNOLOGIES LTD.
FISCAL YEAR ENDED DECEMBER 31, 2016
ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS
 
PART I
Page
 
 
 
ITEM 1.
BUSINESS
3
     
ITEM 1A.
RISK FACTORS
10
     
ITEM 1B.
UNRESOLVED STAFF COMMENTS
15
     
ITEM 2.
PROPERTIES
16
     
ITEM 3.
LEGAL PROCEEDINGS
16
     
ITEM 4.
MINE SAFETY DISCLOSURES
16
     
PART II 
 
     
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
21
     
ITEM 6.
SELECTED FINANCIAL DATA
21
     
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
21
     
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
22
     
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
22
     
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
23
 
 ITEM 9A.
CONTROLS AND PROCEDURES
22
     
ITEM 9B.
OTHER INFORMATION22
   
PART III 
 
     
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
23
     
ITEM 11.
EXECUTIVE COMPENSATION
23
     
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
23
     
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
23
     
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
23
     
PART IV 
 
     
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
23
     
SIGNATURES
36
 
 
2



PART I

Special Note Regarding Forward-Looking Statements
 
Information included or incorporated by reference in this Annual Report on Form 10-K contains forward-looking statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Forward-looking statements may contain the words "believes," "project," "expects," "anticipates," "estimates," "forecasts," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions, and are subject to numerous known and unknown risks and uncertainties. Additionally, statements relating to implementation of business strategy, future financial performance, acquisition strategies, capital raising transactions, performance of contractual obligations, and similar statements may contain forward-looking statements. In evaluating such statements, prospective investors and shareholders should carefully review various risks and uncertainties identified in this Report, including the matters set forth under the captions "Risk Factors" and in the Company's other SEC filings. These risks and uncertainties could cause the Company's actual results to differ materially from those indicated in the forward-looking statements. The Company disclaims any obligation to update or publicly announce revisions to any forward-looking statements to reflect future events or developments.
 
Although forward-looking statements in this Annual Report on Form 10-K reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading "Risk Factors Related to Our Business" below, as well as those discussed elsewhere in this Annual Report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We file reports with the Securities and Exchange Commission ("SEC"). You can read and copy any materials we file with the SEC at the SEC's Public Reference Room, 100 F. Street, NE, Washington, D.C. 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.
 
We disclaim any obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Annual Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

ITEM 1.  BUSINESS.

Our Business

Company Background and History

Alpine 4 Technologies Ltd. (the "Company") was incorporated under the laws of the State of Delaware on April 22, 2014.  The Company was formed to serve as a vehicle to effect an asset acquisition, merger, exchange of capital stock, or other business combination with a domestic or foreign business.  As of the date of this Report, the Company is a technology holding company owning three companies (ALTIA, LLC, Quality Circuit Assembly, Inc., and Venture West Energy Services (formerly Horizon Well Testing, LLC).

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Who We Are


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


At Alpine 4, we understand the nature of how technology and innovation can accentuate a business. We strive to develop strategic synergies between our holdings to create value and operational excellence within a unique long-term perspective.

Our Strategy

Alpine 4's strategy is to provide Fortune 500-level execution strategies in its subsidiary companies and market segments to businesses and companies that have the most to benefit from this access.

Alpine 4 feels this opportunity exists in smaller middle market operating companies with revenues between $5 to $150 million.  In this target rich environment, businesses generally sell at more reasonable multiples, presenting greater opportunities for operational and strategic improvements and have greater potential for growth.   Implementation of our strategy within our holdings is accomplished by the offering of strategic and tactical MBA-level training and development, delivered via the following modules:

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

4


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

Diversification

It is our goal to help drive Alpine 4 into a leading multi-faceted holding company with diverse products and services that not only benefit from one another as 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.   Alpine 4 has been set up with a holding company model, with Presidents who will run each business, and Managers with specific industry related experience who, along with Kent Wilson, the CEO of Alpine 4, will help guide our portfolio of companies as needed.  Alpine 4 will work with our Presidents and Managers to ensure that our motto of S.I.D.E (Synergistic, Innovation, Drives, Excellence) is utilized.  Further, we plan to work with our subsidiaries and capital partners to provide the proper capital allocation and, to work to make sure each business is executing at high levels. 

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

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

Effective, January 1, 2017, Alpine 4 acquired 100% of Venture West Energy Services ("VWES") (formerly Horizon Well Testing, LLC). . Additional information about the acquisition of VWES can be found below under "Recent Developments" and in our Current Reports on Form 8-K filed with the SEC on December 8, 2016, and January 13, 2017.

As of the date of this Annual Report, our subsidiaries and product groups consisted of the following:

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.

Subsidiaries & Product Groups

-
ALTIA, LLC is an automotive technology company with several core product offerings.
 
6th Sense Auto is a connected car technology that provides a distinctive and powerful advantage to management, sales, finance and service departments at automotive dealerships in order to increase productivity, profitability and customer retention.   6thSenseAuto uses disruptive technology to improve inventory management, reduce costs, increase sales, and enhance service.
     
 
BrakeActive™ is a safety device that improves a vehicle's third brake light's ability to greatly reduce or prevent a rear end collision by as much as 40%. According to the Nation Highway Safety Administration (2010), most rear end collisions can be reduced by 90% if trailing vehicles had one additional second to react. The Company's new programmable technology and device aims to do just that.
     
-
 
QCA - Since 1988, Quality Circuit Assembly ("QCA") has been providing electronic contract manufacturing solutions delivered to its customers 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. Turnkey solutions are tailored around each customer's specific requirements.  Conveniently located in San Jose, California with close proximity to San Jose airport and all major carriers, QCA's primary aim is to provide contract-manufacturing solutions to market leading companies within the industrial, scientific, instrumentation, military, medical and green industries. 
     
-
 
Venture West Energy Services (formerly Horizon Well Testing) - Based in Oklahoma City, OK.   Verizon West Energy Services ("VWES") is focused on supporting the oil and gas industry in Texas, Oklahoma, and Arkansas.  Our knowledgeable team provides complete flow back, water transfer, and roustabout services to several of the largest oil producers in the United States.  VWES utilizes a high-quality fleet of manifolds, sand separators and testing units as well as a highly experienced workforce to provide customers with timely and accurate measurements. 
     
-
 
American Precision Fabricators – Based in Fort Smith, Arkansas is a sheet metal fabricator that provides American made fabricated metal parts, assemblies and sub - assemblies to Original Equipment Manufacturers ("OEM"). The Company supplies several industries with fabricated parts that it creates in-house.  It offers several production capabilities with its state-of-the-art machinery. 
5


 
Recent Developments

Termination of Letter of Intent with Lattice Incorporated

On February 28 2018, the Company terminated its previously announced letter of intent to acquire all of the outstanding securities of Lattice Incorporated ("Lattice"), together with letters of intent with certain of Lattice's creditors to convert their debt in Lattice into equity.  After conducting due diligence, the Company determined to not proceed with the acquisition.

Convertible Notes

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

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

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

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

On November 28, 2017, the Company entered into a variable convertible note with unrelated 3rd party for $105,000.  The note is due June 15, 2018 and bears interest at 10% per annum.  The note is immediately convertible to the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion.  The Company can prepay the convertible note up to 180 days from November 28, 2018 with a $750 prepayment penalty.

On December 6, 2017, the Company entered into a variable convertible note with unrelated 3rd party for $86,000 with net proceeds of $79,000.  The note is due June 6, 2018 and bears interest at 10% per annum.  After 180 days, the note is convertible to the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. 
6




Other Equity transaction

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

Completion of Earnhardt Auto Center Pilot Program

On July 12, 2017, the Company announced that its subsidiary ALTIA had successfully concluded its 90 day pilot with Phoenix, AZ-based Earnhardt Auto Centers of its innovative 6th Sense Auto product platform. The pilot program was installed at the Earnhardt Chevrolet dealership in Chandler, AZ, and performed well above expectations and will continue on in the store for the foreseeable future.  ALTIA is also in negotiations with several other large automotive groups regarding its 6th Sense Auto and BrakeActive aftermarket products and anticipates larger orders in 2018.

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

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

Amendment of Amended and Restated Certificate of Incorporation; Change in Capitalization

At the annual shareholders meeting, held on November 18, 2017, the Company's shareholders approved an amendment (the "Amendment") to the Company's Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation"), to reduce the number of shares of the Company's Class A Common Stock authorized from 500,000,000 shares to 100,000,000 shares; to reduce the number of shares of the Company's Class B Common Stock authorized from 100,000,000 shares to 5,000,000 shares; and to increase the number of shares of Preferred Stock from 5,000,000 to 10,000,000 shares.  The Company filed the Amendment on December 15, 2017.

Resignation of Chief Financial Officer

On December 31, 2017, the Company's Board of Directors accepted the resignation of David Schmitt as the Company's Chief Financial Officer.  Mr. Schmitt decided to leave the Company for personal reasons and to spend more time with family. There were no disputes or disagreements with the Company.

Following Mr. Schmidt's resignation, the Company's Board of Directors began a search for a new Chief Financial Officer.

Issuance of Options

On July 31, 2017, the Company issued options to purchase 488,500 shares of the Company's Class A common stock to employees and consultants of the Company. The options were issued pursuant to the Company's 2016 Stock Option and Stock Award Plan (the "Plan").  The options granted vest over four years, and the exercise price of the options granted is $0.13, which was the last closing bid price of the Company's common stock as traded on the OTCQB Market.
7



The options 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.

Acquisition of Horizon Well Testing / Venture West Energy Services, LLC

On November 30, 2016, the Company entered into a Stock Purchase Agreement (the "HWT SPA") with Horizon Well Testing, L.L.C., an Oklahoma limited liability company ("HWT") and its sole shareholder Adam Martin (the "HWT Seller").  Effective as of January 1, 2017, Alpine 4 acquired and took full control of HWT.

Since 2010, VWES has been providing services to the oil and gas industry.  This acquisition is another step in Alpine 4's strategy of diversification through acquisitions.

Pursuant to the HWT SPA, Alpine 4, HWT and the HWT Seller agreed on the terms pursuant to which Alpine 4 would purchase from HWT Seller all of the outstanding membership interests of HWT (the "HWT Interests").  The purchase price paid by Alpine 4 for the HWT Interests consisted of cash, a note, a convertible note, and securities consideration.  The "Cash Consideration" paid was $2,200,000.  The "Note" consisted of a secured note in the amount of $300,000, secured by a subordinated security interest in the assets of HWT.  The Note bears interest at 1% and will be payable in full by July 31, 2017.  The "Convertible Note" consisted of a secured convertible note in the amount of $1,500,000, secured by a subordinated security interest in the assets of HWT.  The HWT Seller has the opportunity to convert the Convertible Note into shares of Alpine 4's Class A common stock at a conversion price of $8.50 after a restricted period according to securities laws.    The Convertible Note bears interest at 5% and is payable in full with a balloon payment on the 18-month anniversary of the closing date of the transaction with no monthly payments.  The "Securities" consisted of two components, an aggregate of 379,403 shares of Alpine 4's Class A common stock issued to the Seller, and a warrant to purchase an additional 75,000 shares of Class A common stock.

In the HWT SPA, the HWT Seller acknowledged and agreed that his entry into consulting agreements with Alpine 4 was an integral part of the transaction contemplated by the HWT SPA. As such, the HWT Seller agreed to enter into consulting agreements with Alpine 4 and HWT, and continue to work with HWT for a period of time agreed upon by Alpine 4 and the HWT Seller.

HWT subsequently changed its name to Venture West Energy Services ("VWES").

Employees

As of the date of this Report, we had 132 full-time and 5 part-time employees. We believe that our relationship with our employees is good. Other than as disclosed in this Report or previously filed with the SEC, we have no employment agreements with our employees.

ITEM 1A.   RISK FACTORS

Because of the following factors, as well as other factors affecting the Company's financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
8


 
Risks Associated With Our Business and Operations

Alpine 4 is an "emerging growth company," and the reduced disclosure requirements applicable to "emerging growth companies" could make our common stock less attractive to investors.

Alpine 4 is 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.

A Company that elects to be treated as an emerging growth company shall continue to be deemed an emerging growth company until the earliest of (i) the last day of the fiscal year during which it had total annual gross revenues of $1,000,000,000 (as indexed for inflation), (ii) the last day 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 it has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (iv) the date on which is deemed to be a 'large accelerated filer' as defined by the SEC, which would generally occur upon it attaining a public float of at least $700 million.

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.

Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.

Alpine 4 has incurred net losses of $20,433,875 since inception through December 31, 2017.  This net loss was primarily driven in 2015 by stock issuance to employees.  Because we have yet to attain profitable operations, in their report on our financial statements for the period ended December 31, 2017, our independent auditors included an explanatory paragraph regarding their substantial doubt about our ability to continue as a going concern.  While management believes Alpine 4 will have net operating gains beginning in the second quarter of 2018, there can be no guarantee that we will be able to achieve these net operating gains.  Our ability to continue as a going concern is subject to our ability to generate a profit and/or obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities, increasing sales or obtaining loan from various financial institutions where possible.  Our net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove successful.  Our financial statements contain additional note disclosures describing the management's assessment of our ability to continue as a going concern.
 
9


Management of Alpine 4 cannot guarantee that Alpine 4 will continue to generate revenues which could result in a total loss of the value of your investment if it is unsuccessful in its business plans.

While Alpine 4 and its subsidiaries have long term Purchase Order arrangements with its large Contract Manufacturing customers and Master Service Agreements with its Oil Field Services customers that can provide a level of dependable revenue, there can be no assurance that Alpine 4 will be able to continue to generate revenues or that revenues will be sufficient to maintain its business.  As a result, investors or shareholders could lose all of their investment if Alpine 4 is not successful in its proposed business plans.

Alpine 4's needs could exceed the amount of time or level of experience its officers and directors may have.  Alpine 4 will be dependent on key executives, and the loss of the services of the current officers and directors could severely impact Alpine 4's business operations.  
 
Alpine 4's business plan does not provide for the hiring of any additional employees other than outlined in its plan of operations until sales will support the expense.  Until that time, the responsibility of developing Alpine 4's business and fulfilling the reporting requirements of a public company will fall upon the officers and the directors.  In the event they are unable to fulfill any aspect of their duties to Alpine 4, it may experience a shortfall or complete lack of sales resulting in little or no profits and eventual closure of our business.

Additionally, the management of future growth will require, among other things, continued development of Alpine 4's financial and management controls and management information systems, stringent control of costs, increased marketing activities, and the ability to attract and retain qualified management, research, and marketing personnel.  The loss of key executives or the failure to hire qualified replacement personnel would compromise Alpine 4's ability to generate revenues or otherwise have a material adverse effect on Alpine 4.  There can be no assurance that Alpine 4 will be able to successfully attract and retain skilled and experienced personnel.

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 publicly 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 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.

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 this 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.
10



Because Alpine 4 has shown a net loss since inception, ownership of Alpine 4 shares is highly risky and could result in a complete loss of the value of your investment if Alpine 4 is unsuccessful in its business plans.

Based upon current plans, Alpine 4 expects to stop incurring operating losses in future periods as its subsidiaries move from their Optimization Phase to its Asset Producing Phase.   However new additional subsidiaries may incur significant expenses associated with the growth of those businesses.  Further, there is no guarantee that it will be successful in realizing future revenues or in achieving or sustaining positive cash flow at any time in the future.  Any such failure could result in the possible closure of its business or force Alpine 4 to seek additional capital through loans or additional sales of its equity securities to continue business operations, which would dilute the value of any shares you receive in connection with the Share Exchange.

Growth and development of operations will depend on the growth in the Alpine 4 acquisition model and from organic growth from its subsidiaries businesses.  If Alpine 4 cannot find desirable acquisition candidates it may not be able to generate growth with future revenues.

Alpine 4 expects to acquire two additional companies in 2018 resulting in projected annualized revenue of $41 million by the end of Q4 2018.  There is no guarantee that it will be successful in realizing future revenue growth from its acquisition model.  As such it is highly dependent on suitable candidates to acquire which the supply of those candidates cannot be guaranteed and is driven from the market for M&A.

Alpine 4 has limited management resources, and will be dependent on key executives.  The loss of the services of the current officers and directors could severely impact Alpine 4's business operations and future development, which could result in a loss of revenues and adversely impact the ability to ever sell any Exchange Shares received through participation in the Share Exchange.

Alpine 4 is relying on a small number of key individuals 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,  and Charles Winters, our Chairman of the Board of Directors.  Mr. Wilson intends to serve full time in his capacities with Alpine 4 to work to develop and grow the Company. Nevertheless, Alpine 4 may not have sufficient managerial resources to successfully manage the increased business activity envisioned by its business strategy.  In addition, Alpine 4's future success depends in large part on the continued service of Mr. Wilson.  If he chooses not to serve as an officer or if he is unable to perform his duties, this could have an adverse effect on Company business operations, financial condition and operating results if we are unable to replace Mr. Wilson or Mr. Winters 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 Alpine 4.

Competition that Alpine 4 faces is varied and strong.

Alpine 4's subsidiaries' products and industries as a whole are subject to 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 competitor entities include a variety of large nationwide corporations, including but not limited to public entities and companies that have established loyal customer bases over several decades.

Many of our current and potential competitors are well established and have significantly greater financial and operational resources, and name recognition than we have.  As a result, these competitors may have greater credibility with both existing and potential customers.  They also may be able to offer more competitive products and services and more aggressively promote and sell their products.  Our competitors may also be able to support more aggressive pricing 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 its control.  Factors such as general economic conditions, levels of unemployment, interest rates, tax rates at all levels of government, competition and other factors beyond Alpine 4's control may have an adverse effect on the ability of our subsidiaries to sell its products, to operate, and to collect sums due and owing to them.
11



Alpine 4 may not be able to successfully implement its business strategy, which could adversely affect its business, financial condition, results of operations and cash flows.  If Alpine 4 cannot successfully implement its business strategy, it could result in the loss of the value of your investment.

Successful implementation of our business strategy depends on our being able to acquire additional businesses and grow our existing subsidiaries, as well as on 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:

o
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;
   
o
Our ability to anticipate changes in consumer preferences and to meet customers' needs for our products in a timely cost effective manner; and
   
o
Our ability to establish, maintain and eventually grow market share in these competitive environments.

 
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.

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.  As we supply more customers, our rate of expansion relative to the size of such customer base will decline. In addition, one of our biggest challenges is securing an adequate supply of suitable product.  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:
 
o
ability to keep satisfied vendor relationships
   
o
hiring and training qualified personnel in local markets;
   
o
managing marketing and development costs at affordable levels;
   
o
cost and availability of labor;
   
o
the availability of, and our ability to obtain, adequate supplies of ingredients that meet our quality standards; and
   
o
securing required governmental approvals in a timely manner when necessary.

Risks Related to Our Common Stock

Alpine 4 stockholders, and others who choose to purchase shares of Alpine 4 common stock if and when offered, may have difficulty in reselling their shares due to the limited public market or state Blue Sky laws.

Our common stock is currently quoted on the OTC market.  Current Alpine 4 stockholders and persons who desire to purchase them in any trading market should be aware that there might be additional significant state law restrictions upon the ability of investors to resell our shares. Accordingly, investors should consider any secondary market for our securities to be a limited one.
12



Sales of our common stock under Rule 144 could reduce the price of our stock.

Under Rule 144 affiliates of Alpine 4 may not sell more than one percent of the total issued and outstanding shares in any 90-day period and must resell the shares in an unsolicited brokerage transaction at the market price. If substantial amounts of our common stock become available for resale under Rule 144 once a market has developed for our common stock, the then-prevailing market prices for our common stock may be reduced.

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 100,000,000 shares of Class A common stock, and 5,000,000 shares of Class B common stock. As of the date of this Annual Report, we had 24,507,853 shares of Class A common stock outstanding, and 1,600,000 shares of Class B common stock outstanding. Accordingly, we may issue up to an additional 75,492,147 shares of Class A common stock, and an additional 3,400,000 shares of Class B common stock.  The future issuance of additional shares of Class A common stock may 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.

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 common stock is likely to be volatile, in part because the volume of trades of our common stock. In addition, the market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including, among others:
13


 
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; 
   
fluctuations in stock market prices and trading volumes of similar companies;
   
general market conditions and overall fluctuations in U.S. equity markets;
   
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 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 common stock may cause our stock price to decline.
 
Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur could significantly reduce the market price of our common stock and impair our ability to raise adequate capital through the sale of additional equity securities.
 
Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly.

Alpine 4's executive officers do not have experience being officers of a public company.   It may be time consuming, difficult and costly for us to develop and implement 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.

Alpine 4 may issue Preferred Stock with voting and conversion rights that could adversely affect the voting power of the holders of Common Stock.
 
Alpine 4's Board of Directors may issue Preferred Stock with voting and conversion rights that could adversely affect the voting power of the holders of Common Stock.  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.  All outstanding shares of Preferred Stock are fully paid and non-assessable.
14



ITEM 1B.   UNRESOLVED STAFF COMMENTS.

Not applicable to Smaller Reporting Companies.

ITEM 2.  PROPERTIES.

Alpine 4 Technologies, Ltd maintains our corporate office in rented offices at 4742 N. 24th Street, Suite 300, Phoenix, AZ 85016. The monthly rent obligation is approximately $3,600 per month.

Quality Circuit Assembly, Inc. rents a location at 1709 Junction Court #380 San Jose, CA 95112.  The monthly rent obligation is approximately $27,500 per month.

Venture West Energy Services, LLC rent a property 6504 SW 29th, Bldg B Oklahoma City, OK 73179.  The monthly rent obligation is approximately $4,500 per month.

American Precision Fabricators, rents a property 4401 Savannah St. Fort Smith, AR 72903 for $15,833 per month.

ITEM 3.   LEGAL PROCEEDINGS.

Kevin Cannon et al. v. Alpine 4 Technologies Ltd., Jeff Hail, et al, Arizona Superior Court, Maricopa County, Cas No. CV2017-055699.  On October 4, 2017, Kevin Cannon and Michelle Hanby, individually and on behalf of It's a Date LLC and Brake Plus NWA, Inc., filed a lawsuit in the Arizona Superior Court, Maricopa County, against the Company and several other defendants, including Jeff Hail, the Company's Sr. Vice President. The claim against the Company alleges tortious interference of contract by the Company. The Company brought a motion to dismiss the Complaint for failure to state a claim on which relief could be granted. The Court permitted the plaintiffs to amend their complaint, which they did. The Company has filed another motion dismiss the Complaint for failure to state a claim on which relief could be granted. As of the date of this Report, the second motion to dismiss had not been ruled on by the Court. The Company disputes the claim against it and intends to defend vigorously against the lawsuit.

ITEM 4.  MINE SAFETY DISCLOSURES.

Not applicable.

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

MARKET PRICES AND DIVIDEND DATA

Stock Prices

As of the date of this Report, our Class A common stock is listed on the OTCQB Market under the symbol ALPP.  Alpine 4 plans to work with a market maker and other professionals to drive trading volume and interest in the stock.

The following table shows the range of high and low sales price information for our Class A common stock as quoted on the OTC Markets for the calendar years 2016 and 2017 and for the first quarter of 2018.  Our Class A common stock was accepted for trading beginning on December 19, 2016.  The quotations below reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.
15



Calendar Year


   
2018
   
2017 
   
2016
 
     High      Low      High      Low      High      Low  
First quarter
 
$
0.34
   
$
0.123
   
$
14.00
   
$
2.40
   
 
 
   
 
 
 
Second quarter
   
  
     
 
   
$
2.54
   
$
0.12
   
 
 
   
 
 
 
Third quarter
   
 
     
 
   
$
0.25
   
$
0.09
   
 
 
   
 
 
 
Fourth quarter
   
 
     
 
   
$
0.46
   
$
0.098
   
$
10.00
   
$
5.00
 

The high and low sales prices for our Class A common stock on April 9, 2018, were $0.125 and $0.122, respectively.  

PLEASE NOTE: Trading in the Company's Class A common stock is limited, and as such, relatively small sales may have a disproportionately large impact on the trading price. The prices shown in the table above reflect the price fluctuations resulting from relatively low volume of trades.

Shareholders

As of April 9, 2018, Alpine 4 had 402 shareholders of record.  This number does not include an indeterminate number of stockholders whose shares are held by brokers in street name. The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of our common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to our common stock.
 
Dividends

Alpine 4 has not declared any cash dividends on its common stock since inception and does not anticipate paying such dividends in the foreseeable future. Any decisions as to future payments of dividends will depend on Alpine 4's earnings and financial position and such other facts, as the Board of Directors deems relevant.

Director Independence

Alpine 4 is not required by any outside organization (such as a stock exchange or trading facility) to have independent directors.

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 "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 2,000,000 shares of the Company's Class A common stock for issuance under the Plan.

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 holders
   
782,250
   
$
0.42
     
1,217,750
 
Equity compensation plans not approved by security holders
                       
Total
   
782,250
   
$
0.42
     
1,217,750
 


16


Recent Sales of Unregistered Securities

Issuances in 2018

Issuance of Convertible Notes

Subsequent to the year ended December 31, 2017, the Company issued a series of short-term notes payable for aggregate proceeds of $260,000.  The notes bear interest at 15% per annum.

On January 23, 2018, the Company entered into a fixed price convertible note for $150,000.  The note is due October 8, 2018 and bears interest at 12% per annum.  After 180 days, the note is convertible into shares of the Company's Class A common stock at a fixed rate of $0.16 per share.

On January 5, 2018, the Company entered into a variable convertible note for $64,000.  The note is due July 5, 2018 and bears interest at 10% per annum.  The note is immediately convertible into the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for the ten days prior to conversion.

On April 3, 2018, the Company entered into a variable convertible note with an unrelated lender for $85,000.  The note is due January 2, 2019 and bears interest at 10% per annum.  The note is immediately convertible into shares of the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion.

On April 5, 2018, the Company entered into a variable convertible note with an unrelated lender for $128,000.  The note is due December 18, 2018 and bears interest at 12% per annum.  After 180 days, the note is convertible into shares of the Company's Class A common stock at a discount of 40% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion.

On April 9, 2018, the Company entered into a variable convertible note for $124,199.  The note is due January 9, 2019 and bears interest at 12% per annum.  After 180 days, the note is convertible to the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for the ten days prior to conversion.

On April 9, 2018, the Company entered into a variable convertible note for $37,800.  The note is due January 9, 2019 and bears interest at 12% per annum.  After 180 days, the note is convertible to the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for the ten days prior to conversion.

The convertible notes issued between January and April 2018 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 2017

During the quarter ended September 30, 2017, the Company issued 106,000 shares of its restricted Class A common stock in connection with services, 177,342 shares for note conversions and 500,000 shares which are fully returnable upon the payment of a convertible note.   Of the 500,000 shares 150,000 have been released for return in exchange for another note with no issuance of shares on the second note.
17



The shares of 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.

During the quarter ended June 30, 2017, the Company issued 154,000 shares of its restricted Class A common stock in connection with services.

The shares of 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 July 31, 2017, the Company issued options to purchase 488,500 shares of the Company's Class A common stock to employees and consultants of the Company. The options were issued pursuant to the Company's 2016 Stock Option and Stock Award Plan (the "Plan").  The options granted vest over four years, and the exercise price of the options granted is $0.13, which was the last closing bid price of the Company's common stock as traded on the OTCQB Market.

The options 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 the quarter ended March 31, 2017, the Company sold an aggregate of 2,001 shares of its restricted Class A common stock in private offerings.  The Company raised an aggregate of approximately $15,000.  The Company issued 36,964 shares of its restricted Class A common stock in connection with the conversion of convertible notes payable.  Additionally, the Company issued 379,403 shares of its Class A common stock for the acquisition of HWT.

The shares of 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.

Convertible Notes

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

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

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

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

On November 28, 2017, the Company entered into a variable convertible note with unrelated third party for $105,000.  The note is due June 15, 2018 and bears interest at 10% per annum.  The note is immediately convertible to the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion.  The Company can prepay the convertible note up to 180 days from November 28, 2018 with a $750 prepayment penalty.

The convertible notes issued between October and December 2017 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.
18



Other Equity transaction

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

The shares of common stock were issued and will be 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 2016

Subsequent to March 31, 2016, the Company issued an additional 1,550,000 shares of its Class A common stock. All of the 1,550,000 shares were issued in connection with employee and consultant compensation arrangements.

During the quarter ended June 30, 2016, the Company sold an aggregate of 670 shares of its restricted Class A common stock in private offerings.  The Company raised an aggregate of approximately $6,000.  The Company issued 58,520 shares of its restricted class A common stock in connection with the conversion of convertible notes payable.  Additionally, the Company issued 161,548 (130,000 to employees) shares of its Class A common stock for services.

The shares of 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.

Issuance of Equity Securities in Venture West/Horizon Transaction

In connection with the acquisition of Venture West Energy Services ("VWES") (formerly Horizon Well Testing, L.L.C.), described in more detail above under "Recent Developments," Alpine 4 purchased all of the outstanding stock of VWES (the "VWES Stock") from Alan Martin (the "Seller").  The purchase price paid by Alpine 4 for the VWES Stock consisted of cash, a note, a convertible note, and securities consideration.  The "Cash Consideration" paid was $2,200,000.  The "Note" consisted of a secured note in the amount of $300,000, secured by a subordinated security interest in the assets of VWES .  The Note bears interest at 1% and will be payable in full by April 30, 2017.  The "Convertible Note" consisted of a secured convertible note in the amount of $1,500,000, secured by a subordinated security interest in the assets of VWES .  The VWES Seller has the opportunity to convert the Convertible Note into shares of Alpine 4's Class A common stock at a conversion price of $8.50 after a restricted period according to securities laws.    The Convertible Note bears interest at 5% and is payable in full with a balloon payment on the 18-month anniversary of the closing date of the transaction with no monthly payments.  The "Securities" consisted of two components, an aggregate of 379,403 shares of Alpine 4's Class A common stock issued to the Seller, and a warrant to purchase an additional 75,000 shares of Class A common stock.

The Note, the Convertible Note, and the Securities was issued to the Seller pursuant to a share exchange agreement with the Seller, in which the Seller made certain representations and warranties, including that he was an accredited investor, that he was acquiring the securities for his own account and not for the account of another, that he was acquiring the securities for investment purposes and not with a view to distribute the securities acquired, and that he had sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of an investment in the Company. As such, the securities were issued to the Seller without registration under the 1933 Act in reliance on Section 4(a)(2) of the 1933 Act and the rules and regulations promulgated thereunder.   The VWES transaction did not involve a public offering.
19



Stock Options to Employees

On April 7, 2017, the Company issued 741,500 options to purchase shares of the Company's Class A common stock to 34 employees and consultants of the Company. The options were issued pursuant to the Company's 2016 Stock Option and Stock Award Plan (the "Plan").  The options granted vest and the exercise price of the options granted was $0.90, which was the last closing bid price of the Company's common stock as traded on the OTC QB Market..

The Company provided to each of the recipients of the Options copies of the Company's public filings including the financial information and other disclosures about the Company. The options were issued to the recipients without registration under the 1933 Act in reliance on Section 4(a)(2) of the 1933 Act and rules and regulations promulgated thereunder. The issuance of the options did not involve a public offering of the Company's securities.

Purchases of Equity Securities by the Company and Affiliated Purchasers

During the fourth quarter of 2017, there were no purchases of the Company's equity securities by the Company or affiliated purchasers

ITEM 6.  SELECTED FINANCIAL DATA.

Not required for Smaller Reporting Companies.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

There are statements in this Report that are not historical facts. These "forward-looking statements" can be identified by use of terminology such as "believe," "hope," "may," "anticipate," "should," "intend," "plan," "will," "expect," "estimate," "project," "positioned," "strategy" and similar expressions. You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. For a discussion of these risks, you should read this entire Report carefully, especially the risks discussed under "Risk Factors." Although management believes that the assumptions underlying the forward looking statements included in this Report are reasonable, they do not guarantee our future performance, and actual results could differ from those contemplated by these forward looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this Report will in fact transpire. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We expressly disclaim any obligation to update or revise any forward-looking statements.

Overview and Highlights

Company Background
 
Alpine 4 Technologies Ltd. (the "Company") was incorporated under the laws of the State of Delaware on April 22, 2014.  The Company was formed to serve as a vehicle to affect an asset acquisition, merger, exchange of capital stock, or other business combination with a domestic or foreign business.  The Company is a technology holding company owning three companies as of December 31, 2017 (ALTIA, LLC; Quality Circuit Assembly, Inc. ("QCA"); and Venture West Energy Services ("VWES") (formerly Horizon Well Testing, LLC).  For 2016, QCA made up most of the revenue for the consolidated financial statements.  VWES was not acquired until January 1, 2017, so it is not combined in our 2016 financial statements.

20


Business Strategy

Alpine 4's strategy is to provide Fortune 500-level execution strategies in its subsidiary companies and market segments to businesses and companies that have the most to benefit from this access.

Alpine 4 feels this opportunity exists in smaller middle market operating companies with revenues between $5 to $150 million.  In this target rich environment, businesses generally sell at more reasonable multiples, presenting greater opportunities for operational and strategic improvements and have greater potential for growth.   Implementation of our strategy within our holdings is accomplished by the offering of strategic and tactical MBA-level training and development, delivered via the following modules:

-
 
Alpine 4 Mini MBA program; and
 
-
 
An Alpine 4 developed ERP (Enterprise Resource Planning system) and collaboration system called SPECTRUMebos.  SPECTRUMebos is what we are defining as an Enterprise Business Operating System (ebos).  This system will combine the key technology software components of Accounting and Financial Reporting, an Enterprise Resource Planning System (ERP), a Document Management System (DMS), a Business Intelligence (BI) platform and a Customer Resource Management (CRM) hub which will be tethered to management reporting and collaboration toolsets. Management believes that these tools will help drive real-time information in two directions: first, to the front lines by empowering customer-facing stakeholders; and second, back to management for planning, problem solving, and integration.   Management believes that SPECTRUMebos will be the technology "secret sauce" in managing our portfolio of companies and, in time, may be offered to external customers.
 
All great strategies must have trades offs. Therefore, Alpine 4 avoids companies that have unionized employees, businesses that have more than $150 million in revenue and companies that reside in highly regulated business industries.

Business Seasonality and Product Introductions

Following the acquisition of the Quality Circuit Assembly, Inc. and VWES and with the newly acquired dealership pilot and contract for ALTIA, LLC, the Company expects to experience higher net sales in its second and third quarters compared to other quarters in its fiscal year.   Each company has varying seasonality to their sales and will be reflected in the financial statements.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses since inception and had accumulated a deficit of $20,433,875 as of December 31, 2017.  The Company requires capital for its contemplated operational and marketing activities.  The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.  Our net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove successful.  Our financial statements contain additional note disclosures describing the management's assessment of our ability to continue as a going concern.

In order to mitigate the risk related with this uncertainty, the Company plans to issue additional shares of common stock for cash and services during the next 12 months and obtain additional funding from the issuance of convertible debt.

Results of Operations

Explanatory Note

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

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

The following are the results of our operations for the year ended December 31, 2017, as compared to 2016.  For comparability purposes, the following results of operations for 2016 are presented on a combined basis showing a full 12 month period including the three months ended March 31, 2016 (Predecessor) and the nine months ended December 31, 2016 (Successor).

   
Successor
   
Successor
   
Predecessor
             
   
Year Ended
December 31,
2017
   
Period from
April 1, 2016
to December 31,
2016
   
Three Months Ended January 1, 2016
to March 31,
2016
   
Combined
12 Month Period
Ended December 31,
2016
   
$ Change
 
                               
Revenue
 
$
10,091,491
   
$
6,072,384
   
$
1,788,654
   
$
7,861,038
     
2,230,453
 
Cost of revenue (exclusive of depreciation)
   
7,524,814
     
4,239,850
     
1,383,031
     
5,622,881
     
1,901,933
 
Gross Profit
   
2,566,677
     
1,832,534
     
405,623
     
2,238,157
     
328,520
 
                                         
Operating expenses:
                                       
General and administrative expenses
   
3,612,885
     
3,847,876
     
533,894
     
4,381,770
     
(768,885
)
Depreciation
   
671,423
     
175,853
     
33,492
     
209,345
     
462,078
 
Amortization
   
92,080
     
56,626
     
-
     
56,626
     
35,454
 
     Total operating expenses
   
4,376,388
     
4,080,355
     
567,386
     
4,647,741
     
(271,353
)
Loss from operations
   
(1,809,711
)
   
(2,247,821
)
   
(161,763
)
   
(2,409,584
)
   
599,873
 
                                         
Other expenses
                                       
Interest expense
   
1,540,226
     
959,308
     
456
     
959,764
     
580,462
 
Change in value of derivative liabilities
   
126,054
 
   
-
     
-
     
-
     
126,054
 
Other (income)
   
(220,179
)
   
(17,429
)
   
-
     
(17,429
)
   
(202,750
)
     Total other expenses
   
1,446,101
     
941,879
     
456
     
942,335
     
503,766
 
                                         
Loss before income tax
   
(3,255,812
)
   
(3,189,700
)
   
(162,219
)
   
(3,351,919
)
   
96,107
 
                                         
Income tax expense (benefit)
   
(258,392
)
   
(52,694
)
   
(31,770
)
   
(84,464
)
   
(173,928
)
                                         
Net loss
 
$
(2,997,420
)
 
$
(3,137,006
)
 
$
(130,449
)
 
$
(3,267,455
)
 
$
270,035
 

Revenue

Our revenues for the year ended December 31, 2017 increased by $2,230,453 as compared to the full 12 month period in 2016.  In 2017, our revenue consisted of $7,769,722 for QCA, $1,773,474 for Venture West Energy Services ("VWES") (formerly Horizon Well Testing), and $548,295 relating to the 6th Sense Auto and Brake Active services of ALTIA.  Revenues increased primarily because of the acquisition of VWES on January 1, 2017, which generated an additional $1,773,474 in revenues in 2017 that did not exist in 2016.  Excluding the impact of VWES revenues, our revenues increased by $456,979 in 2017 as compared to 2016 due primarily to growth in our 6th Sense Auto services.  We expect our revenue to continue to grow over the next 12 months. Management's expectations of growth in revenues is based on multiple areas.  First, management believes that its contacts within the automobile dealership industry, and the anticipated increase in interest in Alpine 4's products and services as Alpine 4 increases its advertising and brand and product/service awareness campaigns will produce increased revenues as the Company engages more dealerships with the Alpine 4 products.  Second, management anticipates continued growth of QCA through new customers and internal growth.  Third, management plans to continue the Company's focus on finding and acquiring companies.
21



Cost of revenue

Our cost of revenue for the year ended December 31, 2017 increased by $1,901,933 as compared to the full 12 month period in 2016.  In 2017, our cost of revenue consisted of $5,330,977 for QCA, $1,865,059 for VWES and $328,778 for ALTIA services.  Cost of revenue increased primarily because of the acquisition of VWES on January 1, 2017, which generated additional costs of $1,865,059 in 2017 that did not exist in 2016.  We expect our cost of revenue to increase over the next year as our revenue increases.

Operating expenses

Our general and administrative expenses for the year ended December 31, 2017 decreased by $768,885 as compared to the full 12 month period in 2016.  The decrease in 2017 is related to higher expenses in 2016 primarily due to non-cash expenses of $1,275,000 for common stock issued to officers and directors for compensation.  These expenses did not reoccur in 2017.  We also had additional expenses in 2016 relating to issuance of common stock for services.  We expect that our general and administrative expenses will increase in future years as we increase our advertising and brand and product/service awareness campaigns and as we hire additional personnel as needed and as operations permit.  The addition of more dealerships will also increase expenses relating to installations, customer management, and operational costs.

Our depreciation expenses for the year ended December 31, 2017, increased by $462,078 as compared to 2016.  The increase is due to additional depreciation expenses in 2017 associated with $4,804,458 in property and equipment acquired with the acquisition of VWES on January 1, 2017.  Our amortization expenses for the year ended December 31, 2017 increased by $35,454 as compared to 2016 due primarily to a full year of amortization in 2017 of intangible assets acquired from the acquisition of QCA on April 1, 2016.

Other expenses

Other expenses for the year ended December 31, 2017, increased by $503,766 as compared to 2016 primarily due an increase in interest expense of $580,462 due to the increase in interest bearing debt during 2017.  The increase was also due to a loss of $126,054 related to the change in value of derivative liabilities in 2017 which did not exist in 2016.  In addition, other income increased by $202,750 in 2017 primarily due to income relating to sublease rental income.

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 by selling shares of our common stock and by generating income from the sale of our products.  As noted above, management's expectations of growth in revenues is based on management's contacts within the automobile dealership industry, and the anticipated increase in interest in Alpine 4's products and services as Alpine 4 increases its advertising and brand and product/service awareness campaigns.  Additionally, management anticipates that the new campaigns will result in the Company's adding new dealerships in 2018.

Management expects to have sufficient working capital for continuing operations from either the sale of its products or through the raising of additional capital through private offerings of our securities. Additionally, as of the date of this Report, the Company was in negotiations to acquire additional businesses, which management believes will provide additional operating revenues to the Company.  There can be no guarantee that the planned acquisitions will close or that they will produce the anticipated revenues on the schedule anticipated by management, or at all.

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

22


Contractual Obligations
 
Our significant contractual obligations as of December 31, 2017, were as follows:


 
 
Payments due by Period
 
 
 
Less than One Year
   
One to Three Years
   
Three to Five Years
   
More Than Five Years
   
Total
 
Notes payable, related parties
 
$
387,000
   
$
-
   
$
-
   
$
-
   
$
387,000
 
Notes payable, non-related parties
   
3,893,617
     
-
     
-
     
-
     
3,893,617
 
Convertible notes payable
   
2,382,250
     
1,660,106
     
-
     
-
     
4,042,356
 
Total
 
$
6,662,867
   
$
1,660,106
   
$
-
   
$
-
   
$
8,322,973
 


Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") and the Company's discussion and analysis of its financial condition and operating results require the Company's management to make judgments, assumptions, and estimates that affect the amounts reported in its condensed consolidated financial statements and accompanying notes. Note 2, "Summary of Significant Accounting Policies," of this Form 10-K describes the significant accounting policies and methods used in the preparation of the Company's condensed consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and such differences may be material.

Management believes the Company's critical accounting policies and estimates are those related to revenue recognition and inventory valuation. Management considers these policies critical because they are both important to the portrayal of the Company's financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.

Revenue Recognition

ALTIA

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

Quality Circuit Assembly

The Company accounts for its revenue per the guidance in ASC 605-25-25 by allocating the total contract amount between the product and service elements.  Revenue is recognized when either the product has completely been built and shipped or the service has been completed.  If a deposit for product or service is received prior to completion the payment is recorded to deferred revenue until such point the product or services meets our revenue recognition policy.  There is an implied warranty on all our services and production.  If a customer is unsatisfied with our work then we will redo the work until the customer is satisfied.  Any returns are credited to the customer until the rework is completed and then re-invoiced to the customer.  Management assess the materiality and likelihood of warranty work and records reserves as needed.  For all periods presented the warrant reserve assessment was immaterial.

23


VWES

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

Principles of consolidation

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

Use of estimates

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

Accounts Receivable

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis.  As of December 31, 2017 and 2016, we had an allowance for bad debt of $18,710 and $0, respectively.

Inventory

Inventory is valued at the lower of the inventory's cost (weighted average basis) or the net realizable value of the inventory. 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 four areas, raw materials, WIP, finished goods, and In-Transit.

Property and Equipment

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

Buildings
39 years
Leasehold Improvements
15 years or time remaining on lease (whichever is shorter)
Equipment
10 years

Maintenance and repair costs are charged against income as incurred.  Significant improvements or betterments are capitalized and depreciated over the estimated life of the asset.
24



Purchased Intangibles and Other Long-Lived Assets

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

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

Impairment of Long-Lived Assets

The Company accounts for long-lived assets in accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 360, "Accounting for the Impairment of Long-Lived Assets."  This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  An impairment loss would be recognized when the estimated future cash flows from the use of the asset are less than the carrying amount of that asset.  During all periods presented, there have been no impairment losses.

Goodwill

In financial reporting, goodwill is not amortized, but is tested for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  Events that result in an impairment review include significant changes in the business climate, declines in our operating results, or an expectation that the carrying amount may not be recoverable.  We assess potential impairment by considering present economic conditions as well as future expectations.  All assessments of goodwill impairment are conducted at the individual reporting unit level.  As of December 31, 2017, the reporting units with goodwill were QCA and VWES.

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

Fair Value Measurement

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

Leases

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

Earnings (loss) per share

Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. The only potentially dilutive securities outstanding during the periods presented were the convertible debentures, but they are anti-dilutive due to the net loss incurred.  All earnings (loss) per common share have been adjusted retroactively for periods presented to reflect changes in number of shares as a result of the reverse stock split amount.
25



Stock-based compensation

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

Income taxes

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

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

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

Embedded Conversion Features

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

Related Party Disclosure

FASB ASC 850, "Related Party Disclosures" requires companies to include in their financial statements disclosures of material related party transactions. The Company discloses all material related party transactions. Related parties are defined to include any principal owner, director or executive officer of the Company and any immediate family members of a principal owner, director or executive officer.
26




ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for Smaller Reporting Companies.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements and footnotes thereto are set forth beginning on page F-1 of this Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.
 
ITEM 9A.  CONTROLS AND PROCEDURES

1. Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as of December 31, 2017.  Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this Report, our disclosure controls and procedures were ineffective.

2. Changes in Internal Control Over Financial Reporting

As of December 31, 2017 CFO Mr. David Schmitt resigned from his position for personal reasons.  Alpine 4 has subsequently hired an outside firm to help with the 2017 10k and 2018 10Q filings and preparations.   The company has also hired additional accounting staff to make up for the resources that Mr. Schmitt supplied the position as CFO.  The company has begun the search for a new CFO but doesn't plan on hiring an new CFO until the 3rd or 4th Quarter 2018.

3. Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
   
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles;
   
provide reasonable assurance that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and
   
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in "Internal Control—Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission.
27



Based on this evaluation, our management determined that our internal controls over financial reporting were not effective as of December 31, 2017.

Areas of material weakness include:

segregation of duties
   
inadequate control activities
   
monitoring processes

4. Inherent Limitations on Effectiveness of Controls

Generally, disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.  Nevertheless, an internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system reflects the fact that there are resource constraints, and the benefits of controls are considered relative to their costs. As noted above, we have determined that our disclosure controls and procedures and our internal controls over financial reporting were not effective as of December 31, 2017.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

ITEM 9B.    OTHER INFORMATION

None.
PART III
 
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

As of the date of this Report, the officers and directors of Alpine 4 were the following:

Name
Age
Officer/Position
Board Member/Position
Kent B. Wilson
45
President, Chief Executive Officer
Director
Charles Winters
40
N/A
Chairman of the Board
Scott Edwards
62
N/A
Director
Ian Kantrowitz
36
N/A
Director
Jeffrey Hail
55
Sr. Vice President
 

Biographical Information for Kent B. Wilson

Mr. Wilson serves as the Chief Executive Officer and Secretary for the Company. Previously, he has 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 holds an MBA from Northcentral University.​

28


On August 21, 2014, Mr. Wilson formed a corporation, WBK 1 Inc., a Delaware corporation.  On September 17, 2014, WBK 1 Inc. filed a Form 10 with the U.S. Securities and Exchange Commission.  WBK 1 Inc. is a "shell company" as defined in the rules of the SEC.  Mr. Wilson was the Chief Executive Officer, Secretary, Treasurer and Director of WBK 1 Inc. from its inception through December 28, 2014, when he sold all of his ownership in WBK 1 to an unrelated third party.  WBK 1 disclosed the change in ownership in a Current Report filed with the Commission on December 29, 2014.  There is no relationship between Alpine 4 and WBK 1 Inc.

Biographical Information for Charles Winters

Mr. Winters is an automotive executive with over 10 years of automotive dealership experience.  He is also a principal in several automotive dealerships and repair shops throughout the southwest.  Mr. Winters holds a Bachelor's Degree in Economics from Auburn University.

Biographical Information for Scott Edwards

Mr. Edwards is automotive sales and marketing executive with over 19 years of experience in the automotive industry.  He currently represents a large national automotive franchise distributorship and has extensive knowledge of the inner workings of the retail and wholesale automotive market.

Biographical Information for Ian Kantrowitz

As Director of Investor Relations, Mr. Kantrowitz 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.

Our bylaws authorize no fewer than one director. As of the date of this Report, we had four directors.

Biographical Information for Jeff Hail

Jeff Hail is the Sr. Vice President (SVP) of Alpine 4 Technologies, Ltd. Raised and educated in Scottsdale, AZ; Mr. Hail earned his Bachelors of Science degree in Operations and Production Management from the W.P. Carey School of Business at Arizona State University  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 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.

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 between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
29



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 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.

As of the date of this Report, we did not have a standing audit, compensation, or nominating committee of the Board of Directors.  The Company has determined that the Board of Directors does not have an "Audit Committee Financial Expert" as that term is defined in Item 407(d)(5) of SEC Regulation S-K.

Section 16(a) beneficial ownership reporting compliance. Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities. Officers, directors and greater than ten percent beneficial shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by us during or with respect to the year ended December 31, 2017, the following persons failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act during fiscal year ended December 2017:
 
 
Name and Principal Position
Number of
Late Reports
Transactions not
 Reported inTimely Manner
Known Failures
 to File a Required Form
       
Kent Wilson, CEO, Director
0
0
None
Charles Winters, Director
1
1
None
Scott Edwards, Director
1
1
None
Ian Kantrowitz, Director
0
0
None
David Schmitt, CFO
2
1
None



30


ITEM 11. EXECUTIVE COMPENSATION.

Summary Compensation Table
 
Name and principal position
 
Year
Salary
   
Bonus
   
Stock awards
   
Option awards
   
Nonequity incentive plan compensation
   
Nonqualified deferred compensation earnings
   
All other compensation
   
Total
 
 
($)
   
($)
   
($)
   
($)
   
($)
   
($)
   
($)
   
($)
 
(a)
 (b)
(c)
   
(d)
   
(e)
   
(f)
   
(g)
   
(h)
   
(i)
   
(j)
 
Kent Wilson, Chief Executive Officer (Principal Executive Officer)
 2016  
120,000
     
0
   
$
0
     
0
     
0
     
0
   
$
7,000
   
$
127,000
 
 
 2017  
200,000
     
0
   
$
0
     
0
     
0
     
0
   
$
0
   
$
200,000
 
David Schmitt, Chief Financial Officer
 2016
$
31,538
   
$
0
   
$
680,000
     
0
     
0
     
0
   
$
0
   
$
711,538
 
 
 2017
$
150,000
   
$
0
   
$
0
   
$
324,414
     
0
     
0
   
$
0
   
$
474,414
 
Jeff Hail, Senior VP
 2016
$
0
   
$
0
   
$
0
     
0
     
0
     
0
   
$
0
   
$
548,241
 
 
 2017
$
120,000
   
$
0
   
$
0
   
$
0
     
0
     
0
   
$
0
   
$
120,000
 
 
Outstanding Equity Awards

Mr. Schmitt was granted 400,000 options on April 7, 2017 with a vesting period of 4 years and an exercise price of $0.90.  The options had a fair value of $311,563 on the date of grant as calculated under ASC 718.  Of the options included in this grant, 350,000 forfeited as of December 31, 2017.  Mr. Schmitt was also granted 100,000 options on July 31, 2017 with a vesting period of 4 years and an exercise price of $0.13.  The options had a fair value of $12,850 on the date of grant as calculated under ASC 718.  Of the options included in this grant, 93,750 forfeited as of December 31, 2017.

Director Compensation

The following table sets forth the amounts paid to the Company's directors for their service as directors of the Company.  Please note: the compensation of Mr. Wilson, who is also an executive officer of the Company, is set forth above.

Name
Fees earned or
 paid in cash
Stock awards
Option awards
Non-equity incentive plan
compensation
Nonqualified deferred
compensation earnings
All other
compensation
Total
($)
($)
($)
($)
($)
($)
($)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Ian Kantrowitz
$0
0
$0
$0
$0
$0
$0
Kent Wilson
$0
0
$0
$0
$0
$0
$0
Charles Winters
$0
0
$0
$0
$0
$0
$0
Scott Edwards
$0
0
$0
$0
$0
$0
$0

31



ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information regarding beneficial ownership of Alpine 4 Class A and Class B common stock as of April 9, 2018, (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:

-
24,507,853 shares of Alpine 4 Class A common stock outstanding as of April 9, 2018; and
 
 
-
1,600,000 shares of Alpine 4 Class B common stock outstanding as of April 9, 2018.

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.

Name and Address of beneficial owner (1)
 
Amount of beneficial ownership of Class A Common Stock
   
Amount of beneficial ownership of Class B Common Stock
   
Percentage of Class A Common Stock (2)
   
Percentage of Class B Common Stock
   
Voting Power (3)
 
 
                             
Kent B. Wilson, Chief Executive Officer,  Director(4)
   
2,401,689
     
1,000,000
     
9.96
%
   
62.50
%
   
30.91
%
Scott Edwards, Director (5)
   
252,000
     
200,000
     
1.04
%
   
12.50
%
   
5.61
%
Charles Winters, Director (6)
   
709,800
     
200,000
     
2.94
%
   
12.50
%
   
6.75
%
Ian Kantrowitz, Director (7)
   
847,371
     
200,000
     
3.51
%
   
12.50
%
   
7.10
%
David Schmitt, Former Chief Financial Officer
   
81,000
     
0
     
0.34
%
   
0
%
   
0.20
%
Richard Evans
515 W. Coliseum Blvd
Ft. Wayne, IN 46808
   
3,270,000
     
0
     
13.56
%
   
0
%
   
8.15
%
All Officers and Directors As a Group (4 persons)
   
4,210,860
     
1,600,000
     
17.46
%
   
100.00
%
   
50.37
%

(1)
Except as otherwise indicated, the address of the stockholder is: Alpine 4 Technologies Ltd., 4742 N. 24th Street, Suite 300, Phoenix AZ 85016.
(2)
The percentages listed in the table are based on 24,507,853 shares of Alpine 4 Class A common stock outstanding as of April 9, 2018.
(3)
The Voting Power column includes the effect of shares of Class B common stock held by the named individuals, as indicated in the footnotes below. Each share of Class B common stock has 10 votes.  The total voting power for each person is also explained in the footnotes below.
(4)
Mr. Wilson owned as of the date of this Report 2,401,689 shares of Class A common stock, and 1,000,000 shares of Class B common stock, which represents an aggregate of 12,401,689 votes, or approximately 31.71% of the voting power.
(5)
Mr. Edwards owned as of the date of this Report 252,000 shares of Class A Common Stock.  Additionally, Mr. Edwards owned 200,000 shares of Alpine 4 Class B Common Stock which together with the Class A Common Stock will represent an aggregate of 2,252,200 votes, or approximately 5.76 % of the voting power.
(6)
Mr. Winters owned as of the date of this Report 709,800 shares of Class A Common Stock.  Additionally, Mr. Winters owns 200,000 shares of Alpine 4 Class B Common Stock which together with the Class A Common Stock will represent an aggregate of 2,709,800 votes, or approximately 6.93% of the voting power.
(7)
Mr. Kantrowitz owned as of the date of this Report 847,371 shares of Class A Common Stock.  Additionally, Mr. Kantrowitz owned 200,000 shares of Alpine 4 Class B Common Stock which together with the Class A Common Stock will represent an aggregate of 2,847,371 votes, or approximately 7.28% of the voting power.
(8)
Mr. Schmittt owned as of the date of this Report 81,000 shares of Class A Common Stock.  Additionally, Mr. Schmitt owned 0 shares of Alpine 4 Class B Common Stock which together with the Class A Common Stock will represent an aggregate of 81,000 votes, or approximately .21% of the voting power. As noted elsewhere in this Report, Mr. Schmitt resigned as the Company's Chief Financial Officer on December 31, 2017.

32


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Related Party Transactions

None.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Malone Bailey

Set below are aggregate fees billed by Malone Bailey for professional services rendered for the year ended December 31, 2017.

Audit Fees

The fees for the audit and review services billed and to be billed by Malone Bailey for the period from January 1, 2017, to December 31, 2017 were $116,000.

Audit Related Fees

The fees for the audit related services billed and to be billed by Malone Bailey for the period from January 1, 2017, to December 31, 2017 were $0.

Tax Fees

The fees for the tax related services billed and to be billed by Malone Bailey for the period from January 1, 2017, to December 31, 2017 were $0.

Set forth below are the aggregate fees billed by Malone Bailey for professional services rendered for the year ended December 31, 2016.

Audit Fees

The fees for the audit and review services billed and to be billed by Malone Bailey for the period from January 1, 2016, to December 31, 2016 were $89,384.

Audit Related Fees

The fees for the audit related services billed and to be billed by Malone Bailey for the period from January 1, 2016, to December 31, 2016 were $51,139.

33


Tax Fees
 
The fees for the tax related services billed and to be billed by Malone Bailey for the period from January 1, 2016, to December 31, 2016 were $0.


PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

15(a)(1). Financial Statements.

The following consolidated financial statements, and related notes and Report of Independent Registered Public Accounting Firm are filed as part of this Annual Report:

Reports of Independent Registered Public Accounting Firm Report of MaloneBailey, LLP
F-1
Financial Statements:
 
Consolidated Balance Sheets
F-2
Consolidated Statements of Operations
F-3
Consolidated Statements of Stockholders' Deficit
F-4
Consolidated Statements of Cash Flows
F-5
Notes to Consolidated Financial Statements
F-6

34


 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Shareholders and Board of Directors of
Alpine 4 Technologies, Ltd.
 
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Alpine 4 Technologies Ltd. and its subsidiaries (collectively, the "Company", or "Successor") as of December 31, 2017 and 2016, and the related consolidated statements of operations, stockholders' deficit, and cash flows for the year ended December 31, 2017 for the period from April 1, 2016 through December 31, 2016, and the related notes (collectively referred to as the "financial statements"). We have also audited the statements of operations, stockholders' deficit, and cash flows of Quality Circuit Assembly, Inc. (the "Predecessor") for the period from January 1, 2016 through March 31, 2016, and the related notes (collectively referred to as the "Predecessor financial statements").  In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for the year ended December 31, 2017 and for the period from April 1, 2016 through December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.  Further, in our opinion, the Predecessor financial statements present fairly, in all material respects, the results of their operations and their cash flows for the period from January 1, 2016 through March 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Matter

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. 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 the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits 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 audits 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 entity's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits 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 audits 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 audits provide a reasonable basis for our opinion.

/s/ MaloneBailey, LLP
www.malonebailey.com
We have served as the Company's auditor since 2015
Houston, Texas
April 17, 2018
F - 1


 
ALPINE 4 TECHNOLOGIES, LTD. and SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
 
   
             
   
December 31,
2017
   
December 31,
2016
 
             
ASSETS
           
             
CURRENT ASSETS:
           
Cash
 
$
128,512
   
$
209,494
 
 Accounts receivable, net
   
2,067,081
     
1,346,585
 
 Inventory
   
1,212,546
     
930,114
 
 Prepaid expenses and other current assets
   
221,958
     
39,734
 
 Total current assets
   
3,630,097
     
2,525,927
 
                 
 Property and equipment, net
   
9,198,387
     
5,202,133
 
 Intangible asset, net
   
752,622
     
757,528
 
 Goodwill
   
2,131,606
     
1,963,761
 
 Other non-current assets
   
258,238
     
688,204
 
 Total non-current assets
   
12,340,853
     
8,611,626
 
                 
 TOTAL ASSETS
 
$
15,970,950
   
$
11,137,553
 
                 
 LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
 CURRENT LIABILITIES:
               
 Accounts payable
 
$
1,980,995
   
$
1,434,170
 
 Accrued expenses
   
1,049,185
     
299,043
 
 Deferred revenue
   
64,918
     
12,536
 
 Derivative liabilities
   
271,588
     
-
 
 Deposits
   
12,509
     
12,509
 
 Notes payable, current portion
   
3,893,617
     
1,332,031
 
 Notes payable, related parties
   
387,000
     
205,000
 
 Convertible notes payable, current portion, net of discount of $79,630 and $7,421
    2,302,620       247,359  
 Financing lease obligation, current portion
   
24,590
     
13,814
 
 Income tax payable
   
-
     
20,123
 
 Total current liabilities
   
9,987,022
     
3,576,585
 
                 
 NON-CURRENT LIABILITIES:
               
 Long-term debt
   
-
     
147,079
 
 Convertible notes payable, net of current portion
   
1,660,106
     
1,760,198
 
 Financing lease obligation, net of curent portion
   
6,560,112
     
6,572,579
 
 Deferred revenue
   
43
     
-
 
 Deferred tax liability
   
181,703
     
287,153
 
 Total non-current liabilities
   
8,401,964
     
8,767,009
 
                 
 TOTAL LIABILITIES
   
18,388,986
     
12,343,594
 
                 
 REDEEMABLE COMMON STOCK
               
               
 Class A Common stock, $0.0001 par value, 379,403 and 0 shares issued and outstanding at December 31, 2017 and 2016, respectively
   
1,439,725
     
-
 
                 
 STOCKHOLDERS' DEFICIT:
               
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding
   
-
     
-
 
Class A Common stock, $0.0001 par value, 100,000,000 shares authorized, 23,222,087 and 21,474,481 shares issued and outstanding at December 31, 2017 and 2016, respectively
   
2,322
     
2,148
 
Class B Common stock, $0.0001 par value, 5,000,000 shares authorized, 1,600,000 and 1,600,000 shares issued and outstanding at December 31, 2017 and 2016, respectively
   
160
     
160
 
 Additional paid-in capital
   
16,573,632
     
16,228,106
 
 Accumulated deficit
   
(20,433,875
)
   
(17,436,455
)
 Total stockholders' deficit
   
(3,857,761
)
   
(1,206,041
)
 TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 
$
15,970,950
   
$
11,137,553
 
 
The accompanying notes are an integral part of these consolidated financial statements
F - 2


 
ALPINE 4 TECHNOLOGIES, LTD. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
   
Twelve month period
 
   
Successor
   
Successor
   
Predecessor
 
   
Year Ended
December 31,
2017
   
Period from
April 1, 2016
to December 31,
2016
   
Three Months Ended
January 1, 2016
to March 31,
2016
 
                   
Revenue
 
$
10,091,491
   
$
6,072,384
   
$
1,788,654
 
Cost of revenue (exclusive of depreciation)
   
7,524,814
     
4,239,850
     
1,383,031
 
Gross Profit
   
2,566,677
     
1,832,534
     
405,623
 
                         
Operating expenses:
                       
General and administrative expenses
   
3,612,885
     
3,847,876
     
533,894
 
Depreciation
   
671,423
     
175,853
     
33,492
 
Amortization
   
92,080
     
56,626
     
-
 
     Total operating expenses
   
4,376,388
     
4,080,355
     
567,386
 
Loss from operations
   
(1,809,711
)
   
(2,247,821
)
   
(161,763
)
                         
Other expenses
                       
Interest expense
   
1,540,226
     
959,308
     
456
 
Change in value of derivative liabilities
   
126,054
 
   
-
     
-
 
Other (income)
   
(220,179
)
   
(17,429
)
   
-
 
     Total other expenses
   
1,446,101
     
941,879
     
456
 
                         
Loss before income tax
   
(3,255,812
)
   
(3,189,700
)
   
(162,219
)
                         
Income tax expense (benefit)
   
(258,392
)
   
(52,694
)
   
(31,770
)
                         
Net loss
 
$
(2,997,420
)
 
$
(3,137,006
)
 
$
(130,449
)
                         
Weighted average shares outstanding :
                       
Basic
   
23,858,031
     
21,294,890
     
-
 
Diluted
   
23,858,031
     
21,294,890
     
-
 
                         
Loss per share
                       
Basic
 
$
(0.13
)
 
$
(0.15
)
 
$
   
Diluted
 
$
(0.13
)
 
$
(0.15
)
 
$
   


The accompanying notes are an integral part of these consolidated financial statements
F - 3



 

ALPINE 4 TECHNOLOGIES, LTD. and SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
 
   
Class A Common Stock
   
Class B Common Stock
   
Additional
Paid-in
   
Accumulated
Earnings/
   
Total
Stockholders'
Equity/
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
(Deficit)
   
(Deficit)
 
 Balance, December 31, 2015 (Predecessor)
   
240,000
   
$
240,000
     
-
   
$
-
   
$
(129,253
)
 
$
1,362,838
   
$
1,473,585
 
                                                         
Net loss
                                           
(130,449
)
   
(130,449
)
                                                         
 Balance, March 31,2016 (Predecessor)
   
240,000
   
$
240,000
     
-
   
$
-
   
$
(129,253
)
 
$
1,232,389
   
$
1,343,136
 
                                                         
Alpine 4 Technologies, Ltd beginning balance
   
20,920,069
     
2,092
     
1,600,000
     
160
     
13,903,376
     
(14,299,449
)
   
(393,821
)
Issue shares of common stock for cash
   
670
     
-
                     
6,000
             
6,000
 
Issue shares of common stock to consultants for services
   
66,784
     
7
                     
591,032
             
591,039
 
Issue shares of common stock for convertible note payable and accrued interest
   
336,938
     
34
                     
336,903
             
336,937
 
Issue shares of common stock to officers and directors for services
   
150,000
     
15
                     
1,274,985
             
1,275,000
 
Beneficial converstion feature associated with convertible notes
                                   
115,810
             
115,810
 
Adjustment for reverse stock split
   
20
                                             
-
 
Net loss
                                           
(3,137,006
)
   
(3,137,006
)
                                                         
 Balance, December 31,2016
   
21,474,481
   
$
2,148
     
1,600,000
   
$
160
   
$
16,228,106
   
$
(17,436,455
)
 
$
(1,206,041
)
                                                         
Issue shares of common stock for cash
   
132,209
     
13
                     
39,987
             
40,000
 
Issue shares of common stock to consultants for services
   
578,640
     
57
                     
62,027
             
62,084
 
Issue shares of common stock for convertible note payable and accrued interest
   
886,757
     
89
                     
99,484
             
99,573
 
Issue shares for discount on convertible note payable
   
150,000
     
15
                     
16,485
             
16,500
 
Reclassification of derivative liability
                                   
(252,633
)
           
(252,633
)
Derivative liability resolution                                     222,099               222,099  
Issuance of warrants for acquisition of VWES
                                   
40,941
             
40,941
 
Share-based compensation expense
                                   
87,136
             
87,136
 
Beneficial converstion feature associated with convertible notes
                                   
30,000
             
30,000
 
Net loss
                                           
(2,997,420
)
   
(2,997,420
)
                                                         
 Balance, December 31,2017
   
23,222,087
   
$
2,322
     
1,600,000
   
$
160
   
$
16,573,632
   
$
(20,433,875
)
 
$
(3,857,761
)

 The accompanying notes are an integral part of these consolidated financial statements
F - 4




ALPINE 4 TECHNOLOGIES, LTD. and SUBSIDIARIES
 
CONSOLIDATED STATEMENT OF CASH FLOWS
 
   
   
Twelve month period
 
   
Successor
   
Successor
   
Predecessor
 
   
Year Ended
December 31,
2017
   
Period from
April 1, 2016 to December 31,
2016
   
Three Months Ended January, 1, 2016
to March 31,
2016
 
OPERATING ACTIVITIES:
                 
Net loss
 
$
(2,997,420
)
 
$
(3,137,006
)
 
$
(130,449
)
Adjustments to reconcile net loss to net cash used in operating activities:
                       
Depreciation
   
671,423
     
175,853
     
33,492
 
Amortization
   
92,080
     
56,626
     
-
 
Loss on disposal of fixed assets
   
18,841
     
-
     
-
 
Change in value of derivative liabilities
   
126,054
 
   
-
     
-
 
Employee stock compensation
   
87,136
     
1,275,000
     
-
 
Stock issued for services
   
62,084
     
591,039
     
-
 
Amortization of debt issuance
   
50,500
     
8,447
     
-
 
Amortization of debt discounts
   
89,292
     
274,615
     
-
 
Change in current assets and liabilities:
                       
Accounts receivable
   
(506,436
)
   
(187,411
)
   
47,578
 
Inventory
   
(282,432
)
   
243,240
     
(14,062
)
Prepaids
   
(127,386
)
   
(33,699
)
   
(41,040
)
Other non-current assets
   
7,007
     
-
         
Accounts payable
   
546,825
     
256,937
     
16,468
 
Accrued expenses
   
723,733
     
203,246
     
56,723
 
Income tax payable
   
(20,123
)
   
-
         
Deferred tax
   
(105,450
)
   
(59,157
)
   
(41,645
)
Deferred revenue
   
52,425
     
11,538
     
-
 
Net cash used in operating activities
   
(1,511,847
)
   
(320,732
)
   
(72,935
)
                         
INVESTING ACTIVITIES:
                       
Capital expenditures
   
(192,805
)
   
(267,401
)
   
-
 
Proceeds from insurance claim on Automobiles & Trucks
   
237,732
     
-
     
-
 
Acquisition, net of cash acquired
   
(1,937,616
)
   
(2,800,000
)
   
-
 
Net cash used in investing activities
   
(1,892,689
)
   
(3,067,401
)
   
-
 
                         
FINANCING ACTIVITIES:
                       
Proceeds from issuances of notes payable, related party
   
105,500
     
175,000
     
-
 
Proceeds from issuances of notes payable, non-related party
   
1,952,390
     
3,630,631
     
-
 
Repayments of notes payable, non-related party
   
(247,084
)
   
(2,482,825
)
   
-
 
Proceeds from line of credit, net
   
709,201
     
-
         
Repayments of notes payable, related party
   
(223,500
)
   
(1,535
)
   
(10,000
)
Proceeds from convertible notes payable
   
785,500
     
15,500
     
-
 
Repayments of convertible notes
   
(219,721
)
   
(82,672
)
   
(59,461
)
Proceeds from the sale of common stock
   
40,000
     
6,000
     
-
 
Net proceeds from financing obligation lease, net of commissions and financing charges
   
-
     
2,704,260
         
Change in restricted cash
   
422,959
     
(641,537
)
   
-
 
Cash paid for rent deposit on lease of building
   
-
     
(46,667
)
       
Cash paid on financing lease obligation
   
(1,691
)
   
(21,314
)
   
-
 
Net cash provided by (used in) financing activities
   
3,323,554
     
3,254,841
     
(69,461
)
                         
NET INCREASE (DECREASE) IN CASH
   
(80,982
)
   
(133,292
)
   
(142,396
)
                         
CASH, BEGINNING BALANCE
   
209,494
     
342,786
     
365,221
 
                         
CASH, ENDING BALANCE
 
$
128,512
   
$
209,494
   
$
222,825
 
                         
CASH PAID FOR:
                       
Interest
 
$
1,219,080
   
$
217,791
   
$
456
 
Income taxes
 
$
2,167
   
$
-
   
$
47,500
 
                         
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
                       
Common stock issued for convertible note payable and accrued interest
 
$
99,573
   
$
336,937
   
$
-
 
Common stock issued for convertible note discount
 
$
16,500
     
-
     
-
 
Issuance of convertible note for acquisition of QCA
 
$
-
   
$
2,000,000
   
$
-
 
Purchase of building from lease proceeds
 
$
-
   
$
3,895,000
   
$
-
 
Issuance of convertible note for acquisition of VWES
 
$
1,500,000
   
$
-
   
$
-
 
Issuance of note payable for acquisition of VWES
 
$
300,000
   
$
-
   
$
-
 
Issuance of warrants for acquisition of VWES
 
$
40,941
   
$
-
   
$
-
 
Issuance of redeemable common stock for acquisition of VWES
 
$
1,439,725
   
$
-
   
$
-
 
Debt discount from convertible note payable
 
$
30,000
   
$
115,810
   
$
-
 
Proceeds for refinancing line of credit and notes payable paid directly to former lender
 
$
-
   
$
1,319,122
     
-
 
Debt discount due to derivative liabilities
 
$
115,000
   
$
-
   
$
-
 
Reclassification of warrants embedded conversion options as derivative liability
 
$
252,633
   
$
-
   
$
-
 


The accompanying notes are an integral part of these consolidated financial statements
F - 5




 
ALPINE 4 TECHNOLOGIES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2017 AND 2016



Note 1 – Description of Business

Alpine 4 Technologies Ltd. ("we" or the "Company") was incorporated under the laws of the State of Delaware on April 22, 2014.  The Company was formed to serve as a vehicle to affect an asset acquisition, merger, exchange of capital stock, or other business combination with a domestic or foreign business.  As of the date of this Report, the Company is a technology holding company owning three companies (ALTIA, LLC; Quality Circuit Assembly, Inc. ("QCA"); and Venture West Energy Services ("VWES") (formerly Horizon Well Testing, LLC).  For 2016 QCA made up most of the revenue for the consolidated financials.  VWES was not acquired until January 1, 2017 (see Note 9), so it is not included in our accompanying 2016 financial statements.
Acquisition Reporting
As discussed in Note 9, the Company entered into a stock purchase transaction with QCA in which the Company purchased 100% of QCA's outstanding stock.
The consolidated financial statements herein are presented under predecessor entity reporting and because the acquiring entity had nominal operations as compared with the acquired company, QCA, prior historical information of the acquirer is not presented.
This new basis of accounting was created on April 1, 2016, the effective date for financial reporting purposes of the stock purchase agreement.  In the following discussion, the results of the operations and cash flows for the periods ended on or prior to March 31, 2016, and the financial position of QCA as of balance sheet date on or prior to March 31, 2016 are referred to as "Predecessor" financial information, and the results of operations and cash flows of the Company for periods beginning April 1, 2016 and the financial position of the Company as of April 1, 2016 and subsequent balance sheet dates are referred to herein as "Successor" consolidated financial information.
Note 2 - Summary of Significant Accounting Policies
Principles of consolidation

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

 
Basis of presentation

The accompanying financial statements present the balance sheets, statements of operations, stockholders' deficit and cash flows of the Company. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP").
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities.  These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances.  Actual results could differ from those estimates.
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.
F - 6



Cash
Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days.  Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds.  The carrying value of those investments approximates fair value. As of December 31, 2017 and 2016, the Company had no cash equivalents.
Major Customers
The Company had two customers that made up 41% and 13% of accounts receivable as of December 31, 2017.  For the year ended December 31, 2017, the Company had one customer that made up 36% of total revenues.
The Company had two customers that made up approximately 50% of outstanding accounts receivable as of December 31, 2016.  These same two customers comprised approximately 50% of total revenues for the nine months ended December 31, 2016 (Successor).
Accounts Receivable
The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis.  As of December 31, 2017 and 2016, we had an allowance for bad debt of $18,710 and $0, respectively.

Inventory

Inventory is valued at the lower of the inventory's cost (weighted average basis) or the net realizable value of the inventory. 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 four areas, raw materials, WIP, finished goods, and In-Transit.  Inventory consisted of the following as of December 31, 2017 and 2016:

   
December 31,
2017
   
December 31,
2016
 
Raw materials
 
$
577,259
   
$
527,599
 
WIP
   
440,586
     
193,525
 
Finished goods
   
161,310
     
195,990
 
In Transit
   
33,391
     
13,000
 
   
$
1,212,546
   
$
930,114
 
 
Property and Equipment
 
Property and equipment are carried at cost less depreciation. Depreciation and amortization are provided principally on the straight-line method over the estimated useful lives of the assets, which range from ten years to 39 years as follows:
Automobiles & Trucks
10 to 20 years
Buildings
39 years
Leasehold Improvements
15 years or time remaining on lease (whichever is shorter)
Equipment
10 years

Maintenance and repair costs are charged against income as incurred.  Significant improvements or betterments are capitalized and depreciated over the estimated life of the asset.
F - 7


Property and equipment consisted of the following as of December 31, 2017 and 2016:
 
 
December 31,
2017
   
December 31,
2016
 
Automobiles & Trucks
 
$
1,208,935
   
$
-
 
Machinery & Equipment
   
4,454,466
     
1,263,941
 
Office furniture & fixtures
   
7,056
     
-
 
Building
   
3,945,952
     
3,895,000
 
Land
   
126,347
     
-
 
Leasehold Improvements
   
294,524
     
219,045
 
Less: Accumulated Depreciation
   
(838,893
)
   
(175,853
)
 
 
$
9,198,387
   
$
5,202,133
 

 
Purchased Intangibles and Other Long-Lived Assets
The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between five and fifteen years as follows:

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

 
Intangible assets consisted of the following as of December 31, 2017 and 2016:
 
 
December 31,
2017
   
December 31,
2016
 
Software
 
$
278,474
   
$
191,300
 
Noncompete
   
100,000
     
100,000
 
Customer Lists
   
531,187
     
531,187
 
Less: Accumulated Amortization
   
(157,039
)
   
(64,959
)
 
 
$
752,622
   
$
757,528
 

 Expected amortization expense of intangible assets over the next 5 years and thereafter is as follows.
 
   
2018
   
2019
   
2020
   
2021
   
2022
   
Thereafter
   
Total
 
Software
   
33,332
     
33,332
     
33,332
     
33,332
     
19,734
     
-
     
153,062
 
Non-compete
   
35,000
     
20,000
     
20,000
     
20,000
     
-
     
-
     
95,000
 
Customer List
   
26,627
     
26,627
     
26,627
     
26,627
     
26,627
     
371,425
     
504,560
 
Total Accumulated Amortization
   
94,959
     
79,959
     
79,959
     
79,959
     
46,361
     
371,425
     
752,622
 

F - 8


 
Other long-term assets consisted of the following as of December 31, 2017 and 2016:

 
 
December 31,
 2017
   
December 31,
2016
 
Restricted Cash
 
$
207,311
   
$
630,270
 
Deposits
   
50,927
     
57,934
 
   
$
258,238
   
$
688,204
 

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

The Company accounts for long-lived assets in accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 360, "Accounting fo