Alpine 4 (ALPP) - 2021 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements The company's Q1 2021 financials show asset growth and a shift to positive equity, despite a net loss driven by higher expenses Consolidated Balance Sheets The company's balance sheet strengthened significantly by March 31, 2021, with total assets doubling and a shift from deficit to positive equity Consolidated Balance Sheet Highlights (as of March 31, 2021 vs. December 31, 2020) | Metric | March 31, 2021 | December 31, 2020 | Change | | :--- | :--- | :--- | :--- | | Cash | $35,691,473 | $277,738 | +$35,413,735 | | Total Current Assets | $48,049,859 | $10,623,776 | +$37,426,083 | | Total Assets | $84,653,265 | $40,734,183 | +$43,919,082 | | Total Current Liabilities | $14,969,761 | $16,835,985 | -$1,866,224 | | Total Liabilities | $38,578,985 | $49,522,475 | -$10,943,490 | | Total Stockholders' Equity (Deficit) | $46,074,280 | ($8,788,292) | +$54,862,572 | Consolidated Statements of Operations In Q1 2021, flat revenue combined with halved gross profit and doubled operating expenses resulted in a significant net loss Consolidated Statements of Operations (Three Months Ended March 31) | Metric | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Revenue, net | $8,668,405 | $8,835,596 | -1.9% | | Gross Profit | $754,619 | $1,759,744 | -57.1% | | Operating Expenses | $5,826,688 | $2,863,389 | +103.5% | | Loss from Operations | ($5,072,069) | ($1,103,645) | +359.6% | | Net Income (Loss) | ($6,129,468) | $250,388 | N/A | | Diluted EPS | ($0.04) | $0.01 | N/A | Consolidated Statements of Cash Flows Negative operating cash flow in Q1 2021 was offset by substantial cash from financing, leading to a net cash increase Consolidated Statements of Cash Flows (Three Months Ended March 31) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($8,950,925) | $208,635 | | Net cash used in investing activities | ($162,550) | ($2,101,537) | | Net cash provided by financing activities | $44,082,365 | $1,848,316 | | Net increase (decrease) in cash | $34,968,890 | ($44,586) | | Cash, ending balance | $35,691,473 | $257,900 | Notes to Unaudited Consolidated Financial Statements Notes detail recent acquisitions, confirm liquidity post-capital raise, and provide specifics on debt, equity, and segment performance - The company completed the asset purchase of Vayu (US), Inc. on February 8, 2021, and acquired two other companies in May 2021[11][39][40] - Management believes the company has sufficient working capital for the next 12 months, supported by a $54 million capital raise[12] - The company raised approximately $45 million in net proceeds through a registered direct offering of its Class A common stock in February 2021[28] - The Vayu acquisition was an asset purchase paid for with 1,428,572 shares of Series D Preferred Stock valued at $6.7 million[34][35] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its DSF business model, a slight revenue decrease, and a net loss driven by acquisition-related expenses - The company operates as a conglomerate acquiring businesses under its DSF (Drivers, Stabilizers, Facilitators) model, focusing on synergistic collaboration[43][46] - Revenue for Q1 2021 decreased slightly by $167,191 compared to Q1 2020, due to declines in construction segments offset by growth in the QCA segment[48] - Operating expenses increased by $3.0 million year-over-year, largely due to $1.8 million in RSU repurchase costs related to acquisitions[48] - The company significantly improved its liquidity by raising approximately $54 million in Q1 2021 through the sale of common stock[50] Quantitative and Qualitative Disclosures About Market Risk The company is exempt from this disclosure requirement as a Smaller Reporting Company - The company is not required to include this disclosure as it qualifies as a Smaller Reporting Company[53] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective due to material weaknesses in internal financial reporting controls - The company's management concluded that disclosure controls and procedures were ineffective as of the end of the reporting period[56] - Material weaknesses identified include inadequate segregation of duties, risk assessment, control activities, and monitoring processes[56] - No changes were made to internal controls during the quarter that have materially affected, or are likely to materially affect, the controls[57] PART II - OTHER INFORMATION Legal Proceedings The company and its subsidiary are involved in two separate lawsuits related to trade secrets and breach of contract - Subsidiary Excel Fabrication, LLC is pursuing a lawsuit against Fusion Mechanical, LLC for tortious interference and trade secret violations[58] - The company is in litigation with the seller of Horizon Well Testing LLC (HWT), claiming breach of contract related to the acquisition agreement[58] Unregistered Sales of Equity Securities and Use of Proceeds The company issued unregistered preferred and common stock for an acquisition and to settle convertible debt during Q1 2021 - In January 2021, issued 1,428,572 shares of Series D Preferred Stock in connection with the Vayu (US) merger transaction[59] - In Q1 2021, issued 702,877 shares of restricted Class A common stock for the conversion of $109,830 in debt and accrued liabilities[28][59] Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None[60] Other Information This section is not applicable for the reporting period - Not Applicable[60] Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements and required officer certifications