0001096906-16-001880.txt : 20160824 0001096906-16-001880.hdr.sgml : 20160824 20160824113906 ACCESSION NUMBER: 0001096906-16-001880 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20160331 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20160824 DATE AS OF CHANGE: 20160824 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Alpine 4 Technologies Ltd. CENTRAL INDEX KEY: 0001606698 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 465482689 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-55205 FILM NUMBER: 161848753 BUSINESS ADDRESS: STREET 1: 4742 N. 24TH STREET STREET 2: SUITE 300 CITY: PHOENIX STATE: AZ ZIP: 85016 BUSINESS PHONE: 855-777-0077 EXT 801 MAIL ADDRESS: STREET 1: 4742 N. 24TH STREET STREET 2: SUITE 300 CITY: PHOENIX STATE: AZ ZIP: 85016 FORMER COMPANY: FORMER CONFORMED NAME: Alpine 4 Automotive Technologies Ltd. DATE OF NAME CHANGE: 20140728 FORMER COMPANY: FORMER CONFORMED NAME: ALPINE 4 Inc. DATE OF NAME CHANGE: 20140429 8-K/A 1 alpine4.htm ALPINE 4 8KA


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
 
FORM 8-K/A
___________
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) March 31, 2016
 
 
Alpine 4 Technologies Ltd.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
 
Delaware
000-55205
 46-5482689 
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
(COMMISSION FILE NO.)
(IRS EMPLOYEE IDENTIFICATION NO.)
 
4742 N. 24th Street Suite 300
Phoenix, AZ
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
 
855-777-0077 ext 801
 (ISSUER TELEPHONE NUMBER)
 
 (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[   ] Written communications pursuant to Rule 425 under the Securities Act
[   ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
[   ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
[   ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act



Item 1.01                          Entry into a Material Definitive Agreement.
Item 2.01                          Completion of Acquisition or Disposition of Assets.
Item 3.02                          Unregistered Sales of Equity Securities.

On March 31, 2016, Alpine 4 Technologies Ltd., a Delaware corporation (the "Company"), announced that it had completed the previously announced acquisition of Quality Circuit Assembly, Inc. ("QCA")  in a cash and debt transaction, and will take effective control of QCA on April 1, 2016.  As a result of the acquisition, QCA became a direct, wholly owned subsidiary of the Company.

This amended Current Report is filed to provide financial information about QCA, as well as pro forma financial information about the Company and QCA, as required by the SEC's rules and regulations.

Item 9.01                          Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.
 
Financial Statements of Quality Circuit Assembly , Inc., as of December 31, 2015 and 2014, and as of March 31, 2016 and 2015 (unaudited).
 
(b) Pro Forma Financial Information.
 
Alpine 4 Technologies Ltd. and Quality Circuit Assembly, Inc., Pro Forma Consolidated Financial Statements (unaudited).
 
(d) Exhibits
 
Exhibit No.
Description
 
 
99.1
Audited Financial Statements of Quality Circuit Assembly, Inc., as of December 31, 2015 and 2014, and as of March 31, 2016 and 2015 (unaudited)
99.2
Alpine 4 Technologies Ltd. and Quality Circuit Assembly, Inc., Pro Forma Consolidated Financial Statements (unaudited)



SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Alpine 4 Technologies Ltd.
 
 
 
By: /s/ Kent B. Wilson                                                                                                  
Kent B. Wilson
Chief Executive Officer, Chief Financial Officer, President
(Principal Executive Officer, Principal Financial Officer)

 Date: August 24, 2016
 

EX-99.1 2 exh99_1.htm AUDITED FINANCIAL STATEMENTS OF QUALITY CIRCUIT ASSEMBLY, INC., AS OF DECEMBER 31, 2015 AND 2014, AND AS OF MARCH 31, 2016 AND 2015 (UNAUDITED)

Exhibit 99.1

 
QUALITY CIRCUIT ASSEMBLY, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014 (audited)
AND MARCH 31, 2016 AND 2015 (unaudited)
 
Table of Contents
 
 
 
Page
 
 
 
Reports of Independent Registered Public Accounting Firms 
 
 
 
 
 
Report of MaloneBailey, LLP
F-2
 
 
 
Financial Statements: 
 
 
 
 
 
Balance Sheets
F-3
 
 
 
 
Statements of Operations
F-4
 
 
 
 
Statements of Stockholders' Equity
F-5
 
 
 
 
Statements of Cash Flows
F-6
 
 
 
 
Notes to Financial Statements
F-7 to F-12



F - 1

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of
Quality Circuit Assembly, Inc.
San Jose, California

Report on the Financial Statements

We have audited the accompanying financial statements of Quality Circuit Assembly, Inc., which comprise the balance sheets as of December 31, 2015 and 2014, and the related statements of operations, changes in stockholders' equity, and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

Opinion
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. In our opinion, based on our audits, the financial statements referred to above present fairly, in all material respects, the financial position of Quality Circuit Assembly Inc. as of December 31, 2015 and 2014 respectively, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
August 24, 2016
F - 2


QUALITY CIRCUIT ASSEMBLY, INC.
 
BALANCE SHEETS
 
             
   
3/31/2016
   
12/31/2015
   
12/31/2014
 
   
(Unaudited)
   
(Audited)
   
(Audited)
 
ASSETS
           
             
CURRENT ASSETS:
           
  Cash
 
$
222,825
   
$
365,221
   
$
224,290
 
 Accounts receivable
   
1,095,419
     
1,091,953
     
1,038,192
 
 Inventory
   
949,785
     
949,362
     
910,960
 
 Prepaids
   
53,535
     
12,193
     
13,047
 
 Total current assets
   
2,321,564
     
2,418,729
     
2,186,489
 
                         
NON-CURRENT ASSETS:
                       
 Property, plant and equipment
   
1,356,711
     
1,356,711
     
1,522,164
 
 Less: Accumulated depreciation
   
(1,223,940
)
   
(1,190,448
)
   
(1,270,339
)
 Net Property, plant and equipment
   
132,771
     
166,263
     
251,825
 
                         
 Total non-current assets
   
132,771
     
166,263
     
251,825
 
                         
 TOTAL ASSETS
 
$
2,454,335
   
$
2,584,992
   
$
2,438,314
 
                         
 LIABILITIES AND STOCKHOLDERS' EQUITY
                       
                         
 CURRENT LIABILITIES:
                       
 Accounts payable
 
$
652,628
   
$
655,942
   
$
505,960
 
 Credit Card payable
   
-
     
25,043
     
17,152
 
 Accrued expenses
   
141,444
     
91,941
     
123,388
 
 Notes payable
   
-
     
19,940
     
19,344
 
 Notes payable, related parties
   
-
     
10,000
     
-
 
 Income tax payable
   
-
     
45,410
     
210,969
 
 Deferred revenue
   
202,049
     
202,049
     
-
 
 Total current liabilities
   
996,121
     
1,050,325
     
876,813
 
                         
 NON-CURRENT LIABILITIES:
                       
 Long-term debt
   
-
     
39,522
     
59,460
 
 Deferred tax liability
   
25,327
     
21,560
     
6,499
 
 Total non-current liabilities
   
25,327
     
61,082
     
65,959
 
                         
 TOTAL LIABILITIES
   
1,021,448
     
1,111,407
     
942,772
 
                         
 STOCKHOLDERS' EQUITY:
                       
 Common stock
   
240,000
     
240,000
     
240,000
 
 Dividends
   
(129,253
)
   
(129,253
)
   
-
 
 Accumulated earnings
   
1,322,140
     
1,362,838
     
1,255,542
 
 Total stockholders' equity
   
1,432,887
     
1,473,585
     
1,495,542
 
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
2,454,335
   
$
2,584,992
   
$
2,438,314
 
 
The accompanying notes are an integral part of these financial statements.
F - 3

QUALITY CIRCUIT ASSEMBLY, INC.
 
STATEMENTS OF OPERATIONS
 
     
    
For Three Months Ended
   
For the Year Ended
 
   
3/31/2016
   
3/31/2015
   
12/31/2015
   
12/31/2014
 
   
(Unaudited)
   
(Unaudited)
   
(Audited)
   
(Audited)
 
                 
Revenue
 
$
1,788,654
   
$
1,844,084
   
$
7,513,844
   
$
6,671,747
 
Cost of revenue
   
1,337,083
     
1,391,216
     
5,736,354
     
4,944,783
 
Gross Profit
   
451,571
     
452,868
     
1,777,490
     
1,726,964
 
                                 
Operating expenses:
                               
General and administrative expenses
   
490,091
     
334,047
     
1,404,526
     
1,367,057
 
Depreciation
   
33,492
     
33,492
     
100,280
     
88,845
 
Amortization
   
-
     
-
     
-
     
-
 
     Total operating expenses
   
523,583
     
367,539
     
1,504,806
     
1,455,902
 
Income/(Loss) from operations
   
(72,012
)
   
85,329
     
272,684
     
271,062
 
                                 
Other expenses
                               
Interest expense
   
456
     
655
     
2,064
     
3,862
 
(Gain) on disposal of fixed assets
   
-
     
-
     
(34,062
)
   
-
 
     Total other expenses
   
456
     
655
     
(31,998
)
   
3,862
 
                                 
Income/(Loss) before income tax
   
(72,468
)
   
84,674
     
304,682
     
267,200
 
                                 
Income tax
   
(31,770
)
   
37,121
     
197,386
     
165,901
 
                                 
Net Income/(Loss)
 
$
(40,698
)
 
$
47,553
   
$
107,296
   
$
101,299
 
                                 
Weighted average shares outstanding :
                               
Basic
   
240,000
     
240,000
     
240,000
     
240,000
 
Diluted
   
240,000
     
240,000
     
240,000
     
240,000
 
                                 
Loss per share
                               
Basic
 
$
(0.17
)
 
$
0.20
   
$
0.45
   
$
0.42
 
Diluted
 
$
(0.17
)
 
$
0.20
   
$
0.45
   
$
0.42
 
 
The accompanying notes are an integral part of these financial statements.
 
F - 4

 
QUALITY CIRCUIT ASSEMBLY, INC.
 
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 
 
Common Stock
 
 
 
Shares
   
Share
Capital
   
Distributions (Dividend)
   
Retained
Earning
   
Total
Stockholders'
Equity
 
Balance - December 31, 2013
   
240,000
   
$
240,000
   
$
-
   
$
1,154,243
   
$
1,394,243
 
                                         
Net Income (Loss)
                           
101,299
     
101,299
 
                                         
Balance - December 31, 2014 (audited)
   
240,000
   
$
240,000
   
$
-
   
$
1,255,542
   
$
1,495,542
 
                                         
Net Income (Loss)
                           
107,296
     
107,296
 
(Dividend)
                   
(129,253
)
           
(129,253
)
                                         
Balance - December 31, 2015 (audited)
   
240,000
   
$
240,000
   
$
(129,253
)
 
$
1,362,838
   
$
1,473,585
 
                                         
Net Income (Loss)
                           
(40,698
)
   
(40,698
)
                                         
Balance - March 31, 2016 (unaudited)
   
240,000
   
$
240,000
   
$
(129,253
)
 
$
1,322,140
   
$
1,432,887
 
 

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


QUALITY CIRCUIT ASSEMBLY, INC.
 
STATEMENT OF CASH FLOWS
 
                 
      
For Three Months Ended
   
For the Year Ended
 
   
3/31/2016
   
3/31/2015
   
12/31/2015
   
12/31/2014
 
   
(Unaudited)
   
(Unaudited)
   
(Audited)
   
(Audited)
 
OPERATING ACTIVITIES:
               
Net Income/(Loss)
 
$
(40,698
)
 
$
47,553
   
$
107,296
   
$
101,299
 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
                               
Depreciation
   
33,492
     
33,492
     
100,280
     
88,845
 
(Gain) on distribution of fixed assets
   
-
     
-
     
(34,062
)
   
-
 
Change in current assets and liabilities:
                               
Accounts receivable
   
(3,466
)
   
(252,027
)
   
(53,761
)
   
(71,671
)
Inventory
   
(423
)
   
(415,114
)
   
(38,402
)
   
48,090
 
Prepaids
   
(41,342
)
   
13,047
     
854
     
(13,047
)
Accounts payable
   
(3,314
)
   
545,887
     
149,982
     
(110,758
)
Accrued expenses
   
24,461
     
(8,238
)    
(23,556
)
   
(124,203
)
Deferred revenue
   
-
     
-
     
202,049
     
-
 
Taxes payable
   
(41,645
)
   
(74,106
)
   
(150,498
)
   
208,633
 
Net cash provided by (used in) operating activities
   
(72,935
)
   
(109,506
)
   
260,182
     
127,188
 
                                 
INVESTING ACTIVITIES:
                               
Capital expenditures
   
-
     
(12,065
)
   
(79,304
)
   
(18,513
)
Net cash used in investing activities
   
-
     
(12,065
)
   
(79,304
)
   
(18,513
)
                                 
FINANCING ACTIVITIES:
                               
Proceeds from issuances of notes payable, related party
   
-
     
-
     
45,000
     
-
 
Repayments of notes payable
   
(59,461
)
   
(4,770
)
   
(19,342
)
   
(22,399
)
Repayments of related party loan
   
(10,000
)
   
-
     
(35,000
)
   
(72,624
)
Dividends
   
-
     
-
     
(30,605
)
   
-
 
Net cash used in financing activities
   
(69,461
)
   
(4,770
)
   
(39,947
)
   
(95,023
)
                                 
NET INCREASE IN CASH
   
(142,396
)
   
(126,341
)
   
140,931
     
13,652
 
                                 
CASH, BEGINNING BALANCE
   
365,221
     
224,290
     
224,290
     
210,638
 
                                 
CASH, ENDING BALANCE
 
$
222,825
   
$
97,949
   
$
365,221
   
$
224,290
 
                                 
CASH PAID FOR:
                               
Interest
 
$
456
   
$
655
   
$
2,362
   
$
3,862
 
Income taxes
 
$
47,500
   
$
118,435
   
$
350,952
   
$
-
 
                                 
NON CASH TRANSACTION:
                               
Distribution of fixed assets to owners
 
$
-
   
$
-
   
$
98,648
   
$
-
 


 The accompanying notes are an integral part of these financial statements.
F - 6


QUALITY CIRCUIT ASSEMBLY, INC.
NOTES TO THE FINANCIAL STATEMENTS
 
 
Note 1 – Description of Business
Quality Circuit Assembly, Inc. ("Quality Circuit Assembly," "we," or "us"), is a wire harness and printed circuit board assembler with locations in San Jose and San Diego, CA.  Quality Circuit Assembly mainly serves the Pacific Northwest.
Note 2 - Summary of Significant Accounting Policies

Basis of presentation

The accompanying audited financial statements present the balance sheets, statements of operations, stockholders' equity and cash flows of Quality Circuit Assembly. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP").

The unaudited condensed consolidated financial statements were prepared by Quality Circuit Assembly, pursuant to the rules and regulations of the Securities Exchange Commission.  The information furnished herein reflects all adjustment (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating result for the respective periods.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires Quality Circuit Assembly 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 Quality Circuit Assembly and on various other assumptions that Quality Circuit Assembly believes to be reasonable under the circumstances.  Actual results could differ from those estimates.

Cash and Cash Equivalents

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, 2015 and 2014, and as of March 31, 2016 (unaudited), Quality Circuit Assembly had no cash equivalents.

From time to time, Quality Circuit Assembly held deposits over the FDIC insured amount of $250,000.
 
Accounts Receivable

Quality Circuit Assembly 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.

Quality Circuit Assembly had no allowance for uncollectible accounts as of December 31, 2015 and 2014, and as of March 31, 2016 (unaudited).  Quality Circuit Assembly carries accounts receivable insurance.  Therefore, no allowance for uncollectible accounts is needed.


F - 7


Major Customers

During the year ending December 31, 2014, Quality Circuit Assembly had two customers that made up approximately 50% of total revenues.  During the year ending December 31, 2015, Quality Circuit Assembly had two customers that made up approximately 62% of total revenues.  During the unaudited three months ending March 31, 2016, Quality Circuit Assembly had two customers that made up 57% of total revenues.  All other customers were less than 10% each of total revenues in each period.

As of December 31, 2014, Quality Circuit Assembly had two customers that made up approximately 73% of total accounts receivable of which no significant amount was deemed uncollectible or uncollected.  As of December 31, 2015, Quality Circuit Assembly had two customers that made up approximately 71% of total accounts receivable of which no significant amount was deemed uncollectible or uncollected.  As of March 31, 2016 (unaudited), Quality Circuit Assembly had one customer that made up approximately 50% of total accounts receivable of which no significant amount was deemed uncollectible or uncollected.  All other customers were less than 10% each of total accounts receivable as of each balance sheet date.
 
Inventory

Inventory, consisting of raw materials, work in progress and finished goods, is valued at the lower of the inventory's cost or market, using the average cost method to determine the cost. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower.
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.  Useful lives are five years for automobiles and trucks, and for machinery and equipment, and seven years for office furniture, fixtures, and software.
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.
Impairment of Long-lived Assets

Management monitors events and changes in circumstances that could indicate long-lived assets, including intangible assets, may not be recoverable.  Whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, an impairment loss is recorded.  Quality Circuit Assembly recorded no impairment on its long-lived assets during the years ended December 31, 2015 and 2014, or the three months ended March 31, 2016 (unaudited).

Fair Value Measurement

Quality Circuit Assembly's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and shareholder loans.  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.
F - 8


Revenue Recognition

We recognize revenue either FOB Origin or FOB Destination dependent upon the contract with the customer.

We consider revenue recognizable when persuasive evidence of an arrangement exists, the price is fixed or determinable, goods or services have been shipped or delivered, and collectability is reasonably assured. These criteria are assumed to have been met if a customer orders an item, the goods or services have been shipped or delivered to the customer, and we have sufficient evidence of collectability, such a payment history with the customer. Our records at December 31, 2015 and 2014, and at March 31, 2016 (unaudited), have been sufficient to satisfy all of the four requirements. Revenue has been recognized for all amounts billed prior to December 31, 2015 and December 31, 2014, and prior to March 31, 2016 (unaudited).

Income taxes

We record 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, our experience with operating loss and tax credit carry forwards not expiring unused, and tax planning alternatives.
 
Significant judgment is required in evaluating our tax positions and determining our 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. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes.

In November 2015, the Financial Accounting Standards Board ("FASB") issued updated accounting guidance on balance sheet classification of deferred taxes, ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. This update provides for simplified presentation of deferred income taxes. Deferred tax liabilities and assets are now required to be classified as noncurrent in a classified statement of financial position. This guidance is effective within those annual reporting periods that begin after December 31, 2016, and interim periods within those annual periods and allows for full prospective or retrospective application. Early adoption is permitted. Quality Circuit Assembly has elected early adoption in accordance with the guidance.
F - 9


Note 3 – Inventory

Inventory is categorized in three areas.  Below is a list of balances for each area and period.

   
Mar 31,
2016
   
Dec 31,
2015
   
Dec 31,
2014
 
     (Unaudited)              
Raw materials
 
$
463,024
   
$
391,845
   
$
396,388
 
WIP
   
309,939
     
351,697
     
333,712
 
Finished goods
   
163,822
     
192,820
     
167,860
 
In-Transit
   
13,000
     
13,000
     
13,000
 
   
$
949,785
   
$
949,362
   
$
910,960
 
 
Note 4 – Fixed Assets


Quality Circuit Assembly depreciates fixed assets on the straight-line method over the assets useful life.  Useful lives are five years for automobiles and trucks, and for machinery and equipment, and seven years for office furniture, fixtures, and software.  Depreciation expense for the years ending December 31, 2015 and 2014, were $100,280 and $88,845, respectively.  For the unaudited three months ending March 31, 2016 and 2015, depreciation expense were $33,492 and $33,492, respectively.
 
Below is a list of fixed assets by category.

   
Mar 31,
2016
   
Dec 31,
2015
   
Dec 31,
2014
 
     
(Unaudited) 
                 
Automobiles & trucks
 
$
-
   
$
-
   
$
238,155
 
Machinery & Equipment
   
1,191,843
     
1,191,843
     
1,119,141
 
Office furniture & fixtures and software
   
164,868
     
164,868
     
164,868
 
Less: Accumulated Depreciation
   
(1,223,940
)
   
(1,190,448
)
   
(1,270,339
)
 
 
$
132,771
   
$
166,263
   
$
251,825
 
 
Note 5 – Debt


As of December 31, 2015 Quality Circuit Assembly had non-related-party debt of $59,462.  This debt is in the form of 6- month and 72-month term car loans with interest rates of 2.06% and 4.83%, respectively, and ending in 2018 and 2019, respectively.  Interest expense on debt for the periods ending December 31, 2015 and 2014, was $2,364 and $3,000, respectively.  Interest expense on debt for the unaudited three months ending March 31, 2016 and 2015, was $456 and $655, respectively.
 
The schedule of payments for debt is as follows
 
   
2016
   
2017
   
2018
   
2019
   
Total
 
Loan Payable
 
$
19,940
   
$
20,633
   
$
17,279
   
$
1,610
   
$
59,462
 

F - 10

Note 6 - Leases


Quality Circuit Assembly conducts its operations from an office located in San Jose, CA, for which in 2014 and 2015 we paid rent of approximately $17,000 and $18,000, respectively, per month.  All rent has been paid through December 31, 2015.  The lease expires December 31, 2016, and Quality Circuit Assembly is in negotiations to extend the lease to December 31, 2021.  Rent expense for the years ending December 31, 2015 and 2014, was $234,174 and $281,192, respectively.  Rent expense for the unaudited three months ending March 31, 2016 and 2015, was $58,459 and $55,809, respectively.

Note 7 - Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. For the years ending December 31, 2015 and 2014, the deferred tax liability was $21,560 and $6,499, respectively.  For the unaudited three months ending March 31, 2016 the deferred tax liability was $25,327.  The difference is due to long-lived assets, book versus tax depreciation, and amortization.  Examinations for periods from July 1, 2013, are still open for examination but management believes that adequate accruals have been provided for all open years.

Note 8 – Related Party Transactions

At December 31, 2015, Quality Circuit Assembly had one outstanding note payable to officers and directors of Quality Circuit Assembly.  The note payable is unsecured, non-interest bearing and payable upon demand.  The note payable amount outstanding at December 31, 2015 and 2014, was $10,000 and $0, respectively.  Payments were $72,624 in 2014, $35,000 in 2015, and $10,000 in 2016.
 
Related Party Notes Payable
 
 
 
Borrowings
   
Payments
   
Related
Party
Note
Payable
Balance
 
Balance - December 31, 2014
  $       $      
$
-
 
 
                       
Borrowings
   
45,000
             
45,000
 
Payments
           
(35,000
)
   
(35,000
)
 
                       
Balance - December 31, 2015
 
$
45,000
   
$
(35,000
)
 
$
10,000
 
 
                       
Payments
           
(10,000
)
   
(10,000
)
 
                       
Balance - March 31, 2016 (unaudited)
 
$
45,000
   
$
(45,000
)
 
$
-
 
 
The note was paid in full in February 2016 and there are no other obligations or terms associated with this note.

For the year ended December 31, 2014 Quality Circuit Assembly had rent expense of $50,000 with Nancy Moss and Madu Hargreaves, the wives of the two owners.
In 2015, there were disbursements of assets and cash to the owners in the amounts of $98,648 and $30,605, respectively.
F - 11

Note 10 – Subsequent Event


On April 1, 2016, Quality Circuit Assembly was purchased by Alpine 4 Technologies Ltd. ("Alpine 4"), and became a wholly owned subsidiary of Alpine 4.  The purchase price was $5,000,000, with $3,000,000 paid in cash and $2,000,000 in convertible notes, secured by a subordinated security interest in the assets of Quality Circuit Assembly.  The Sellers have the opportunity to convert the notes into shares of Alpine 4's Class A common stock at a conversion price of $10 per share after 12 months.  The notes bear interest at 5% with first payment due July 1, 2016, and payable in full in 36-months (namely, July 1, 2019).  As part of the transaction, Quality Circuit Assembly entered into an agreement with Celtic Capital to provide a letter of credit on accounts receivable and inventory, as well as a 60-month term loan on machinery and equipment.  The balance on the letter of credit and term loan are approximately $1,100,000.  Quality Circuit Assembly also entered into a 15-year lease on a property in San Diego, CA, in connection with the purchase by Alpine 4.  The lease is recorded as a financing obligation lease with the following minimum lease payments.

   
2016
   
2017
   
2018
   
2019
   
2020
   
Total
 
Capital Lease
 
$
422,997
   
$
571,499
   
$
584,763
   
$
599,382
   
$
614,366
   
$
2,793,007
 


Quality Circuit Assembly also has a commitment to pay $276,000 towards Leasehold Improvements over the first year of the lease.

On April 1, 2016, Quality Circuit Assembly entered into an employment agreement with Terry Protto, pursuant to which Mr. Protto agreed to serve as President.  Pursuant to the agreement, Quality Circuit Assembly will pay Mr. Protto an annual salary of $120,000. Additionally, 500,000 shares of Alpine 4 Class A common stock were issued to Mr. Protto on May 15, 2016.  The shares are fully vested and non-cancelable.

The balance of non-related party term debt of $59,462 was paid off in March of 2016.

Subsequent events have been evaluated through August 17, 2016.

 
F - 12

EX-99.2 3 exh99_2.htm ALPINE 4 TECHNOLOGIES LTD. AND QUALITY CIRCUIT ASSEMBLY, INC., PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Exhibit 99.1

ALPINE 4 TECHNOLOGIES, LTD.
and QUALITY CIRCUIT ASSEMBLY, INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 
Table of Contents
 
 
Page
 
 
 
Pro Forma Consolidated Financial Statements: 
 
     
 
Pro Forma Consolidated Balance Sheet as of March 31, 2016
PF-2
     
 
Pro Forma Consolidated Statements of Operations for the three months ended March 31, 2016
PF-3
 
 
 
 
Pro Forma Consolidated Statements of Operations for the year ended December 31, 2015
PF-4
 
 
 
 
Notes to Pro Forma Consolidated Financial Statements (unaudited)
PF-5

PF - 1

 
ALPINE 4 TECHNOLOGIES, LTD. and QUALITY CIRCUIT ASSEMBLY, INC.
 
PRO FORMA CONSOLIDATED BALANCE SHEET
 
as of MARCH 31, 2016
 
 (unaudited)  
                   
           
Pro forma
     
Pro forma
 
   
Alpine 4
   
QCA
   
Adjustments
     
Consolidated
 
                   
ASSETS
                 
                   
CURRENT ASSETS:
                 
    Cash
 
$
342,786
   
$
222,825
   
$
(22,825
)
a
 
$
542,786
 
 Accounts receivable
   
179
     
1,095,419
     
-
       
1,095,598
 
 Inventory
   
222,930
     
949,785
     
-
       
1,172,715
 
 Prepaids
   
-
     
53,535
     
-
       
53,535
 
 Total current assets
   
565,895
     
2,321,564
     
(22,825
)
     
2,864,634
 
                                   
NON-CURRENT ASSETS:
                                 
 Property, plant and equipment
   
-
     
1,356,711
     
(99,826
)
a
   
1,256,885
 
                     
3,895,000
 
b
   
3,895,000
 
 Less: Accumulated depreciation
   
-
     
(1,223,940
)
   
1,223,940
 
a
   
-
 
 Net Property, plant and equipment
   
-
     
132,771
     
5,019,114
       
5,151,885
 
 Intangibles
   
150,000
     
-
     
150,000
 
a
   
300,000
 
 Less: Accumulated depreciation
   
(8,333
)
   
-
     
-
       
(8,333
)
 Net Intangibles
   
141,667
     
-
     
150,000
       
291,667
 
 Deposits and other assets
   
-
     
-
     
546,667
 
c
   
546,667
 
 Goodwill
   
-
     
-
     
2,440,760
 
a
   
2,440,760
 
 Total non-current assets
   
141,667
     
132,771
     
8,156,541
       
8,430,979
 
                                   
 TOTAL ASSETS
 
$
707,562
   
$
2,454,335
   
$
8,133,716
     
$
11,295,613
 
                                   
 LIABILITIES AND STOCKHOLDERS' EQUITY
                                 
                                   
 CURRENT LIABILITIES:
                                 
 Accounts payable
 
$
504,822
   
$
652,628
   
$
-
     
$
1,157,450
 
 Credit Card payable
   
-
     
-
     
-
       
-
 
 Accrued expenses
   
12,500
     
141,444
     
-
       
153,944
 
 Deferred revenue
   
998
     
202,049
     
(202,049
)
a
   
998
 
 Short-term debt
   
-
     
-
     
117,766
 
a
   
117,766
 
                     
740,098
 
d
   
740,098
 
 Notes payable, related parties
   
108,635
     
-
     
-
       
108,635
 
 Advances from related parties
   
342,500
                       
342,500
 
 Financing Obligation Lease S/T
                   
59,456
 
b
   
59,456
 
 Convertible notes payable, net of discount of $162,422 (including related parties of $0)
   
131,928
     
-
               
131,928
 
 Total current liabilities
   
1,101,383
     
996,121
     
715,271
       
2,812,775
 
                                   
 NON-CURRENT LIABILITIES:
                                 
 Long-term debt
   
-
     
-
     
1,882,234
 
a
   
1,882,234
 
                     
169,223
 
d
   
169,223
 
 Financing Obligation Lease L/T
                   
6,590,544
 
b
   
6,590,544
 
 Deferred tax liability
           
25,327
     
320,983
 
a
   
346,310
 
 Total non-current liabilities
   
-
     
25,327
     
8,962,984
       
8,988,311
 
                                   
 TOTAL LIABILITIES
   
1,101,383
     
1,021,448
     
9,678,255
       
11,801,086
 
                                   
 STOCKHOLDERS' EQUITY/(DEFICIT):
                                 
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding
   
-
     
-
     
-
       
-
 
Class A Common stock, $0.0001 par value, 500,000,000 shares authorized, 5,869,981 and 8,505,039 shares issued and outstanding
   
587
     
-
     
75
 
e
   
662
 
Class B Common stock, $0.0001 par value, 100,000,000 shares authorized, 1,600,000 and 0 shares issued and outstanding
   
160
     
-
     
-
       
160
 
QCA Common stock
   
-
     
240,000
     
(240,000
)
a
   
-
 
Dividends
   
-
     
(129,253
)
   
129,253
 
a
   
-
 
Additional paid-in capital
   
13,904,881
     
-
     
637,425
 
e
   
14,542,306
 
Accumulated earnings/(deficit)
   
(14,299,449
)
   
1,322,140
     
(1,322,140
)
a
   
(14,299,449
)
                     
(637,500
)
e
   
(637,500
)
                     
(111,652
)
f
   
(111,652
)
 Total stockholders' equity/(deficit)
   
(393,821
)
   
1,432,887
     
(1,544,539
)
     
(505,473
)
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
707,562
   
$
2,454,335
   
$
8,133,716
     
$
11,295,613
 

 
The accompanying notes are an integral part of these unaudited financial statements.
PF - 2


ALPINE 4 TECHNOLOGIES, LTD. and QUALITY CIRCUIT ASSEMBLY, INC.
 
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
 
FOR THE THREE MONTHS ENDED MARCH 31, 2016
 
  (unaudited)  
                 
           
Pro forma
     
   
Alpine 4
   
QCA
   
Adjustments
   
Consolidated
 
                 
Revenue
 
$
7,115
   
$
1,788,654
    $      
$
1,795,769
 
Cost of revenue
   
82
     
1,337,083
             
1,337,165
 
Gross Profit
   
7,033
     
451,571
     
-
     
458,604
 
                                 
Operating expenses:
                               
General and administrative expenses
   
167,148
     
490,091
             
657,239
 
Depreciation
   
-
     
33,492
             
33,492
 
     Total operating expenses
   
167,148
     
523,583
     
-
     
690,731
 
Income/(Loss) from operations
   
(160,115
)
   
(72,012
)
   
-
     
(232,127
)
                                 
Other expenses
                               
Interest expense
   
(130,120
)
   
456
             
(129,664
)
     Total other expenses
   
(130,120
)
   
456
     
-
     
(129,664
)
                                 
Income/(Loss) before income tax
   
(290,235
)
   
(72,468
)
   
-
     
(362,703
)
                                 
Income tax
   
-
     
(31,770
)
           
(31,770
)
                                 
Net Income/(Loss)
 
$
(290,235
)
 
$
(40,698
)
 
$
-
   
$
(330,933
)
                                 
Weighted average shares outstanding :
                               
Basic
   
16,705,956
     
-
             
16,705,956
 
Diluted
   
16,705,956
     
-
             
16,705,956
 
                                 
Loss per share
                               
Basic
 
$
(0.02
)
 
$
-
    $      
$
(0.02
)
Diluted
 
$
(0.02
)
 
$
-
    $      
$
(0.02
)


The accompanying notes are an integral part of these unaudited financial statements.
PF - 3


ALPINE 4 TECHNOLOGIES, LTD. and QUALITY CIRCUIT ASSEMBLY, INC.
 
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
 
FOR THE YEAR ENDED DECEMBER 31, 2015
 
 (UNAUDITED)  
                 
           
Pro forma
   
Pro forma
 
   
Alpine 4
   
QCA
   
Adjustments
   
Consolidated
 
                 
Revenue
 
$
21,840
   
$
7,513,844
    $      
$
7,535,684
 
Cost of revenue
   
1,170
     
5,736,354
             
5,737,524
 
Gross Profit
   
20,670
     
1,777,490
     
-
     
1,798,160
 
                                 
Operating expenses:
                               
General and administrative expenses
   
13,293,644
     
1,404,526
             
14,698,170
 
Depreciation
   
-
     
100,280
             
100,280
 
     Total operating expenses
   
13,293,644
     
1,504,806
     
-
     
14,798,450
 
Income/(Loss) from operations
   
(13,272,974
)
   
272,684
     
-
     
(13,000,290
)
                                 
Other expenses
                               
Interest expense
   
(131,006
)
   
2,064
             
(128,942
)
Loss/(Gain) on disposal of fixed assets
           
(34,062
)
               
     Total other expenses
   
(131,006
)
   
(31,998
)
   
-
     
(128,942
)
                                 
Income/(Loss) before income tax
   
(13,403,980
)
   
304,682
     
-
     
(13,099,298
)
                                 
Income tax
   
-
     
197,386
             
197,386
 
                                 
Net Income/(Loss)
 
$
(13,403,980
)
 
$
107,296
   
$
-
   
$
(13,296,684
)
                                 
Weighted average shares outstanding :
                               
Basic
   
7,773,850
     
-
             
7,773,850
 
Diluted
   
7,773,850
     
-
             
7,773,850
 
                                 
Loss per share
                               
Basic
 
$
(1.72
)
 
$
-
   
$
     
$
(1.71
)
Diluted
 
$
(1.72
)
 
$
-
   
$
     
$
(1.71
)
 
The accompanying notes are an integral part of these unaudited financial statements.
PF - 4

ALPINE 4 TECHNOLOGIES, LTD.
and QUALITY CIRCUIT ASSEMBLY, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1 – Basis of Presentation


On April 1, 2016, Alpine 4 Technologies, Ltd. ("Alpine 4") and Quality Circuit Assembly, Inc. ("QCA"), entered into a Stock Purchase Agreement whereby Alpine 4 acquired 100% of the issued and outstanding shares of common stock of QCA.  On July 29, 2016, Alpine 4 effected a reverse stock split at a ratio of one (1) new share for each ten (10) old shares of Alpine 4's Class A and Class B Common Stock.  The financial statements have been retrospectively restated to reflect the reverse split.
The accompanying pro forma consolidated balance sheets presents the accounts of Alpine 4 and QCA as if the acquisition occurred March 31, 2016.  The accompanying pro forma consolidated statement of operations presents the accounts of Alpine 4 and QCA for the three months ended March 31, 2016, and the year ended December 31, 2015, as if the acquisition occurred January 1, 2016 and 2015, respectively.  The unaudited pro forma combined financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, the historical financial statements of QCA and Alpine 4.
The following adjustments would be required if the acquisition occurred as indicated above:

a
To allocate the purchase price of $5,000,000 consisting of $3,000,000 in cash and a convertible 5% interest bearing note of $2,000,000.  Conversion of  the note is not allowed for first six months and the conversion price is $10 per share of common stock.

   
Purchase
Allocation
 
Cash
 
$
200,000
 
Accounts Receivable
   
1,095,419
 
Inventory
   
930,783
 
Property, Plant & Equipment
   
1,256,885
 
Prepaid
   
53,535
 
Intangibles
   
150,000
 
Goodwill
   
2,440,760
 
Accounts Payable
   
(652,628
)
Accrued Expenses
   
(128,444
)
Deferred Tax Liability
   
(346,310
)
 
 
$
5,000,000
 

b.
To record the financing obligation lease of a building.  QCA closed a financing lease obligation for $7,000,000 of which $3,000,000 was used to pay the cash portion of the QCA purchase, and the balance was used to purchase a building.  QCA leased the building for 15 years at $58,000 per month in rent.  There was also a debit issuance cost of $350,000.
 
c.
To record restricted cash collateralizing a letter of credit of $500,000, and $46,667 rent deposit on a building which were required under the financing obligation described in note b.
   
d.
To record the line of credit and loan to acquire cash for purchase of QCA with a third party lender.  A line of credit was obtained on QCA's outstanding accounts receivable, inventory and equipment of $909,321.  QCA drew on the line of credit an additional $187,001 for working capital.
   
e.
To recordo Terry Protto for employment services and 250,000 shares of Alpine 4 Class A Common stock to a broker for fees on the building transaction, described in Note b.
   
f.
Adjust retained earnings for the financing obligation transaction described in Note b.  Three months interest ($44,986) and depreciation ($66,666).
 
The unaudited consolidate pro forma financial information is presented for informational purposes only and is subject to a number of uncertainties and assumptions and do not purport to represent what QCA's actual performance or financial position would have been had the transaction occurred on the dates indicated and does not purport to indicate the financial position or result of operations as of any future date or for any future period.
 
PF - 5


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